Hong Kong Profit Tax Returns: A Comprehensive Guide to Filing the Form

One of the most important yearly obligations for people and companies involved in Hong Kong’s dynamic economy is filing earnings tax returns.

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The goal of this thorough book is to provide you a thorough understanding of the intricacies of the profits tax system in Hong Kong. We’ll go over everything from tax calculations and exemptions to deadlines and incentives.

This handbook is your go-to resource for help with tax filing, whether you’re a seasoned business owner, a foreign corporation doing business in Hong Kong, or just an individual trying to understand your tax responsibilities.

What Is A Tax Return On Profit?

A Profit Tax Return (PTR) is not only a tax record in Hong Kong; it is also essential for correctly reporting your taxable revenue.

This crucial document, which records the income taxes earned over a certain accounting period—typically a year—is created in cooperation with audited accounting companies. The evaluation period for first-time taxpayers cannot be more than 17 months. The timely and precise reporting of taxable income is ensured by filing a PTR, which helps Hong Kong’s tax system gain a reputation for being open and effective.

Types of Income Tax Returns That Can Be Filed

The forms for corporations, small firms, and partnership businesses are divided into three categories: profit tax returns.

These forms are distributed by the Inland Revenue Department.

#1) Corporations’ Profits Tax Return (BIR51)

Businesses that are based or conduct business in Hong Kong are bound by this rule.

When submitting a Profit Return, small corporations and defunct firms are exempt from the requirement to produce supporting documentation.

Before completing and submitting BIR51, small companies and inactive organizations need to finish their audited financial statements and tax calculations.

#2) Individuals other than corporations: Profits Tax Return (BIR52)

Businesses that collaborate with a presence in Hong Kong must fill out this form.

For the whole basis period of the year of transition, businesses that changed from being a partnership to a sole proprietorship or vice versa throughout the year should record their profits or losses on profit tax form BIR52 (not BIR60). This pertains to private taxpayers.

Businesses should use the annual average rate as of the account closure date when creating foreign currency financial statements.

#3) Non-resident individuals’ profits tax return (BIR54)

This tax is applied to non-residents who have taxable income from work done in Hong Kong or from a trade, profession, or other source.

A “non-resident person” is someone who does not maintain a continuous commercial presence in Hong Kong, according to the IRD’s long-standing definition.

For instance, if the directors of a BVI Incorporated company are residents of Hong Kong and the company’s main management and control are located there, the company shouldn’t be regarded as non-resident.

How Do I Prepare My Profit Tax Returns?

Let us go over the criteria so you can determine whether and how your company must pay revenue taxes:

Profit Tax Returns must be filed by newly registered firms eighteen months after their commencement date or incorporation date. A profit tax form (BIR51) and audited financial statements are required to be filed by corporations.

Small companies and inactive firms must file Form BIR51 and other supplemental forms. The audited financial statements are not necessary. The data on revenue’s tax Form BIR51 for small firms must come from audited financial statements, which you should save in case the authorities want access to them.

You must report all of your income and expenses on Form BIR52 for the full year if your company converts from a partnership to a sole proprietorship within a year.

A newly registered company will typically get its first earnings tax return about 18 months following the date of incorporation or the start of operations.

The annual bulk filing of profit tax reports occurs on the first working day of April.

IRD does not need the yearly Profit Tax filing in situations where the trade, profession, or company being carried out does not generate assessable earnings or has not started.

If you receive a Profits Tax return—which you can receive from time to time while your future tax situation is being examined—you still have an obligation to file the returned profit tax form.