Profits Tax Return

Hong Kong follows a territorial tax system, which means only the income earned within Hong Kong is subject to taxes. According to the Inland Revenue Ordinance (IRO), the three major taxes in Hong Kong are salaries tax, profits tax, and property tax. In this article, we will be discussing the details of the profits tax return in Hong Kong. The Profits Tax Return (PTR) is an official tax form that needs to be filed by all companies operating in Hong Kong. Companies file the PTR annually to report their profits (or losses) to the Inland Revenue Department (IRD). A PTR is used to evaluate the profits tax for the Hong Kong company.

The Profits Tax Return (PTR) represents a fundamental requirement for conducting tax filing and adhering to regulations within Hong Kong. Timely, precise submission of the PTR serves as evidence of commitment to legal compliance for the company. The company remains protected from fines and late penalties through the filing process. A proper PTR filing enables effective business financial management and proper operational functioning within Hong Kong. Non-filing the PTR on time may lead to legal consequences and damage the reputation of the company. If you own a business in Hong Kong or are planning to set up one, then this article is for you. We will be learning in detail the deadlines, exemptions, and filing requirements for companies in Hong Kong.

Initial and Subsequent PTR Issuance

The IRD would issue the very first Profits Tax Return (PTR) of the company approximately after 18 months of incorporation. The subsequent Profits Tax Returns (PTR) would be issued every 12 months after that. The company is obligated to file and submit the Profits Tax Return to the IRD in time. Filing the PTR can provide you with a 1-month extension on the deadline. Not filing the PTR accurately or on time may result in severe consequences and negative impacts on the company’s image.

Timing and Submission Deadlines

Hong Kong businesses must submit their Profits Tax Return during which specific period? Here is the answer. The fiscal year in Hong Kong begins in April and ends on March 31st with exactly the same duration as Hong Kong’s tax year. The PTR adheres to the Hong Kong fiscal year. The Hong Kong authorities distribute the PTR during April or May after the fiscal year finishes on March 31.

Generally, the PTR is due within one month after issuance by the IRD. However, in the case of filing the first PTR, the filing deadline can be extended for up to 3 months. In normal cases, the period to submit the PTR can be extended up to 8.5 months after the financial year end date of the company.

Obligations for Offshore Businesses and Tax Exemption Claims

Offshore companies are obliged to submit their accounts to the authorities of Hong Kong. Even if the company conducts business outside of Hong Kong, it still needs to provide its accounts to be submitted to the Hong Kong Government. The profits earned outside Hong Kong are not subject to profits taxation and can be shown for PTR exemptions.

As the income earned by offshore businesses is earned outside Hong Kong, they can request a profits tax exemption. The profits tax exemption for offshore business in Hong Kong can be claimed by filing a claim along with the PTR. This Hong Kong tax filing is given with a set of audited accounts to the IRD to figure out the amount of tax necessary to pay with respect to the basis period. Audited accounts and accurate filing reduce the chances of the company getting involved in legal battles and being penalized for filing inaccuracies.

Importance of Accurate and Timely Filing

Each company is responsible for submitting the accounts accurately and in a timely fashion. There are a multitude of penalties for late submission of the Profits Tax Return in Hong Kong. If the taxpayer files an incorrect return, makes an incorrect statement, provides incorrect information, fails to file a return on time, or fails to report tax liability without a reasonable excuse, they might have to face serious consequences.

For late submission of the PTR, the fixed penalty is HKD 10,000. A fine of HKD 1,000 can also be imposed as a daily penalty until the PTR is filed. If the IRD instigates a prosecution in the court and the company is convicted of the offence, they might have to pay a fine of HKD 10,000 and up to three times the amount of tax undercharged. In the case the PTR is not filled for an extended amount of time, there may be further penalties and court summons for the company for this non-submission of the PTR.

Professional Assistance with Profits Tax Return Filing

If you require assistance in filing the Profits Tax Return for your company, Startupr can help with the process and filing of the PTR. We provide professional bookkeeping and taxation services, which can help you prepare the necessary documents, such as certified audit reports and tax computations.

We can provide you with assistance with filing the Profits Tax Return in Hong Kong on time. This can save you from fines and penalties and maintain your professional business image in the market.

Contact us for more information or consultation with our staff for your company.

Frequently Asked Questions (FAQ)

Below you will find answers to common inquiries regarding the Profits Tax Return in Hong Kong. Understanding these points can help businesses ensure compliance with the Inland Revenue Department (IRD) regulations.

When is the first PTR issued?

The first Profits Tax Return after incorporation in Hong Kong is issued by the Inland Revenue Department (IRD) after 18 months of incorporation.

What is the standard submission deadline?

Normally, the deadline for submitting the PTR is 1 month after the issuance by the IRD. However, for filing the first PTR, this deadline can be extended for up to 3 months.

Can the deadline for PTR for subsequent years be extended?

Yes, extending the profits tax return deadline in Hong Kong is possible upon request by the company to the IRD. The deadline for filing the PTR for subsequent years can be extended for up to 8.5 months after the financial year end date of the company.

Is filing required for offshore businesses?

Yes, offshore businesses are required to file the PTR in Hong Kong. They need to submit their accounts to the Inland Revenue Department (IRD). Upon submission, they can request a profits tax exemption.

What are the penalties for late submission?

The fixed penalty for late submission of the Profits Tax Return (PTR) in Hong Kong is HKD 10,000. A daily default fine of up to HKD 1,000 may also be imposed until the return is filed. Moreover, in severe cases and court convictions, the company might have to pay a fine of up to HK$10,000 and a further fine of up to three times the amount of tax undercharged.

What are the consequences of not filing at all?

Under Section 80(2) of the Inland Revenue Ordinance, not filing the PTR at all is a criminal offense. The IRD can issue a summons for the company, and the court can impose a fine of HKD 10,000 and order the company to file the PTR. If the company fails to file the ITR within the specified time, it may also lead to imprisonment.

Can Startupr help with PTR filing?

Definitely, the bookkeeping and taxation services offered by Startupr can help you navigate the PTR filing requirements. Startup’s expert guidance can help you with PTR filing in Hong Kong.

Last update: April 2025