The following are exempt from the assessable profits:

1. dividends received from a corporation

2. profits already assessed to Profits Tax in name of other persons such as partnership

3. interest on:

• tax reserve certificates

  
  

• bonds issued under the Loans Ordinance or the Loans (Government Bonds) Ordinance

  
  

• Exchange Fund debt instruments

  
  

• Hong Kong dollar-denominated multilateral agency debt instruments

  
  

• a deposit with a bank (this exemption does not apply to the bank itself).

  
  

4. Sums accrued to an authorized mutual fund corporation or an authorized unit trust by way of:

• interest

  
  

• gains or profits arising from the sale or other disposal or on the redemption on maturity or presentment of securities

  
  

• gains or profits under foreign exchange contracts or futures contracts.

  
  

Where a taxpayer makes profits on qualifying debt instruments, such instruments are only taxed at half the relevant profits tax rate. To find out what are "qualifying debt instruments" and their tax treatments, please visit the IRD's homepage > English > Tax information > Business > Qualifying Debt instruments.

Besides, section 26(b) states that no double taxation of profits: any profits chargeable under Part IV of the Inland Revenue Ordinance of a person shall not be included in the assessable profits for which any other persons is chargeable to tax under the same part. This is to ensure that any profits of a partnership will not be taxable on receipts by the partners (whether corporate or individual partners) where the profits has already been taxed in name of the partnership.