Hong Kong Taxation
Hong Kong has a simple taxation system. In addition, low tax rate, generous tax allowances, no capital gain tax, no VAT, no sales tax, no withholding tax on dividend and interest make Hong Kong one of the most attractive tax regimes in the region.
Hong Kong adopts the territoriality basis of taxation, whereby only income or profit sourced in Hong Kong is subject to tax and that derived from a source outside Hong Kong by a local resident is in most cases not taxed in Hong Kong.
?The principal direct taxes of Hong Kong are profits tax, salaries tax and property tax. Profit tax is charged from profits from a trade or business, salaries tax is charged from income from an office, an employment or a pension, and property tax is charged from income from real estate.
The Inland Revenue Department (IRD) is responsible for taxation matters in Hong Kong. IRD makes tax assessment based on income or profit accrued in the tax year or year of assessment which runs from 1 April of a year to 31 March of the following year.
Profits Tax Return
Profits Tax Return will be issued by the Inland Revenue Department to active partnership businesses and corporation at the beginning of April each year. The deadline for filing Profits Tax Return will be different for companies with different year end dates. The standard deadline and extended due dates are set out below:
IF YEAR DATES FALL WITHIN
Apr – 30 Nov (N Code)
1 – 31 Dec (D Code)
1 Jan – 31 Mar (M Code)
STANDARD DEADLINE
2 May of next year
15 Aug of next year
15 Nov of same year
EXTENDED DUE DATE
No extension
No extension
31 Jan of next year for companies suffering a statutory loss*
*) Applications must be lodged on or before 31 Oct.
Income Tax Return
Tax Return – Individuals will be issued by the Inland Revenue Department to individuals at the beginning of May each year. The deadline for filing the Tax Return will be different depending on whether the individuals have sole proprietorship business or not. Details of deadlines are stated as follows:
SOLE PROPRIETORSHIP
With sole proprietorship
With sole proprietorship
STANDARD DEADLINE
31 July
1 month from issue date
EXTENDED DUE DATE
2 October
30 June
Property Tax Return
Property Tax Return will be issued by the Inland Revenue Department to landlords at the beginning of April each year. The deadline for filing the Property Tax Return will be one month from the date of issue.
Penalty
If tax returns are not lodged by the above-said due dates or extended due dates, the Inland Revenue Department will issue estimated assessments and also undergo penalty proceedings under Section 80(2) or 82A where the taxpayer will be subject to a fine of maximum HK$25,000 and an additional tax not exceeding treble of the tax concerned.
Get in touch for preliminary assessment and quotation.