What is Taxation?

It is this time of the year again. Every year when 31 March is closing in, it means that it is time for some company to pay their taxes. Taxation might be a fairly complicated and troublesome process, that a lot of computation is needed. Tax reports should be filed with clear and accurate calculations of your company’s income earned. OneStart Business Centre has a certified team of professional registered accountants to help you handle all the computations and calculations, making sure there would be no mistakes in your tax reports.

OneStart Certified Public Accountants (Practising) is a Certified Public Accountants (CPA) of The Hong Kong Institute of Certified Public Accountants based on the "Professional Accountants Ordinance" in Hong Kong. In addition, our Certified Public Accountants are the members of CPA Australia (CPAA).

OneStart Business Centre’s professional team would help you to compute your company taxation report, be it a limited company or an unlimited company, based on the information you provided for us. We would compute your annual income tax return, on your behalf, based on the requirements of the Inland Revenue Department, and submit your tax report to the department.

After your company formation in Hong Kong, all Hong Kong company would need to pay a profit tax every year. As noted in our previous Company Formation series, a limited company and an unlimited company would enjoy a different profit tax rate. Hong Kong government adopted a two-tiered tax rates mechanism, meaning that there will be a cut-off with your revenue earned.

- For Limited Company: First $2 millions of profits of a limited company will be subject to a profit tax rate of 8.25%. Any profit above would be subject to a profit tax rate of 16.5%.

-For Unlimited Company (Partnerships/ Sole Proprietorships): First $2 millions of profits of an unlimited company will be subject to a profit tax rate of 7.5%. Any profit above would be subject to a profit tax rate of 15%.

If your company, no matter it is an unlimited company or limited company, has not been making any revenue, or under business in the financial year subjecting to taxation, you company would not need to pay any profit tax. However, you would still have to submit a tax report form stating clearly that the profit is “zero”. If you company has not started to conduct business, you might also choose to submit a declaration, stating clearly to the Inland Revenue Department, that the company “has not started to conduct business”.

If you re the sole proprietor of an unlimited company, the company’s taxation report would only be reported on the owner’s personal tax report. This is because the company’s liabilities are solely on the sole proprietor. However, for a limited company and a partnership unlimited company, these companies would receive a separate tax report from the government.

A Hong Kong registered company would have the obligation to file tax declaration to the Inland Revenue Department, even if the business is not taking place within the Hong Kong border, or having a bank account for profits at foreign overseas banks. However, if the source of income is not in Hong Kong, you may apply to the Inland Revenue Department for an exemption from taxation.

Taxation would only be required to be computed at the financial year end of the Hong Kong Company. However, such year end does not mean the anniversary of company formation of your company. The year end of Hong Kong company is generally either 31 March or 31 December. Therefore, 31 March is just around the corner! If you would need professional taxation assistant, feel free to call OneStart Business Centre, or CLICK HERE, to find out more!

If it is your first year under taxation, the maximum basis period would be 18 months. If you have chosen OneStart Certified Public Accountants (Practising) as your taxation consultant, there would be an extra 3-6 months exemption from the government, for you to postpone submission of your tax report. Taxation is strictly regulated under the Inland Revenue Ordinance, and all tax charges under the provision of the Ordinance must be paid.

Recently, the government has been issuing rounds of Anti-epidemic Fund to different fields. Such fund would be exempted from the calculation of profit tax. In this difficult times, OneStart Business Centre wishes every reader a resilient year with stable business.

Interested in OneStart Business Centre’s Taxation Consultation Services? Phone in to our hotline 3575 6888 or WhatsApp our helpful consultants!