Profits tax is charged for each year of assessment. The basis period for profits tax assessment is:-
- the year ended 31 March of the year printed on the return; or
- where the annual accounts are made up to any day other than 31 March, the year ended on that day within the year printed on the return; or
- where the accounts are made up for each lunar year, the relevant lunar year that ended within the year printed on the return; or
- where you commenced or ceased to carry on a business or changed its accounting date, the special period prescribed by the Inland Revenue Ordinance.
To report profits tax liability, applicable profits tax returns should be completed and filed, This includes that for corporations, persons other than corporations, and in respect of non-resident persons. Generally, the profits tax return, supplementary forms and supporting documents should be filed within 1 month from the date of issue. For both incorporated and unincorporated businesses, the following supporting documents should be filed:
- a certified copy of the Statement of Financial Position/Balance Sheet;
- a Statement of Comprehensive Income/Profit and Loss Account in respect of the basis period;
- a tax computation with supporting schedules showing how the amount of Assessable Profits (or Adjusted Loss) has been arrived at; and
- other documents and information as specified in the Notes and Instructions.
Incorporated businesses also need to file an Auditor’s Report on top of the above-supporting documents.
Taxpayers who have earned no income or of an amount below their allowance entitlements do not have to pay tax. Nonetheless, should they receive a tax return, they are still required to complete and file it with the Inland Revenue Department.
The documents may be submitted electronically if the business satisfies a number of requirements. Otherwise, they should be submitted in paper form.
Apart from being subject to penalty or prosecution, late filing may result in you being required to pay more tax, as the assessor would be unable to grant relevant allowance entitlements and deductions.
Key Takeaways
- Applicable profits tax return, supplementary forms and supporting documents should be completed and submitted on time either electronically or in paper form.
References
- Profits Tax Return: https://www.gov.hk/en/residents/taxes/taxfiling/filing/types/profitstax.htm#wtf
- Completion of Profits Tax Returns and the Supplementary Forms: https://www.ird.gov.hk/eng/tax/bus_cpt.htm
- eTax: https://www.gov.hk/en/residents/taxes/etax/index.htm
- Electronic filing requirements: https://www.ird.gov.hk/eng/tax/bus_epf.htm#A1