profit tax return from the IRD

What should I do after I receive the profit tax return from the IRD?

Every year, the Inland Revenue Department (IRD) of Hong Kong issues corporate earnings tax reports on the first working day of April. Usually, the company will apply for an extension within one month of receiving the PTR (Profit Tax Return), and the deadline might be extended as follows:

Normal issue dateFor accounting year ended betweenNormal filing date for unrepresented / represented casesDue date for tax payment
First working day in April of the following year of assessment1 April to 30 November2 MayAs stated in the notice of assessment, generally between November of the year the return is issued and April of the following year.
1 December to 31 December2 May / 15 August
1 January to 31 March2 May / 15 November

Types of Profit Tax Return Form

If you conduct business as a company, partnership, or non-resident person is subject to profits tax in your name, you must disclose the profits on profits tax returns. Your revenues from running a sole proprietorship should be declared on your Tax Return – Individuals (BIR60). Profits tax return forms are divided into three categories:

Profits Tax Return – Corporations (BIR51)

  • Companies that operate or have a presence in Hong Kong are eligible.
  • Small firms and inactive businesses are free from submitting supporting documentation when filing their Profits Tax Return.
  • Before completing and submitting BIR51, small firms and dormant companies must continue to prepare audited financial statements and tax computations.

Profits Tax Return – Persons Other Than Corporations (BIR52)

  • Applicable to corporations with a presence in Hong Kong that operates as a partnership.
  • Businesses that transitioned from a partnership to a sole proprietorship or vice versa throughout the year should record their earnings / (loss) in BIR52, not BIR60, for the entire basis period of the year of change (applicable to individual taxpayers).
  • Companies preparing foreign currency financial statements should utilize the yearly average rate of the account closing date.

Profits Tax Return – In Respect of Non-Resident Persons (BIR54)

  • Non-residents who have taxable income coming from or generated from a trade, profession, or business carried on in Hong Kong are affected.
  • The IRD has long used the term “non-resident person” to describe someone who does not have a permanent commercial presence in Hong Kong.
  • A BVI-incorporated firm, for example, should not be considered a non-resident if its directors are based in Hong Kong and its core management and control are based in Hong Kong.

Filing Profit Tax Return

When completing and filing the profits tax return, supporting documentation (Audit Report and Profits Tax Computations) and any applicable extra forms must be provided to the IRD within one month of the date stated on the profits tax return. The exact date of filing can be found on page 1 of a profits tax return.

Because one month may not be enough time for a company to complete its corporation tax return, an extension may be granted upon request. Each year, the IRD issues a Circular Letter to tax representatives outlining the basics of the block extension scheme and how tax representatives can assist their customers in applying. (A tax representative is a person or corporation authorized by law to assist taxpayers in managing operations related to the fulfillment of tax liabilities. They can help businesses prepare tax returns, communicate with IRD, and develop tax plans to increase tax efficiency.)

Key Takeaway

It would be best for you to Hire professional help for audit firm If you face difficulties to submitting you profit tax returns. Late filing of a Profits Tax Return may result in penalties ranging from HK$1,200 to HK$10,000. You may potentially face criminal charges. To avoid delays in filing Corporate Tax Returns, you must have all financial papers available for your CPA because the document preparation procedure is usually the most extended phase in the audit process.

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Christophe Rude

Christophe Rude

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