前稅局評稅主任楊輝洪 Qualifications

Raymond Yeung Tax Consultant former Assessor of Inland Revenue Department * Service charge $500/hr

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yeungfhr@yahoo.com.hk * Tel /WhatsApp /WeChat 94735846  

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Demand Note for Profits Tax

Profits Tax is levied on the actual assessable profits in the basis period for the year of assessment concerned.

Tax payable = Assessable profits * Tax rate

Tax rate: for corporation is  16.5% (from 2008/09 onward); for person other than corporation 15%.

 

Where a sole-proprietor or a partner elects to be personally assessed, the relevant profits will be transferred to Personal Assessment --- if Personal Assessment can reduce his total tax payable, the tax payable will be demanded under Personal Assessment instead of Profits Tax --- in that case no provisional tax will be demanded.

Because the actual assessable profits will not normally be known until a final assessment is made --- that will not usually be issued until after the year of assessment (the exceptional case is the taxpayer ceases his business or is going to leave Hong Kong). In order to demand tax promptly, Section 63G of Inland Revenue Ordinance empowers the Revenue to demand provisional profits tax for the estimated provisional profits earned for the period up to the date of tax payment.

Normally, for an ongoing business: Provisional profits tax = Assessable profits for the preceding year of assessment * Tax rate.

In special circumstances such as business commencement, the Revenue may estimate the amount of provisional profits --- the estimation is usually based on a projection of accounting profits for 12 months.

The provisional tax is normally demanded in the notice of assessment containing the final assessment of preceding year of assessment. 

The provisional tax demanded will set-off the final profits tax payable in the final assessment for the same year and, any excess to set-off the provisional profits tax for the following year of assessment. 

Press here for hold-over of provisional profits tax

When to pay tax?

 

The due date for payment of profits tax depends on a number of factors including: (a) whether it is a current year of assessment (b) when the taxpayer files the tax return, (c) when the tax return is processed by the IRD officer, (d) the date of issue of the assessment, (e) whether it is an urgent case, e.g. the taxpayer has been broke, (f) whether provisional tax is demanded and (g) which category of accounting date ('N', 'D' or 'M') does the case belong to. Press here for details of category of accounting date. Only one due date is set for back-years assessment. For current-year assessment, two due dates are normally set for 'D” and 'M' cases where provisional tax is demanded. The general practice is as follows:

 

'D' code - Two due dates are set in December to May if the assessment is issued before early November and thereafter one due date.

 

'M' Code -Two due dates are set in December to May if the assessment is issued before early February and thereafter one due date.

 

'N' Code - One due date in November.

 

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