The Inland Revenue (Amendment) (Tax Concessions for Intellectual Property Income) Ordinance 2024 has been published in the Gazette.

The amendment ordinance implements the Government’s “patent box” tax incentive, which provides tax concessions for qualifying profits derived from eligible intellectual property (IP). It comes into force today and allows taxpayers to apply for the incentive starting from the 2023/24 year of assessment.

Eligible IP includes patents, copyrighted software and new plant variety rights. It may be registered in different places around the world, with profits sourced in Hong Kong benefitting from the tax incentive.

The concessionary tax rate is 5%, substantially lower than the existing normal profits tax rate of 16.5% in Hong Kong.

The Government noted that eligible IP must be developed by the taxpayers themselves. If the research and development (R&D) process involves the acquisition of IPs or the outsourcing of R&D activities, the proportion of profits eligible for the concessionary tax rate may be reduced.

Additionally, enterprises need to obtain local registration for their IP in order to enjoy the concession. This requirement will come into force two years after the “patent box” tax incentive comes into operation.

The Commerce & Economic Development Bureau said the “patent box” regime encourages enterprises to forge ahead with more R&D activities and promotes IP trading, thereby consolidating Hong Kong’s competitiveness as a regional IP trading centre.

The Government said separately that in view of copyright issues arising from the rapid development of artificial intelligence technology, it will soon conduct a consultation to explore further enhancing the protections provided by the Copyright Ordinance, so as to ensure that Hong Kong’s copyright regime remains robust and competitive.


Latest Business News


HK can be ASEAN-GBA connector  22-7-2024


A local chamber of commerce believes Hong Kong firms can grow their business in Southeast Asia by leveraging the city’s...

‘ASEAN states have key advantages’  22-7-2024


President of The Chinese Manufacturers' Association of Hong Kong Wingco Lo, who will travel to Laos, Cambodia and Vietnam...

FS bound for Beijing  22-7-2024


Financial Secretary Paul Chan will depart Hong Kong late this afternoon for Beijing, where he will call on relevant centr...

June sees 1.5% Inflation  22-7-2024


Overall consumer prices rose 1.5% in June, year on year, higher than the 1.2% increase in May, the Census & Statistic...