The key distinction: control, not just a shared director
Having the same director does not, by itself, make two companies connected. The IRD tests control: generally more than 50% of share capital, voting rights, or capital/profit entitlement, directly or indirectly. Entities under common control can be connected.
Two companies, one election: where companies are connected at the relevant basis-period end, only one can elect the two-tier rates for that year of assessment.
8.25%First HK$2 million of assessable profits of the eligible elected corporation; 16.5% above that.
16.5%Standard rate on the other connected corporation’s assessable profits, subject to applicable special treatment.
A practical example
A person owns 100% of Company A and Company B. Both are under that person’s control: only one may elect the two-tier rates. Merely serving on both boards does not establish this ownership or control.
Before filing
- Map direct and indirect ownership and control.
- Identify connected entities and coordinate the annual election.
- Ask your Hong Kong tax adviser to confirm eligibility and return disclosures.
Official sources
Hong Kong IRD — Two-tiered Profits Tax FAQ (Q1, Q3, Q6–9) ↗Hong Kong IRD — Connected entity examples ↗Hong Kong IRD — Introduction of two-tier rates ↗
Checked 16 October 2026. General information; confirm the company’s circumstances and current law with a Hong Kong tax adviser.