Dormant Company Profits Tax Returns Hong Kong
In Hong Kong, dormant companies are generally exempt from filing audited financial statements with their Profits Tax Returns. This is a benefit of maintaining a company in dormant status.
However, even though they are exempt from submitting audited financials, dormant companies are still required to file Profits Tax Returns annually with the Inland Revenue Department (IRD).
Here's a breakdown of the requirements:
Dormant Company Filing:
File Profits Tax Returns
Exempt from submitting audited financial statements
Non-Dormant Company Filing:
File Profits Tax Returns
Include audited financial statements
There's one other thing to consider:
Profits During Dormancy (Fūk-wāt Profits): If a dormant company has any profits during the period it was inactive (fūk-wāt profits), then those profits may be taxable and need to be declared in the Profits Tax Return.
Profits Tax Returns
All companies in Hong Kong, including dormant ones, are required to file Profits Tax Returns with the Inland Revenue Department (IRD) https://www.ird.gov.hk/eng/tax/bus_cpt.htm. However, there's a difference in the filing requirements between dormant and non-dormant companies:
Dormant Company:
Must file Profits Tax Returns annually.
Exempt from submitting audited financial statements - This is a benefit of maintaining a dormant company status.
Non-Dormant Company:
Must file Profits Tax Returns annually.
Needs to include audited financial statements along with the return.
Additional Considerations:
Profits During Dormancy (Fūk-wāt Profits): If a dormant company generates any profits during its inactive period, these profits (fūk-wāt profits) are taxable and must be declared in the Profits Tax Return.
Filing Methods:
You can file the Profits Tax Return electronically through the IRD's eTAX system. This is the preferred method and grants a one-month extension on the filing deadline.
Paper filing is also an option, but the deadline is stricter.
In summary:
Dormant companies need to file Profits Tax Returns but are exempt from submitting audited financials.
However, they might still have tax liabilities if they generate profits during their dormant period.
Resources:
How Bestar HK can Help
Bestar HK can assist dormant companies with Profits Tax Returns in Hong Kong by:
Ensuring timely and accurate filing of Profits Tax Returns, meeting IRD deadlines. Even though dormant companies have a simpler filing process compared to active companies, there are still deadlines to adhere to. Bestar HK can ensure your return is submitted on time to avoid any penalties.
Applying our knowledge of Hong Kong tax regulations to ensure the return is completed correctly, potentially minimizing any tax liabilities. We can identify any deductions or exemptions that may apply to your dormant company, potentially reducing your tax bill.
Even for dormant companies, there may be some record-keeping requirements. Bestar HK can help with this if needed. Dormant companies may still have some residual expenses or minimal transactions, and Bestar HK can ensure these are properly recorded to facilitate filing.
In case of any inquiries from the IRD, Bestar HK can represent the company professionally. The IRD may have questions about your return, and Bestar HK can communicate with them on your behalf.
Overall, Bestar HK can streamline the Profits Tax Return process for your dormant company in Hong Kong, ensuring it is completed accurately and on time, while potentially minimizing your tax liabilities.