Frequently ask questions – When to File Tax Returns-Company Formation_Trademark Registration_Tax Service - Hong Kong CPA

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Taxation - China

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Frequently ask questions – When to File Tax Returns

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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: The annual exercise to issue profits tax returns in bulk takes place on the first working day of April each year.
No need to submit: 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?

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. A block extension scheme is made for different Accounting Date:

Accounting Date	Extended Due Date
For C Code Returns (Newly registered business, no Accounting Date yet)	Due in 3 months after receive tax return
For N Code Returns (Accounting Date between 1 April to 30 November)	No extension (Due in 1 month)
For D Code Returns (Accounting Date between 1 to 31 December)	August 15^th of the year
For M Code Returns (Accounting Date between 1 January to 31 March)	November 15^th of the year
For M Code Returns and Current Year Loss Cases	January 31^st of next year

What will happen if failure to submit tax return?

In all cases if you cannot lodge a tax return by the due date or the extended due date, estimated assessment will be issued and you may be required to pay more tax. You may also be subject to penalty proceedings which include payment of penalty, or even prosecuted.

What to do if you are subject to penalty proceedings or receive estimated assessment?

First, no matter you receive what kind of penalty, the most important thing is to submit the profit tax return and audited financial statements (AFS) to Inland Revenue Department (“IRD”). In addition, the following measures can be taken:

Fined: entrust Kaizen CPA Limited (Kaizen) to apply for exemption. If the IRD refuses the exemption, the fine (usually HK$1,200/First time or HK$3,000) should be paid on time within the prescribed period.
Prosecuted: entrust Kaizen to appear in court and submit a fine.
Estimated assessment: need to submit the AFS within one month and file an objection to the estimated assessment, otherwise you need to pay the tax according to the estimated assessment. Please note that if the IRD doesn’t received the AFS, IRD will continue to send estimated assessment even if you have paid the estimated tax.

How to avoid overdue tax returns?

Keep and collect supporting documents during the daily business, such as sales and purchase invoices, shipping documents, accounts receivable and accounts payable statements and stock list. After the accounting date, you can ask Kaizen CPA firm to help you with the accounting, audit and tax filling work. Generally no overdue situation would happen if the AFS could be prepared in time.

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