Nil Return Filing

14 May 2014

NIL RETURN FILING

The effective operation of Hong Kong's simple tax system with low tax rates requires a high degree of compliance by taxpayers. It is also the primary duty of every taxpayer under law to file timely and accurate tax returns to the Inland Revenue Department ("IRD"). Businesses are often misguided into believing that “Nil” returns are filed for businesses if it has no business carried out inside of Hong Kong. Whilst Hong Kong has a territorial tax system whereby businesses carried out outside of Hong Kong is not subject to Hong Kong profits tax (i.e. zero taxable income in Hong Kong), it must be noted that in order to apply for such offshore tax benefit, the Company must apply for such arrangement with the IRD. Offshore tax claim is not granted automatically and should never assume the IRD will approve such arrangements and file a “Nil” return as a result.

Punitive actions under section 80(2) Part XIV of the Inland Revenue Ordinance ("IRO") state that any person who without reasonable excuse:

makes an incorrect return;
makes an incorrect statement;
gives any incorrect information;
fails to furnish a return in time; or
fails to inform chargeability to tax.

The offence is subject to a fine of $10,000 and treble the amount of the tax undercharged.

Normal Filing Time
Generally, profits tax return 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. If you are an existing business please refer to important deadlines for filing here.

Should you require any assistance in relation to filing of Hong Kong tax return, please do not hesitate to contact us.

CONTACT PERSON

Zita Ng
zita@alcpa.com.hk
(852) 2574 8289 (Ext. 117)

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