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How to file company tax? The most powerful tax-saving secrets revealed

1. Understanding Hong Kong Company Tax Filing Basics

Tax Filing Obligations

According to the Inland Revenue Ordinance, all registered companies in Hong Kong are required to fulfill tax filing obligations, including submitting a Profits Tax Return (PTR).

First Tax Filing: Around 18 months after incorporation, a company will receive its first Profits Tax Return from the Inland Revenue Department, which must be completed and submitted within the specified deadline.

Annual Tax Filing: After the end of each fiscal year, companies must submit their Profits Tax Return within one month. If granted an extension by the Inland Revenue Department, the latest filing deadlines are April 30 (for companies with a December 31 year-end) or August 15 (for companies with a March 31 year-end).

Common Types of Taxes

Hong Kong has a simple tax system, primarily involving the following:

Profits Tax: Applicable to businesses operating in Hong Kong, based on taxable profits generated in Hong Kong. The standard tax rate is 8.25% (for the first HK$2,000,000 in profits) and 16.5% (for profits exceeding HK$2,000,000).

Salaries Tax: Levied on personal employment income, calculated based on progressive tax rates.

Stamp Duty: Applicable to property transactions, stock trading, etc.

2. Avoiding Common Tax Filing Pitfalls

Despite Hong Kong's simple tax system, companies may still make the following mistakes, leading to penalties or tax audits:

Incomplete Income Reporting: Ensure all Hong Kong-sourced income is correctly reported to avoid tax evasion risks. If overseas income is involved, assess whether it is substantially connected to Hong Kong operations to avoid being taxed.

Incorrect Deduction of Business Expenses: Only expenses directly related to business operations—such as rent, salaries, office supplies, and business travel—are tax-deductible. Personal expenses, fines, and capital expenditures (e.g., fixed asset purchases) are non-deductible. Always keep invoices and receipts as supporting documents for tax authorities.

Late Submission of Tax Returns: Late submission of Profits Tax Returns may result in penalties or even tax audits. How to avoid this? Prepare financial statements in advance and complete tax filing before the deadline.

Preventive Measures: Early Planning & Professional Assistance

Hire Professional Accounting & Audit Services Early: Engaging OneStart to handle financial statements and tax filing ensures timely submission and minimizes errors.

Ensure Accurate Financial Records: Maintain precise financial records to reduce tax audit risks caused by miscalculations, missing data, or incorrect fiscal year reporting.

Reduce Last-Minute Stress: Avoid rushing tax filing at the last moment, which can lead to errors and penalties.

3. Strengthening Financial Management & Record Keeping

Properly Maintain All Financial Documents

According to the Inland Revenue Ordinance, companies must retain financial records for at least seven years, including:

• Receipts, invoices, and contracts
• Bank statements
• Payroll records and other financial documents

Engage Professional Accountants or Tax Advisors

• Professionals ensure compliance with Hong Kong tax laws and provide optimal tax-saving strategies.
• Minimize extra costs and legal risks due to tax filing errors.

4. Conclusion: How Should Companies Choose the Right Audit Service?

Hong Kong company tax filing may seem simple, but mistakes can result in penalties or audits. By complying with tax filing regulations, avoiding common errors, and strengthening financial management, businesses can ensure compliance and minimize tax risks. If you have any uncertainties regarding tax matters, consult a professional accountant or tax advisor to ensure proper financial management and smooth business operations.

"Professional + Considerate + Reliable" = Worry-Free Accounting & Auditing!

OneStart provides comprehensive "Accounting • Auditing • Tax Filing" services, with an experienced team trusted by clients. We can also act as your tax representative. To learn more, call 3575 6888 or contact us via WhatsApp.