Hong Kong: Domestic Corporate Taxation

Filing Requirements and Payments of Tax

The tax year starts on 1 April. The assessment of profit tax is provisional and is based on the previous year's assessable profits; 75% of the assessed amount is due by the 3rd quarter and the final 25% being due at the year-end. Tax payments delayed less than 6 months are subject to a 5% non-deductible surcharge; for more than 6 months, the surcharge rate increases to 10%. A tax credit is granted where the previous year's assessment exceeds the currents year's assessable profits.

Corporations and partnerships are able to file their tax returns electronically using the e-TAX system. However, businesses must satisfy a number of conditions in order to use this internet filing service. These conditions include: a corporation’s gross income should not exceed HK$2m; it should not be claiming a foreign tax credit; it should not have obtained an advance ruling on any of its tax matter in relation to that year of assessment; and it should not have paid or accrued to a non-resident person any sum for the use of intellectual property.

A partnership must satisfy all of the conditions applicable to a corporation. In addition, it cannot have more than six partners during the basis period for that year of assessment (including those partners who have retired); and all of its partners should be individuals.

In April 2012, the government reminded individual taxpayers to file their 2011/2012 tax returns by 2 June, while sole proprietors of unincorporated businesses had until 2 August. An automatic one-month extension was granted to e-filers.

In a bid to make paying tax easier, the Hong Kong government launched a scheme on 1 August 2012, whereby cash payment of salaries tax, profits tax, property tax, tax under personal assessment, business registration fees and e-stamping payments will be accepted at more than 1,000 convenience stores across the city. The maximum limit for each transaction is HK$5,000, and part payment is not accepted for business registration fees.