Profits Tax and Employer’s Returns in Hong Kong: A Simple Guide to Filing
Receiving your first Profits Tax and Employer’s Returns in Hong Kong from the Inland Revenue Department (IRD) may not feel exciting, but filing them doesn’t have to be daunting. This guide will break down the process, clarify common misconceptions about the Profits and Employer’s Tax Returns, and help you avoid unnecessary penalties.
Profits Tax Return vs. Employer’s Return: Key Differences
- Profits Tax Return (PTR): Filed to report the financial situation of your Hong Kong company during the financial year.
- Employer’s Return (ER): Filed to report all payments (salary, Director fee, commission, etc.) made to directors or employees during the period from April of the previous year to March of the current year.
Important Note: Even if your company has no business activity or employees, you must still file both returns to stay compliant.
Key Filing Deadlines for the Profits Tax and Employer’s Returns in Hong Kong
Profits Tax Return:
- First PTR: Issued around 18 months after incorporation and must be submitted within 3 months from the date of issue.
- Subsequent PTRs: Issued annually (mostly in early April) and due within 1 month unless you’ve requested an extension based on your financial year-end.
Employer’s Return:
- Issued annually (mostly in early April) and due within 1 month from the issue date.
- An individual return must be completed for every employee. If you have none, then you will have to file it as “Nil.”
Who Handles the Filing?
Profits Tax Return:
A Certified Public Accountant (CPA) must prepare audited accounts to be submitted with your PTR. Your CPA will manage the filing, whether by paper or online.
Employer’s Return:
You can prepare and file the ER yourself or hire a service provider for assistance. For online filing, you’ll need an eTAX account to digitally sign the return.
Paper vs. Online Filing
- For PTR, the IRD requires you to present them with the original paper return they sent to you. Although online filing is technically possible, it’s uncommon, and most CPAs stick to paper submissions.
- For ER, both paper and online options are available. If filing online, ensure you have access to an eTAX account, which can be set up independently or with a service provider’s help.
Avoid Late Filing Penalties
Filing returns late results in penalties. The IRD provides ample notice, so take advantage of reminders to avoid additional costs.
If you’ve already been penalized but have valid reasons for the delay, you may apply to the IRD for a penalty waiver.
Key Takeaways for a Stress-Free Filing
- Stay Informed: Read all communication from your service provider carefully.
- Act Promptly: File your returns as soon as they’re issued to avoid penalties.
- Choose the Right Partner: A reliable service provider simplifies the process and keeps you on track.
Need assistance with filing your Profits Tax Return or Employer’s Return? iNCUBEE is here to help!
