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Tax advisory services / Businesses tax filing 2022

Mexus understands Hong Kong’s taxation/tax declaration rules and provides the most comprehensive tax declaration consulting and tax declaration services for enterprises in the tax declaration process with professional knowledge and experience related to tax declaration. and improve corporate profitability.

In 2022, the Inland Revenue Department will, as always, issue tax returns/returns to individuals, sole proprietors, partnerships, owners, and limited companies.

These individuals and companies should complete the tax return within 1 to 3 months from the date of issuance of the tax return, as well as submit the required documents to the Inland Revenue Department for tax filing and assessment.

Mexus tax services include:

Whether it is individual tax returns, self-employed tax returns, business operator tax returns (sole proprietorship/partnership), owner tax returns, limited company tax returns, unlimited company tax returns, etc., Mexus tax preparation service company can provide customers with the most professional tax return advice to arrange the most High-quality accounting and tax preparation services.

Tax services include:

• Hong Kong reporting tax services (Tax Planning and Tax Advices.);
• Corporate Profits Tax Return Consulting Services;
• Company Profits Tax Return for Limited and Unlimited Companies;
• Acting as Tax Representative;
• Tax planning and Advice for Individual Tax;
• Applying for extension of tax return, instalment payment, tax refund (Applying for Hold-over of Provisional Tax, Tax Payment by Instalment or Tax Refund);
• Lodging objection against improper Tax Estimation;
• Resolving tax disputes, etc. (Handling Tax Litigation).

Introduction to Hong Kong Tax System

If you are full of question marks about tax returns every tax season, whether you are an employer or an employee, you may be confused by tax returns when paying taxes, and it is very important to understand the tax system in Hong Kong.

Hong Kong’s tax system enjoys a good reputation internationally. Hong Kong adopts a classified tax system. The main taxes are the following three:

• Salaries Tax;
• Profits Tax;
• Property Tax.
Some taxes that are often heard in foreign countries are not levied in Hong Kong, such as inheritance tax, value-added tax, business tax, sales tax, capital gains tax, etc.
Tax returns and numbers

Tax Return (English: Income Tax Return).

For the convenience of taxpayers, the common tax return numbers are consolidated into the following items:

• Limited company tax return (BIR51);
• Partnership tax return (BIR52);
• Individual and Sole Proprietorship Tax Return (BIR60);
• Employer’s Return (BIR56A; IR56B; IR56E; IR56F).

The Inland Revenue Department will issue (BIR60) forms to individuals, which are commonly known as “green bombs” by taxpayers, for taxpayers to fill in and sign.

During the year of assessment, taxpayers are required to declare their salaries income, rental income from discretionary properties and profits from sole proprietorships for assessment by the Assessor.

Tax filing 2022 schedule / tax month

With reference to the 2021 tax returns, individual tax returns for the year of assessment 2021/22 should be sent out in May, usually from the first working day of May.

If there is no accident, the tax filing month and tax filing date in 2022 will be as follows:

• From May 2022, tax returns will be sent by the Inland Revenue Department;
• In June and July, taxpayers will return their completed tax returns to the tax office on time;
• In October, the Inland Revenue Department will issue tax notices to taxpayers;
• In January 2023, taxpayers will pay their first tax;
• In April 2023, taxpayers will pay their second instalment of tax.

In addition, the so-called “year of assessment” actually refers to the 12-month period from April 1 each year to March 31 next year, all actual income has the opportunity to be levied salaries tax. If a taxpayer starts work on a certain day in the year of assessment, he should file a salaries tax return on his income between that day and 31 March next year.

Didn’t receive your tax return?

According to the above tax filing timetable and filing date, if the taxpayer needs to file a tax return in previous years and still has not received a tax return after May, you are responsible for contacting the Inland Revenue Department within 4 months after the end of the tax year for enquiry, and you must make an enquiry. The following information is highlighted to facilitate follow-up: name, Hong Kong identity card number, correspondence address, daytime contact telephone number, etc.

Personal Tax / Salaries Tax Instructions

According to the Inland Revenue Ordinance of Hong Kong, salaries tax must be paid in the year of assessment based on actual income for holding positions in Hong Kong, income generated from Hong Kong, or even receiving pensions.

Personal tax return deadline?

When the tax return is received, the taxpayer must complete the tax return and return it to the Inland Revenue Department within 1 month of the date of issuance of the tax return; if the taxpayer files tax returns electronically, the tax return deadline will be 2 days from the date of issuance of the tax return Within a month (you can automatically enjoy a one-month grace period for submission of forms).

Personal first tax return?

For those who file tax returns for the first time, since the Inland Revenue Department will set up a file for you in advance, so that they can handle tax return matters. There is no fixed date for issuing their tax returns.

The employer should submit the form (IR56E) to the Inland Revenue Department within 3 months of the new employee’s entry into the job, the notification of salaries tax payable for the employee, and the Inland Revenue Department will create a file for the taxpayer when the above documents are received by the Inland Revenue Department and send the tax return to the taxpayer within 5 months for the first tax return.

If taxpayers have doubts about the initial tax return, they can not only inquire about the Mexus tax preparation service company, but also refer to the “Individual Tax Return Guide” of the Inland Revenue Department for assistance in filling out the tax return.

Salaries Tax Calculation Method

For the year of assessment 2021/22, the amount of salaries tax will be calculated by the following two methods: “Progressive rate” and “Standard rate”, whichever is lower:

1.) Progressive tax rate calculation method: “Actual taxable income” X “Progressive tax rate”

2.) Standard tax rate calculation method: “Net Income” X “Standard Tax Rate”
in,
• “Net Chargeable Income” = Total Income – Deductions – Allowances
• “Net Income” = Total Income – Deductions
The “Standard Rate” for Hong Kong Salaries Tax filing is 15%, while the “Progressive Rate” varies depending on the “Actual Taxable Income” as follows:
• $0 – $40,000 HKD: 2%
• $40,001 – $80,000 HKD: 7%
• $80,001 – $120,000 HKD: 12%
• Above $120,001 HKD: 17%

Allowances and Deductions (Year of Assessment 2021/22)

When filling out the tax return, in addition to filling in the amount of income, various allowances and deductions are also calculated, which are applicable to persons filing tax returns under salaries tax or personal assessment.

Listed below are common exemptions that taxpayers can claim on their tax returns as long as they meet the conditions:

• Basic Allowance ($132,000)
• Married Person Allowance ($264,000)
• Child Allowance (per child)
(Children 1 to 9 – $120,000)
(The child allowance may be increased by an additional amount – $120,000 for each year of assessment in which the child is born)
• Dependent sibling allowance ($37,500)
• Dependent Parent and Dependent Grandparent or Grandparent Allowance (each)
(if age 55 or older but under 60 – $25,000)
(if age 60 or over – $50,000)
(Under the age of 60 but eligible to claim allowance under the Government Disability Allowance Scheme – $50,000)

• Single Parent Allowance ($132,000)
• Disabled Dependent Allowance ($75,000), Disabled Person Allowance ($75,000)
Listed below are common deductions that taxpayers can claim on their tax returns if they meet the conditions:

• Personal education expenses (tax deduction capped at $10,000)
• Approved charitable donations (tax deduction capped at 35% of assessable income)
• Contributions to Mandatory Provident Fund (MPF) or Recognized Occupational Retirement Scheme (ORSO) (tax deduction capped at $18,000)
• Voluntary Health Insurance Scheme (VHIS) (tax deduction cap of $8,000)
• Qualifying Annuities, Tax-deductible MPF Voluntary Contributions (TVC) (tax deduction capped at $60,000)
• Home loan interest (tax deduction capped at $10,000)

Basically, all allowances and tax deductions must be declared by themselves. Many people mistakenly believe that the mandatory contributions to the Mandatory Provident Fund (MPF) are reported by employers, but this is not the case, and if employees do not declare the deductions, they may deem a waiver of tax deduction rights.

tax return calculator

To assist taxpayers in simplifying the tax filing process, the “Tax Return Computer (2021/22)” produced by the Inland Revenue Department can calculate the salaries tax or personal assessment tax payable. If you enter information such as marital status, total income, etc., and press the “Calculate” button at the bottom, you can list the estimated tax payable by the taxpayer.

The calculation of the “tax return computer” may vary according to each tax year, and it is for reference only. Its accuracy depends on whether the taxpayer’s information is entered correctly. For individual tax situations, it is still recommended to consult a professional tax preparation service company.

How to File Your Tax: Online vs. Physical Forms

Tax filing methods can be divided into physical methods (filling in tax returns) and online methods (ETax platform).

To fill in the tax return in physical form, it must be completed and submitted to the tax bureau within 1 month of the date of issuance of the tax return. Therefore, when sending the tax return by mail, be sure to pay attention to whether the stamps are sufficient, so as not to return it and re-send it and cause trouble.

To file tax returns online, you can file tax returns online through the “eTAX” platform, a tax management system established by the Hong Kong government, which is convenient for environmental protection. Generally, it only takes 2 working days to open a personal account on the “eTAX” platform of the Inland Revenue Department. After opening the account, you can enjoy a variety of tax services, including checking outstanding tax payments, submitting tax returns and tax assessments.

In addition, to encourage citizens to use online tax filing, taxpayers who use the service will automatically enjoy a one-month grace period for filing returns, allowing them to file tax returns within 2 months of the date of issuance of the tax return.

Online tax filing / eTAX account setup tutorial

• Visit the eTAX website first;
• Click “Apply for Access Code”, and you will receive the activation code within 2 working days by post;
• Go to the eTAX website and select the link “Open an eTAX Account”;
• Input “Tax ID” and “eTAX Activation Password” (Tax ID can be found on “Tax Return” or “Notice of Assessment”);
• Customize your personal “Tax ID” and “Password”;
• Set up a “password reminder”;
• Provide information such as email address and telephone number;
• Choose to receive notices and documents electronically to activate.
Corporate Tax Return / Profits Tax Instructions

According to the “Inland Revenue Ordinance”, any business activities in Hong Kong include trades, professions, or businesses, whether the object is a corporation, partnership, trustee, or body, if it is a profit generated or derived in Hong Kong (after deduction of expenses) net income), are required to report to the government and pay profits tax.

In addition, if someone plans to “sell a building or property” as a profit-making plan, this will also be considered a business operation and the profits will also be taxed. Self-employed persons who work for themselves are also liable to pay profits tax.
As for the Profits Tax Return, from the first working day of April each year, the Inland Revenue Department will issue separate tax returns for all limited companies in Hong Kong, or an audit may be required.

The sole proprietorship of an unlimited company (only business registration, BR) can file tax returns in the personal tax return.

Business tax filing deadline?

When an enterprise receives a tax return issued by the Inland Revenue Department, it must complete and return it to the Inland Revenue Department within 1 month from the date of issuance of the tax return. This period is also stated on page 1 of the tax return.

Corporate tax filing for the first time?

For companies that file tax returns for the first time, the Inland Revenue Department will issue the first Profits Tax Return (BIR51) within 18 months after the company is established. If the business does not receive the tax return, it is the proprietor’s responsibility to notify the tax office to issue the tax return.

Compared with the tax returns of the following year or later, the first tax return of the proprietor is submitted within 3 months. It is worth noting that the tax filing period of the first tax return is 2 months longer than that of the non-first tax return, so it is not possible to apply for a tax return extension.

For the first tax return, its file number will be displayed in the following form:
“23/” + the first 8 digits of the company’s business registration number
(eg: 23/51130044)

In the first tax return, a company can indicate the date of incorporation (within the tax year), but does not have to state the financial position of the 18-month period.

Profits Tax Calculation Method

In Hong Kong’s “two-tier tax rate”, for the year of assessment 2021/22, the calculation method of profits tax is as follows:

All corporate business:

• Profits tax assessable profit is 8.25% for the first HK$2 million of profits;
• For the portion of the profit exceeding HK$2 million, the assessable profits tax rate is 16.5%.
Non-incorporated persons:
• Profits tax assessable profits at the rate of 7.5% for the first HK$2 million of profits
• For profits exceeding HK$2 million, the assessable profits tax rate is 15%.

Like salaries tax, businesses can reduce the tax they pay through various tax deductions and exemptions.

Corporate tax return

Does a “dormant” business need to file tax returns?

According to the definition of the Inland Revenue Department, if a Hong Kong limited company has no “significant accounting transactions” in the year of assessment, that is, there is no transaction in the accounting records (annual fees from the Companies Registry and the payment of share issuance are not included), that is Consider it a “dormant” company.

Although the company is “dormant” and has no operations, it still needs to fill out a Profits Tax Return to fulfill its due tax obligations. It is only when filing tax returns that it can apply for an exemption from the auditing process, without the need to submit audited financial statements and Tax calculation sheet.

Does a business “not in business” need to file a tax return?

The proprietor may pre-establish a limited company but not actually start the business. Likewise, companies are still required to complete a tax return and provide the Inland Revenue Department with a business statement that the business has not commenced operations, declare that there was no business profit for the year, and are not required to submit an audit report.

Does a business “loss” need to be taxed?

Once the business/business owner made a loss in the last tax year, the business does not necessarily receive a Profits Tax Return. However, tax returns may be issued at any time.

If the company has “assessable profits” for the year, even if it has not received a profits tax return, the company is still responsible for notifying the Inland Revenue Department to issue the relevant tax return.

In addition, for the tax year in which the loss occurs, the proprietor may consider carrying forward the current year’s loss to the next year to offset the profits of the business in subsequent years. The same applies to corporations operating in multiple industries. For details, please contact the professional Tax filing company inquiries.

Income exceeding $2,000,000 must be filed with other information

Regardless of whether the company is a sole proprietorship or a partnership, if the company’s income exceeds 2 million in the financial year, the company must submit the tax return, income statement and balance sheet to the Inland Revenue Department when filing tax returns.

The above information is for reference only. If you have any questions or information about tax returns (personal tax returns, corporate tax returns, accountant tax returns), we welcome you to contact our professional consultants and provide you with free quotes and consulting services later.

Tax filing FAQ

Tax services include

Whether it is individual tax returns, self-employed tax returns, business operator tax returns (sole proprietorship/partnership), owner tax returns, limited company tax returns, unlimited company tax returns, etc., Mexus tax preparation service company can provide customers with the most professional tax return advice to arrange the most High-quality accounting and tax preparation services.

corporate tax return

From the first working day of April every year, the Inland Revenue Department will issue profits tax returns to all companies in Hong Kong.

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