Updated: Dec 26, 2020
What is the corporate tax rate in Hong Kong? How much tax do you pay in Hong Kong? What tax do companies have to pay? Do I have to pay tax in Hong Kong? When can I file my 2020 tax return? How do I file my taxes in Hong Kong?
Profits Tax Rate
(1) Normal rate (for the year of assessment 2008/09 onwards)
Unincorporated Businesses: 15%
Two-tiered rates (for the year of assessment 2018/19 onwards)
Corporations: 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000
Unincorporated Businesses: 7.5% on assessable profits up to $2,000,000; and 15% on any part of assessable profits over $2,000,000
(2) Concessionary rate
A tax rate at 50% of the normal profits tax rate will be applied to:
trading profits and interest income received or derived from "short / medium term debt instruments" (issued before 1 April 2018);
profits of the offshore business of professional reinsurer, or authorized captive insurer;
qualifying profits of a qualifying corporate treasury centre (for the year of assessment 2016/17 onwards); and
qualifying profits of a qualifying aircraft lessor or a qualifying aircraft leasing manager (for the year of assessment 2017/18 onwards).
All taxpayers are subject to the same corporation or unincorporated business tax rate irrespective of their residential status.
However, any permanent or temporary resident of Hong Kong except a person under the age of 18 (unless both his parents have passed away) may obtain relief from the standard rate of tax on his profits and income by electing to be assessed under Personal Assessment. An election may offer relief where the tax computed under Personal Assessment is less than the aggregate amount of the tax charged separately under Profits Tax, Salaries Tax and Property Tax.
Who Should File
Newly Registered Business
Generally, a newly registered business will receive its first profits tax return some 18 months after the date of commencement of business or the date of incorporation.
Continuing Business - Annual Bulk Issue of Returns
The annual exercise to issue profits tax returns in bulk takes place on the first working day of April each year.
Business Not Required to Submit Return Annually
It is the practice of IRD not to call for the annual submission of profits tax returns in instances where the trade, profession or business carried on does not give rise to assessable profits or where the trade, profession or business has not commenced or has ceased and not recommenced. However, upon receipt of a profits tax return which may be issued from time to time in the course of reviewing your future tax potential, the requirement to lodge the return form must still be complied with
When to File
Normal Filing Time
Generally, profits tax return and any required supplementary forms should be filed within 1 month from the date of issue. The compliance date of submission is specified on page 1 of the profits tax return.
Further Extension for using Electronic Filing
To promote electronic filing, the Department will grant, on application, a further extension of 2 weeks after the normal due date subject to the condition that Small Corporations and Small Partnership Businesses will file the profits tax returns through the Internet.
Block Extension Scheme for Lodgement of 2019/20 Tax Returns
If your tax representative has duly applied for an extension to file your 2019/20 profits tax return under the Block Extension Scheme, the due date is normally extended as follows:
For N Code Returns (Accounting Date between 1 April to 30 November), the Extended Due Date is 30 June 2020, and the Electronic Filing Extended Due Date is 14 July 2020.
For D Code Returns (Accounting Date between 1 to 31 December), the Extended Due Date is 17 August 2020 and the Electronic Filing Extended Due Date is 31 August 2020.
For M Code Returns (Accounting Date between 1 January to 31 March), the Extended Due Date is 16 November 2020, and the Electronic Filing Extended Due Date is 30 November 2020.
For M Code Returns and Current Year Loss Cases, the Extended Due Date is 1 February 2021, and the Electronic Filing Extended Due Date is 1 February 2021.
If you would like to know more, please contact Bestar.