As a business owner, you may be in the middle of starting a new business venture in Hong Kong, or you may already have a business entity established in Hong Kong.
One of the benefits that attracts most entrepreneurs to Hong Kong is its simplified tax regulation and reduced tax regime. In this article, we will explore the different types of income tax return forms and the filing processes.
By the way, we truly understand that all of this paperwork can be confusing and painful to complete. You don't have to figure it out alone. Our experienced accountants can guide you.
Let's move on to:
What is an income tax return? How many forms are there? What are the income tax filing requirements? When and where should you send the form? What happens if you can't file it on time? compliance?
What is an income tax return?
Income tax filing refers to income tax that is applied to all profits that a company has made in Hong Kong. It also applies to all Hong Kong people, professions or companies, except for profits from the sale of capital assets.
The important thing to remember is that every April, the Internal Revenue Department (IRD) will issue an income tax declaration form to companies doing business in Hong Kong.
A note on supplemental forms
There are 10 supplemental forms that you can complete during your profit tax return. The purpose of the supplementary forms is to report information on preferential regimes and tax incentives.
These supplemental forms must be submitted along with your income tax return forms. Although submitting supplemental forms is not mandatory, you will still need to prepare those documents in case the authorities request them. You can refer to these forms for reference. Our accountants can advise you on what forms you may need to complete, as the forms you will need to submit will vary depending on your business.
What are the requirements for Profits Tax Return?
Now you may be wondering: does my business have to pay income tax? And what happens if my company has gone from being a corporation to a sole proprietorship in one year?
Here are some of the requirements you may want to pay attention to:
-Newly registered companies will file income tax returns 18 months after the start or incorporation date.
-For corporations, you will need to submit an income tax return form (BIR51) and audited financial statements.
-For small corporations and inactive businesses, you only need to submit Form BIR51 and other required supplemental forms. You do not need to present audited financial statements. For small corporations, the data filled in Form BIR51 should be based on audited financial statements and should be kept in case the authorities request it.
If your business changes from a partnership to a sole proprietorship within a year, it is advisable that you report your profits and losses for the entire year on Form BIR52.
What if you can't send on time?
Yes, we great post understand that one month is not long enough for you to complete your income tax return form. But don't worry, you can request an extension. At the beginning of the year, the IRD will issue a Circular Letter to advise the representatives on the Block Expansion Plan. Contains applications for block extension and detail change notifications. So look for the letter!
Is there a penalty or fine for non-compliance?
Yes. There is a penalty and a fine if you do not comply with the notice requirements or if you do not keep adequate records. The maximum fine is HK $ 50,000 with an additional fine of three times the amount undercharged. Imprisonment can be up to 3 years.
With such high fines and penalties, it is scary to be in this situation. If you are looking for an accounting service, look no further. Our experienced team can help you fill out your income tax return form, so you don't have to worry about making mistakes. Come talk to us today!