The setup: a Hong Kong fintech spends HKD 3 million on in-house R&D and deducts 300% on the first HKD 2 million plus 200% on the rest. They ask: how does that compare with Vietnam’s 200%? Answer: a higher multiplier (300%) at a lower rate (8.25%/16.5%) — worth less than Vietnam in real terms. A textbook case: a high headline multiplier does not mean more saving.
Hong Kong: 300%/200% in two tiers at low rates
- Mechanism: qualifying R&D spend (Type B): 300% on the first HKD 2 million, 200% above; Type A only 100%.
- Real value: 300% × 8.25% = 24.75% (first HKD 2M, at the 8.25% tier); 300% × 16.5% = 49.5% (above the tier).
- Plus: no VAT; territorial principle.
- Note: HKMTT from financial years beginning on or after 1 January 2025 — large groups topped up to 15%.
Vietnam: 200% in one tier at 20% — 40% real
CIT Law 67/2025/QH15 (effective 1 October 2025): a deduction of up to 200% — real value 40% (at 20%). Versus Hong Kong: a lower multiplier (200% vs 300%) at a higher rate (20% vs 8.25%) — the 40% real value beats Hong Kong’s 24.75% at the 8.25% tier.
Comparison
| Criterion | Hong Kong | Vietnam |
|---|---|---|
| Multiplier | 300% (first HKD 2M) / 200% (above) | Up to 200% |
| Rate | 8.25%/16.5% | 20% |
| Real value | 24.75% (8.25% tier) / 49.5% (16.5% tier) | 40% |
The fintech in the opening scenario: HKD 3 million of spend. In Hong Kong (income within the 8.25% tier): HKD 2M × 300% × 8.25% = HKD 495,000 plus HKD 1M × 200% × 8.25% = HKD 165,000 — HKD 660,000 total (22% of spend). The same spend in Vietnam (20%): 40% saved — nearly double. Only above the HKD 2M tier (16.5%) does Hong Kong pull ahead (49.5% vs 40%).
Four points to remember
1. A high multiplier ≠ more saving. 300% × 8.25% = 24.75% < 200% × 20% = 40% — always multiply by the rate.
2. The tier decides. A small startup at 8.25% gets far less than a large company at 16.5% — one mechanism, two values.
3. Type A/B matters. Not all R&D spend gets 300%/200% — Type A only 100%; read the classification.
4. Hong Kong still deserves a look overall. No VAT, territoriality, simple procedures — R&D is only one piece of the tax picture.
Frequently asked questions
1. What is Hong Kong’s R&D deduction?
Qualifying Type B spend: 300% on the first HKD 2 million, 200% above; Type A only 100%.
2. What is it really worth?
At the 8.25% tier: 24.75% (first HKD 2M) and 16.5% (above). At the 16.5% tier: 49.5% and 33%.
3. When does Hong Kong beat Vietnam?
When taxable income exceeds the HKD 2M tier (16.5% rate): 49.5% versus Vietnam’s 40% — provided the spend is Type B.
4. How do Type A and Type B differ?
Type B (qualifying in-house R&D / designated-institute contracts): 300%/200%. Type A (other qualifying R&D): only 100%.
5. Where should a fintech put R&D?
Income under HKD 2M → Vietnam (40% vs 24.75%). High income plus the fintech ecosystem → Hong Kong (49.5% at the 16.5% tier plus no VAT).
This article has been quality-reviewed by the FLAW AI Legal Council.
