How to file tax returns in Hong Kong_How to pay taxes in Hong Kong

The Hong Kong tax declaration process covers tax classification, filing time, required materials, frequently asked questions and professional advice to help you complete your tax declaration efficiently and compliantly.

Hong Kong tax classification and scope of application

Hong Kong implements a simple tax system, and the main tax types include profitsProfit tax, salary tax and property tax. Profits tax is levied on corporate profits, with a standard tax rate of 16.5%; salary tax is calculated progressively based on personal income, with a maximum of no more than 15%; property tax is levied on rental income from rental properties, with a tax rate of 15%. Different tax types apply to different taxpayers, and you need to judge the reporting obligations according to your own circumstances.

ValueIt should be noted that Hong Kong adopts the principle of territorial source taxation and only taxes income derived from Hong Kong. If the corporate profits come entirely from overseas, you can usually apply for tax exemption. If the annual income of individual taxpayers does not reach the tax exemption amount (HKD 132,000 in 2023/24), they do not need to pay salaries tax.

Tax declaration time point

The Hong Kong Inland Revenue Department usually issues tax returns in April each year, and taxpayers need to submit them within 1 month from the date of issuance. The submission deadline for profits tax returns (BIR51 form) is usually 3 months after the tax form is issued, and newly established companies may be extended to 3 months after the end of the accounting period. Late filing will face penalties of up to 10,000Hong Kong dollars and a surcharge of three times the tax owed.

For companies that choose different year-end dates, the filing deadlines will be different. Common year-end dates are March 31 (consistent with the tax year) and December 31. Companies can choose flexibly according to the business cycle. If individual taxpayers have not received a tax form but meet the tax conditions, they should take the initiative to file a tax return in the tax year.Notify the tax bureau in writing within 4 months after the end.

Preparation of materials required for declaration

Enterprises reporting profits tax must prepare audited financial statements, trial balances, fixed asset lists and tax calculation sheets. The audit report must be issued by a Hong Kong licensed accountant, including asset liabilities.Debt sheet, profit and loss statement and cash flow statement. Cross-border operating enterprises also need to provide transfer pricing documents to prove that related-party transactions comply with the principle of arm's length.

Individuals reporting salary tax must submit form IR56B, attach a salary summary (IR56E form) issued by the employer, MPF contribution records and certificates of tax-deductible items. Common tax deduction items includeCharitable donations, personal training expenses and voluntary health insurance premiums have upper limits for each item, and the original vouchers must be retained for future reference.

Electronic declaration operation guide

The Hong Kong Inland Revenue Department vigorously promotes the "Easy Tax" electronic service platform to submitTaxpayers can submit tax returns online, pay taxes and check the processing progress. To register for an "E-tax" account, you need to provide your tax number, ID number and bank account information. Electronic declarations can not only automatically calculate taxes, but also get a 1-month extension of submission.

Electronic declaration processIt includes steps such as logging in to the system, selecting tax form type, filling in income data, declaring deductions, and checking calculation results. The system supports a temporary storage function, and the declaration can be completed in batches. After successful submission, a confirmation receipt will be received, and taxpayers should print and archive it. It is worth noting that in some complex cases, paper supplementary materials still need to be submitted.

Frequently Asked Questions and AnswersSolution

Many taxpayers are confused by the provisional tax system, which requires prepayment of this year's tax based on the previous year's tax. If the income this year decreases, you can apply for deferral of provisional tax, and you need to submit the IR1121 form and income certificate. When the estimated profit decline exceeds 10%, partial relief can be obtained.