This editorial (Global minimum tax deal: a timely warning) stated: “Since Carrie Lam took over, not only did she raise the profits tax rate from 15% to 16.5%, she also followed the U.S. mistake of a two-tiered profits tax rate regime in the name of a “tax reform”, setting a 7.5% which favored unincorporated businesses, especially small and medium start-up businesses, but was in fact complicating the tax”.

This is not true. The corporate income tax has been 16.5% since 2008. But it is true that Carrie Lam created a two-tiered profits tax rate regime, but I don’t find it particularly more complicated since like before you have to pay an auditor to do it and the additional tier doesn’t really add any real complication but it does reduce tax burden especially for smaller sized businesses since corporations pay 8.5% profits tax on their first 2 million in profits.

The profits tax rates for unincorporated businesses were 15% before the Carrie Lam tax cuts and have now dropped to 7.5% for the first 2 million and are still at 15% for any profits past 2 million.

In conclusion, there is no tax increase. And compared to running a business, it is simple to calculate the taxes owed in a two-tiered tax system compared to a single-tier system.

I do not like Carrie Lam nor do I like taxes but I think HK continues to be a low tax jurisdiction. It is the only thing that didn’t change in this new regime we had imposed on us last year.

Please consider correcting the error I pointed out. Here is my source: https://www.gov.hk/en/residents/taxes/taxfiling/taxrates/profitsrates.htm

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