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Filing Obligations

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Profits Tax Return

Tax Year

A tax year commences on 1 April and ends on 31 March of the following year.

Basis Period

 

The basis period of a corporation for a tax year refers to the 12 months’ period covered by the annual financial statements of the corporation which ended anytime within that tax year.

Filing of Tax Returns

 

Tax returns must be filed on pre-printed forms issued by the Hong Kong IRD.  A corporation which commenced to derive Hong Kong sourced income has an obligation to request the IRD to issued a Profits Tax return. A newly incorporated corporation may be issued with a Provisional Profits Tax return for complexion. For corporations which have recurring Hong Kong sourced income, the IRD will automatically issue Profit Tax return to these corporations in April each year. These Profits Tax returns place an obligation on a corporation to file a return of its Hong Kong source income within one month of the date of the return or the extended due date.

Where the IRD is satisfied that a company is dormant or does not derive Hong Kong sourced income, the IRD may at its discretion exempt such a corporation from filing future Profits Tax returns.

Extension of Time

 

In practice, the IRD has a policy for granting extensions of time for filing Profits Tax return as follows:

Non-filing or Late-filing of Returns

If a return is not filed within the time stipulated, the IRD may impose penalties or issue estimated assessments to the corporation.

Tax Payment

 

Tax is payable on assessment by the IRD.  The IRD will normally raise an assessment for final tax based on examination of the tax return filed and provisional tax in respect of the ensuring tax year. Provisional tax is assessed based on the quantum of taxable profits for the previous tax year. Where a corporation is of the view that its profits will likely be less than the profits assessed to provisional tax, an application for holdover of collection of provisional tax can be made.

 

Depending on the financial year end of the corporation, tax is generally assessed for collection sometime between November to March of the following year.

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Employer’s Return

A corporation with employees in Hong Kong has obligations to inform the IRD of the following events:

 

  • Commencing to employ a person;

  • Ceasing to employ a person; and

  • When an existing employee is about to depart from Hong Kong on a permanent basis.

 

In addition, a corporation is required to file an annual Employer’s Return in respect of remuneration paid to each employee within a tax year. The Employer’s Return is normally issued by the IRD in April each year and is due for filing within one month of the date of issued.

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