⚠ Provisional Tax Demand — You Have Only 28 Days to Act
Provisional profits tax equals approximately 75% of your prior year's final liability — and the demand can arrive before your current year accounts are prepared. If profits have fallen, you have exactly 28 days from the date of the provisional tax note to apply for a holdover under s.63 IRO. Miss this and you must pay the full amount even if actual profits are far lower.
주요 과제
Incorrect Depreciation vs Capital Allowances
IRD-approved capital allowances (Initial Allowance 20–60%, Annual Allowance 10–30%) differ materially from accounting depreciation. Many SMEs file using P&L depreciation figures — losing substantial deductions.
⚠ Risk: HK,000–HK0,000 misstated per year
Missing Enhanced R&D Deductions (s.16B)
Under s.16B IRO, qualifying R&D expenditure is deductible at 300% for approved HK research institutions, or 200% for in-house expenditure. Most tech companies claim only 100%.
⚠ Risk: Forfeiting 100–200% additional deductions
Failing to Claim Offshore Profits Exemption
Under the territorial basis (s.14 IRO), profits from operations entirely outside HK are not taxable. Trading and holding companies frequently miss or inadequately document this claim.
⚠ Risk: Taxing profits that should be entirely exempt
No Provisional Tax Holdover Filed
When profits decline year-over-year, provisional tax based on the prior year represents a major cash flow burden. A timely s.63 holdover can defer or reduce this payment.
⚠ Risk: Premature outflow of HK0K–HK0K
대상 고객
Trading & import/export companies
Complex supply chains create offshore profit claims. We structure documentation to support robust offshore exemption positions and handle all IRD queries.
Technology & software companies
R&D enhanced deductions under s.16B, IP amortisation, and software capitalisation require specialist knowledge to maximise.
F&B, retail & hospitality businesses
Entertainment deduction limits, staff meals, renovation capitalisation vs expensing, and tips/service charges all require careful treatment.
Financial services & fund managers
The unified funds exemption, carried interest tax concession, and updated FSIE regime for passive income require dedicated specialist advice.
Professional services firms
Sole proprietors and partnerships benefit from careful timing of income recognition, TVC contributions, and remuneration structuring.
서비스 내용
BIR51 Preparation & Filing
Accurate preparation of your Profits Tax Return with full supporting tax computations, depreciation schedules, offshore income apportionment, and all supplementary forms.
All supplementary forms and schedules included
Capital Allowance Optimisation
We apply the correct Initial Allowance (20–60%) and Annual Allowance (10–30%) to all qualifying plant, machinery, and industrial buildings.
Every asset class reviewed and correctly classified
R&D Enhanced Deduction Claims (s.16B)
We identify qualifying R&D expenditure and prepare full technical documentation required to support 300%/200% enhanced deductions.
300%/200% enhanced deductions under IRO s.16B
Offshore Profits Exemption
We prepare a robust offshore profits claim documenting the location of profit-generating operations and defending claims under IRD enquiry.
Full IRD-defensible documentation package
Provisional Tax Holdover Applications
When current year profits are expected lower, we prepare and submit a s.63 holdover application within the critical 28-day statutory window.
Filed within 28-day window — no exceptions
서비스 절차
Engagement & Prior Year Review
Week 1 — FreeWe begin with a complimentary review of your prior year's profits tax return to identify potential amended claims, missed deductions, and incorrect treatments.
Financial Statement Analysis & Tax Computation
Weeks 2–3We receive your accounts and prepare the full tax computation — adjusting for non-deductible items, adding back disallowable expenses, and applying capital allowances.
Offshore Apportionment & R&D Assessment
Week 3We assess whether any portion of profits qualifies for the offshore exemption and review all R&D expenditure to identify qualifying amounts under s.16B.
BIR51 Preparation & Client Sign-Off
10 working daysWe prepare the complete BIR51 with all supplementary schedules and a plain-English client memo explaining key figures and our tax positions.
성공 사례
Garment Trading Company, Kwun Tong — 4 Years Overpaid
- •HKM annual assessable profits
- •Used P&L depreciation instead of IRD capital allowances for 4 years
- •Offshore profits claim for 40% of Guangzhou activity never filed
“We had no idea our accountant was using the wrong depreciation rates for 4 years. The refund paid for professional fees many times over.”
HK FinTech Startup — R&D Enhanced Deductions Unlocked
- •HKM annual R&D expenditure on AI risk-scoring platform
- •HKM to HKUST research partner qualifies for 300% deduction under s.16B
- •HKM in-house R&D above base amount qualifies for 200% deduction
“The R&D enhanced deduction was transformative for our cash flow. TAX.hk's technical expertise in s.16B is genuinely unmatched.”
자주 묻는 질문
What is the current HK profits tax rate for 2025/26?
HK operates a two-tier system. Incorporated entities: 8.25% on the first HK,000,000 of assessable profits, 16.5% above. Unincorporated businesses: 7.5% on the first HKM, 15% above. Only one entity in a connected group benefits from the lower first-tier rate.
When is my BIR51 due?
Unlike salaries tax (fixed 2 May deadline), profits tax deadlines depend on your accounting year-end: 31 March year-end typically due 2 August (N code), 30 November year-end due 28 February (M code), 31 December year-end due 15 August (D code). Tax representatives can apply for bulk filing extensions.
How does the R&D enhanced deduction work under s.16B?
Section 16B provides 300% deduction for payments to HKSAR-approved research institutions, 200% for in-house R&D expenditure above the base amount, and 100% for qualifying R&D expenditure up to the base amount. Qualifying activities include basic research, applied research, and experimental development conducted in HK.
Can my HK company claim offshore profits exemption?
Yes — under HK's territorial basis (s.14 IRO), only profits arising in or derived from HK are taxable. A successful claim requires demonstrating that profit-generating activities occur outside HK. From 2023, the updated FSIE regime captures passive income previously considered offshore.
Are entertainment expenses fully deductible?
No. Entertainment expenses are only 50% deductible under the IRO. Claiming 100% is one of the top IRD audit triggers — it flags your return for selection under the IRAS programme. Entertainment must also be wholly and exclusively incurred in the production of assessable profits.
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