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How to Fill in Hong Kong Tax Return?

how to fill in hong kong tax return

Hong Kong is one of the biggest and most important business hubs in the world; every day, thousands of people come in and out of the region to conduct business activities, making Hong Kong a powerful force in world trade and one of Asia’s main commercial ports.

The tax system is one of the main strengths of Hong Kong, and because of this, a business or entrepreneur looking for an opportunity to start a venture in Hong Kong must study the tax structure, and they must also know how to fill in Hong Kong Tax return. 

The Hong Kong Tax system and the procedure are known as one of the most straightforward in the world.

Read on to find out more about what a Hong Kong Tax return entails, the types of tax returns that should be filed, filing deadlines and extensions, and how Premia TNC can assist you in filing in your company tax return.

How to Fill in Hong Kong Tax Return: What Is A Hong Kong Tax Return?

As part of the process of how to fill in Hong Kong tax return, the Hong Kong government utilizes a simple and business-friendly tax system in order to maximize trade processes in and out of the region.

Due to this aspect, Hong Kong has the third highest number of billionaires of any city in the world. The Government of Hong Kong doesn’t enforce taxes on dividends, sales taxes, estate taxes, inheritance taxes, or withholding taxes.

In addition to the absence of these taxes, there is also a territorial factor in the taxes charged, i.e., any amount that is made outside Hong Kong is not taxed, which is a very good thing for businesses that have various branches all over the world. 

A Tax Return is an official document prepared by an Individual or an Organization that shows the entire income and revenue generated with their sources together with the amount of taxes that would be paid to the Government.

There are three main parts of a Tax return which are Income, Deductions and Allowances, and Tax Credits. Since taxes contribute a lot to the revenue of the Hong Kong Government, the tax filing period is an important one. 

The Hong Kong Tax Return is the total documentation of all the revenue and taxes that would be paid by all the companies present in Hong Kong. For New Businesses and Companies, their tax return must be filed after the first eighteen months of the company’s incorporation date.

Meanwhile, for existing companies, tax returns are issued by the Inland Revenue Department of Hong Kong from the April 1st every year through the 31st of march the next year.

When a company receives a request by the Inland Revenue Department to file their Tax return, they have to submit the document within a month of receiving the request from the Inland Revenue Department of Hong Kong or risk certain penalties or fines.

For private individuals, the Inland Revenue Department usually sends out tax returns on the first day of May. There are certain things to take note of regarding the filling in a tax return of a company, such as the fact that only income generated in Hong Kong is taxed.

If a company has not been gaining profits over a few years, it can be exempted from tax returns and would not receive a letter from the Inland Revenue Department, and there are also certain deductions that can be made when filing the tax return. 

How to Fill in Hong Kong Tax Return: Types of Tax Returns That Should Be Filed

As part of the process of how to fill in Hong Kong tax return, there are three main types of taxes that are filled in Hong Kong:

Salaries Tax

This is the kind of Tax charged on Income earned in Hong Kong from employment, office, and pension. Salary tax in Hong Kong is taxed at a progressive rate which starts from 2-17% based on your net chargeable income.

Your net chargeable income is your total income earned after subtractions the deductions and allowances allowed by the Inland Revenue Department. Your salary tax is capped at a fixed rate of 15% without allowances.

Profits Tax

These are taxes that are filed with regard to the profits made by a company through one fiscal year. There are two tax rates that are available for profits tax in Hong Kong.

One is for Incorporated companies, and the second is for business that have not been incorporated, such as partnerships and sole proprietorships.

For an incorporated company, the tax rate is first charged at 8.25% until when the company has made more than 2 million HKD in profits; after this, the profit tax rate is 16.5%; meanwhile, for unincorporated businesses, the corresponding tax rates are 7.5% and 15%. 

Property Tax

This is the kind of tax charged on lands, buildings, and estates owned by private individuals and companies in Hong Kong. Most of the time, it is charged at a rate of 15%.

How to Fill in Hong Kong Tax Return?

Filling in a tax return in Hong Kong can be quite straightforward; involved parties can use the IRD tax calculator, which is available online.

The tax rates based on the income have to be put into consideration, some deductions such as personal allowances, single parent allowances, child allowances, personal disability allowance, marriage allowances can also be made.

After this, you would subtract the percentage rate your net chargeable income falls under and pay it as tax.  

How to Fill in Hong Kong Tax Return: When is the Deadline and Extension?

The usual deadline for filing a tax return is usually a month after the party receives that notification from the Inland Revenue Department.

However, for companies who might have a different financial calendar and cannot meet up with their Tax return and apply for an extension that is normally about 7 and a half months from the end of the involved company’s financial year.

How to Fill in Hong Kong Tax Return: How Can We Help?

Tax payment is a sensitive matter in Hong Kong, and if caution is not taken and some mistake is made in the documentation and filing, it can lead to serious repercussions for the company.

If you are having trouble with how to fill in Hong Kong tax return, consider contacting Premia TNC services.

Premia TNC is a leading business consultancy agency and tax accounting firm that can make your tax filing process as fast and as transparent as possible with little or no stress involved. 

How to Fill in Hong Kong Tax Return – Frequently Asked Questions

Is capital gains tax charged in Hong Kong?

No. As part of the process of how to fill in Hong Kong tax return, Hong Kong doesn’t charge Capital Gains Tax.

When does the tax filing period in Hong Kong begin?

As part of the process of how to fill in Hong Kong tax return, the tax filing period in Hong Kong starts at the beginning of April.

Does Hong Kong charge taxes on income made overseas?

No. As part of the process of how to fill in Hong Kong tax return, Hong Kong doesn’t charge taxes on income made overseas.