On October 11, 2017, Chief Executive Carrie Lam announced the implementation of the new tax system within 2018 in her Policy Address. 

Under the plan, the tax rate for the first HKD 2 million of profits of enterprises will be lowered to 8.25%, or half of the standard profits tax rate. Profits over HKD 2 million will be subject to the current standard tax rate of 16.5%. For encouraging enterprises to invest in R&D, the first eligible R&D expenditure will enjoy a 300% tax deduction with the remainder at 200%.

The Government will impose tax restrictions such that each group of enterprises can only nominate one enterprise to benefit from the lower tax rate in ensuring the tax benefits small and medium size enterprises.