Annual Hong Kong Profits Tax Return Filing


Introduction to Hong Kong Profits Tax

Hong Kong profits tax is a tax levied on the profits derived from any trade, profession, or business carried on in Hong Kong. It is a tax based on the "territorial source principle," meaning that tax is charged on income derived from Hong Kong.

However, not every Hong Kong company is a Hong Kong tax resident. The definition of tax resident in Hong Kong is as follows:-

Hong Kong Profits Tax rate

The profits tax rates in Hong Kong are relatively low across the globe. Hong Kong adopts 2-tier tax rate (two-tiered profits tax rate). For unincorporated businesses, profits tax rate is 7.5% on assessable profits up to HK$2,000,000, and 15% on any part of assessable profits over HK$2,000,000. For corporations, profits tax rate is 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000.

There is no VAT in Hong Kong. The VAT rate in Hong Kong is 0%. Profits Tax is similar to Corporate Income Tax in other tax jurisdictions. 

2-tier tax rate (two-tiered profits tax rate) table
 

The dividend withholding tax rate in Hong Kong is 0%. Dividend tax in Hong Kong has been 0% in the past, subject to the enactment of FSIE regime effective from 1 January 2023. Please refer to our article about FSIE Regime latest update for details. 

Hong Kong Profits Tax exemption

Taxpayers may apply for Hong Kong Profits Tax exemption in a number of ways:-

•    Hong Kong Profits Tax offshore claim; 
•    Hong Kong capital gain claim
•    Foreign Source Income Exemption (FSIE) Regime. 

Profits Tax Return filing deadline for the year of assessment 2023/24
 

Profits Tax exchange rate

It is common for Hong Kong company to prepare audited financial statements in foreign currencies. The IRD has fixed the Hong Kong Profits Tax return exchange rate for major currencies. Below is the link of the IRD for Hong Kong Tax exchange rate:-

https://www.ird.gov.hk/eng/tax/bus_aer.htm 

Hong Kong Profits Tax Return sample

The Hong Kong Profits Tax return sample can be found here:-

BIR 51: https://www.ird.gov.hk/eng/pdf/ebir51.pdf 
BIR 52: https://www.ird.gov.hk/eng/pdf/ebir52.pdf 
BIR 54: https://www.ird.gov.hk/chi/pdf/bir54.pdf 

Consequences of late filing of Profits Tax Return

Inland Revenue Department (IRD) is the tax bureau in Hong Kong. Failure to file a Profits Tax Return to the IRD by the specified deadline without reasonable excuse will potentially result into severe consequences, such as compound offer, additional tax and prosecution.

How our services can help

As a tax representative, we provide comprehensive assistance in filing Profits Tax Returns in Hong Kong. Our services include:-
We can assist you on the following services:

✓  Reviewing and preparing Profits Tax Returns and tax computations

✓  Providing tax planning advices to minimize tax burden

✓  Handling any inquiries from the IRD

✓  Representing clients in any tax disputes