The Scope of the Charge - S.14
Persons, including corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. There is therefore no distinction made between residents and non-residents. A resident may therefore derive profits from abroad without suffering tax; conversely, a non-resident may suffer tax on profits arising in Hong Kong. The question of whether a business is carried on in Hong Kong and whether profits are derived from Hong Kong is largely one of fact, however some guidance on the principles applied can be found in cases which have been considered by the Hong Kong Courts and the Privy Council. No tax is levied on profits arising abroad, even if they are remitted to Hong Kong.
If a person sells his flat or any property as part of a scheme of profit-making, it will be regarded as a business and he is required to pay tax on any profit he may make.
Profits Tax Return (B.I.R. 51 or B.I.R. 52 or B.I.R. 54)
If you carry on a trade, profession or business in the form of a corporation, partnership business or if a non-resident person is chargeable to profits tax in your name, you must complete all items in the following profits tax returns (if applicable) to report the profits tax liability:
Profits Tax Return - Corporations (B.I.R. 51)
Profits Tax Return - Persons Other Than Corporations (B.I.R. 52)
Profits Tax Return - In Respect Of Non-Resident Persons (B.I.R. 54)
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In all cases if you cannot lodge a tax return by the due date or the extended due date, estimated assessment will be issued and you may be required to pay more tax. You may also be subject to penalty proceedings which include payment of penalty, or even prosecuted.
Profits Tax Return
If you carry on a trade, profession or business in form of a corporation, partnership business or if a non-resident person is chargeable to profits tax in your name, you should complete the profits tax return and file it to the Inland Revenue Department (IRD) by the due date.
Who Should File
Newly Registered Business
Generally, a newly registered business will receive its first profits tax return some 18 months after the date of commencement of business or the date of incorporation.
Annual Bulk Issue of ReturnsThe annual exercise to issue profits tax returns in bulk takes place on the first working day of April each year.
Business Not Required to Submit Return
AnnuallyIt is the practice of IRD not to call for the annual submission of profits tax returns in instances where the trade, profession or business carried on does not give rise to assessable profits or where the trade, profession or business has not commenced or has ceased and not recommenced. However, upon receipt of a profits tax return which may be issued from time to time in the course of reviewing your future tax potential, the requirement to lodge the return form must still be complied with.
When to File
Normal Filing Time
Generally, profits tax return should be filed within 1 month from the date of issue. The compliance date of submission is specified on page 1 of the profits tax return.
Block Extension Scheme for Lodgement of Tax Returns
If you make up your annual accounts for the trade, profession or business after 30 November and your tax representative has duly applied for an extension to file your profits tax return under the Block Extension Scheme, the due date is normally extended.
Our Tax Services
We offer an efficient service to ensure agreement of a company's profits/income tax liability as early as possible. This reduces compliance costs, interest, penalties, and also ensures a company can budget accurately for the payment of its tax liabilities. Furthermore, we also offer technical advice and support in the following areas:
- Timing of income and expenses
- Capital expenditure
- Transfer pricing from group companies
- Employee & director remuneration
- Dividends, salaries & bonus
- Efficient use of tax losses
- Planning of the timing of capital gains
- Group tax planning