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HK Tax Facts
Profits Tax Rates
| Year of Assessment |
2015/16 |
2016/17 |
2017/18 |
| - Corporations |
16.5% |
16.5% |
16.5% |
| - Sole Proprietorships and Partnerships |
15% |
15% |
15% |
Profits Tax Returns
| Profits Tax Returns can be issued at any time but are generally issued on 1st April each year and must be completed and submitted together with the required supporting documents within 1 month, unless an extension is available (see Tax Reporting Deadlines belew). |
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| Supporting documents will consist of Profits Tax Computations, Certified Profit and loss accounts and Balance Sheets, Audited Financial Statements and other Schedules when required. |
| What to consider when the first Profits Tax Return is received |
- Determine which Tax Year it relates to. A Tax return with 2006 in the top right corner indicates the tax year: 1 April 2005 to 31 March 2006.
- Ascertain whether your company's first financial (CFY) period ends during that tax year or whether it ends after that.
- If the former (i.e. CFY ends during that tax year) then you should have already undergone an audit and Audited Financial Statements should be available. For small businesses, the Taxation Representatives tend to be the auditor therefore it is advisable that you deliver the Profits Tax Return to them as soon as possible for it to be prepared for submission. A director will need to sign the return prior to it being submitted to the IRD. If the audit has not yet been completed then this should be a given very high priority.
- If the latter then you need to explain this, usually by way of a cover letter and completing the Profits Tax Return, to the IRD.
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| If you need assistance or advice then firms such as LLB Accounting Services Ltd are available to provide such. |
Financial Periods and the Hong Kong Tax Year
| The Hong Kong Tax Year is from 1 April to 31 March of the following year. |
| A company's first financial period can be up to 18 months in length. |
| Subsequent finacial periods can be up to 15 months in length. |
| However, once a financial year end is decided upon, this is usually adopted consistently thereafter |
| Example: |
Company Incorporation Date |
Closes First financial Period |
Tax Year |
Year of Assessment |
|
01 Nov 05 |
31 Oct 06 |
01 Apr 06 - 31 Mar 07 |
2006/07 |
|
01 Nov 05 |
30 Apr 07 |
01 Apr 07 - 31 Mar 08 |
2007/08 |
|
01 Jan 05 |
31 Dec 05 |
01 Apr 05 - 31 Mar 06 |
2005/06 |
|
01 Jan 05 |
31 Mar 06 |
01 Apr 05 - 31 Mar 06 |
2005/06 |
|
01 Jan 05 |
30 Apr 06 |
01 Apr 06 - 31 Mar 07 |
2006/07 |
| Careful consideration should also be given to choosing a financial year end to suit the business nature. For example, if the business being carried on is cyclical. |
Profits Tax Reporting Deadlines
| Companies with financial year ends between 1 January to 31 March may apply for an extention to file the Profits Tax Return up to 15 November of that year |
| Companies with financial year ends between 1 April to 30 November do not qualify for an extention and must file the profits tax return within 1 month of being issued. |
| Companies with financial year ends between 1 December to 31 December may apply for an extention to file the Profits Tax Return issued in April, up to 31 July of that year. |
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