Enhanced Tax Deduction for R&D Expenditures
Objective: The Enhanced Tax Deduction provides for expenditure incurred by enterprises on qualifying research and development (R&D) activities in order to encourage more enterprises to conduct R&D activities in Hong Kong.
Funding Details: The deduction will be 300% for the first $2 million of the aggregate amount of payments made to “designated local research institutions”(DLRI) for “qualifying R&D activities” and “qualifying expenditures” incurred by the enterprises, and 200% for the remaining amount. There is no cap on the amount of enhanced tax deduction.
Eligibility:
- Any university or college located in Hong Kong;
- Or any other “local institution” (Note 1) that undertakes “qualifying R&D activities” in Hong Kong, including:
- a body corporate incorporated in Hong Kong under the Companies Ordinance (Cap. 622) (“Companies Ordinance”) or a former Companies Ordinance as defined by section 2(1) of the Companies Ordinance.
- a body corporate incorporated outside Hong Kong and registered as a non-Hong Kong company with a place of business in Hong Kong under the Companies Ordinance.
- a statutory corporation established under any other relevant Ordinances in Hong Kong.
Note 1: “local institution” means an institute, association, organisation or corporation that is located in Hong Kong.
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