In Hong Kong, how can I begin filing my profits taxes?
Within one month of the date on the Profits Tax Return, the IRD must receive the completed form, any supporting documentation, and any appropriate supplemental profit tax forms.
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The first page of the form contains the precise submission date. You may file your profit tax returns and other paperwork using Hong Kong e-Tax. If a firm is unable to file its earnings tax return within the given month, they may be eligible for an extension.
The IRD sends tax representatives a circular letter outlining the specifics of the block extension program and how tax representatives may assist their customers in applying at the beginning of each year.
If small and small partnership enterprises file their profits tax filing electronically, the Department will, on a case-by-case basis, provide a 2-week extension after the regular due date in order to encourage electronic tax filing.
To use the online filing service, a company or partnership must fulfill the requirements listed on the Completion of Profits Tax Return page.
Additional tax return forms
You might need to fill out ten more paperwork for your taxes. Supplementary forms indicate information regarding preferred regimes and tax incentives.
You must submit these extra forms together with your Profits Tax Filing Return forms. Supplementary forms are not necessary to submit, but you should have them ready in case the authorities ask for them.
The additional profit tax forms need to be filed as well, as they are a component of the return. If necessary, you should complete out the form online by downloading the extra forms.
You might get information from these forms for your taxes. Our accountants can also help you with the documents you must complete, as the documentation requirements will differ based on your sector.
For further information on submitting Profit Tax Return paperwork in Hong Kong, consult the Corporate Tax Returns Guide.
You can print the completed additional forms S1, S2, S3, and S4 for signing and send them in paper form together with your tax return. Alternatively, you can use GovHK’s Profits Tax Return e-Filing Services to electronically file your tax return by exporting the completed form as an XML file. The only supplemental forms that can be electronically submitted with the electronically filed Profits Tax return are S1, S2, S3, and S4. Should further supplementary forms be needed, you must print the completed form, sign it, and mail all signed paper copies of the supplemental documents together with your tax return.
At What Point Are Profits Tax Returns Due?
Hong Kong essentially uses a territorial taxation system for profit tax returns and corporation tax rates that includes:
Profits from sources outside of Hong Kong are not subject to the profit tax reporting requirement. For instance, a US-based offshore business that maintains no operations in Hong Kong but has clients and suppliers there is exempt from Hong Kong profits tax. Instead, the Internal Revenue Service (IRS) is the company’s primary employer in this situation.
The only companies that must pay HK tax are those that operate in Hong Kong. The requirements of the regional tax authorities (such as the Inland Revenue Department and the Inland Revenue Ordinance) apply to all firms operating in Hong Kong, regardless of the company’s citizenship, place of origin, or headquarters.
Recall that anybody who trades, practices a profession, or conducts business in the region must file a Profits Tax Return (PTR) in Hong Kong. Assessable income from Hong Kong sources is subject to taxes.
Now let’s examine several instances that show when revenue taxes might be due:
Regarding Independent Consultants
Hong Kong’s Income Potential for Independent Consultants:
It is required to file a PTR if an independent consultant, such as John, offers consulting services to customers located in Hong Kong and receives payment for these services. In order to determine his assessable earnings and therefore pay taxes, John must accurately disclose his consulting revenue and costs.
Self-employed Consultant Serving Global Clientele:
Another freelance consultant, Sarah, serves customers both domestically and abroad. Although her earnings from customers in Hong Kong must be reported on Profits Tax Returns, earnings from clients outside of Hong Kong are often not taxed unless they are related to a commercial activity in Hong Kong.
For Owners of Small Businesses
Owner of a local retail store:
Let’s say Lisa runs a modest apparel and accessory shop in Hong Kong. The revenue obtained from the sales of her Hong Kong store is considered as assessable earnings. Lisa’s retail company requires her to submit a PTR in order to record her sales revenue and deductible business costs.
Hong Kong-Based Internet Company:
Alex runs an internet store that ships handcrafted goods all over the world. Even if he has a global clientele and operates his firm mostly out of Hong Kong (creating and managing products, for example), the earnings he makes there are liable to profits tax. As a result, Alex needs to submit a PTR, disclosing his income from all sources but allocating it to Hong Kong sources.