Completion of Profits Tax Returns, Supplementary Forms and Other Forms

No. You must complete all items in the tax return. If nil, just enter "0".

No. You should exclude cents when stating amounts.

You should put in the numbers without inserting " , " in between them and align the figure to the right-hand side.

Photocopy of tax returns, Control List and uncertified financial statements are not acceptable for return filing purpose.

Letters of enquiries, objections or claims should not be sent together with the tax return and Control List unless it is an objection against an estimated assessment made in the absence of the tax return, supplementary forms and/or other forms. Do not staple these letters to returns and the Control List or bury them among financial statements and schedules.

Section 5 of the Companies Ordinance (Cap. 622) (the CO) provides that a private company may pass and deliver to the Registrar of Companies for registration a special resolution declaring that the company will become dormant as from the date of delivery of that resolution to the Registrar of Companies; or any later date that is specified in that resolution. If a company has delivered such special resolution to the Registry of Companies under section 5 of the CO, it will be exempt from preparing audited financial statements under section 447 of the Companies Ordinance. The Department is prepared to accept profits tax returns filed by dormant companies (within the terms of the CO) without the submission of the audited financial statements.

The profits/(loss) of the business for the full basis period of the year of change should be reported in the Profits Tax Return (BIR52) for the partnership file. In subsequent years, the profit/(loss) should be reported in the Profits Tax Return (BIR52) or Tax Return - Individuals (BIR60) as the case may be.

It is not necessary to apportion (or gross up) the figures if the financial statements for a period of more (or less) than 12 months have been prepared. Amounts extracted from the Statement of Financial Position/Balance Sheet and the Statement of Comprehensive Income/Profit and Loss Account should be used in completing the items of financial data.

No, personal data are exempt from the provisions of data protection if they are for the purposes of assessment or collection of tax or duty. See section 58 of the Personal Data (Privacy) Ordinance, Cap. 486.

On the appointment of a provisional liquidator/liquidator, all the powers of the directors in a company shall cease. Thereafter, the directors do not have any official capacity to act on behalf of the company under liquidation, including signing tax return. In the circumstances, the provisional liquidator/liquidator should be the only person who is empowered to sign the tax return of a company in liquidation. Whilst the provisional liquidator/liquidator may appoint another person to perform certain acts on his behalf, the act of signing a tax return cannot be delegated to that person. Profits Tax return of a company in liquidation signed by any person other than the provisional liquidator/liquidator will not be accepted.

With effect from 1 April 2022, a taxpayer may engage a service provider to furnish Profits Tax return for or on behalf of the taxpayer, irrespective of the mode in which a return is furnished (that is, paper or electronic mode of filing).

In furnishing a tax return, the service provider must obtain a written confirmation, "Confirmation for Engagement of Service Provider to Furnish Return" (IR1476), from the taxpayer stating that the information contained in the return is correct and complete to the best of the taxpayer’s knowledge and belief. The duly signed IR1476 should be filed together with the return.

The amount of loss brought forward from prior year, if any, should be provided in the Profits Tax return.  In the absence of the statement of loss for year Y-1, enter the amount of loss carried forward as shown in your tax computation for year Y-1.  If such figure is not available, just enter “0”.

For details, please refer to the Q & A for Two-tiered Profits Tax Rates Regime in this web site.

Item 3.2 of BIR51 / Item 2.2 of BIR52 is targeted on a resident investor having beneficial interest in one of the following entities:

If a resident investor, either alone or jointly with his associates, holds a beneficial interest of not less than 30% in one of the above entities (or any percentage if the entity is the resident investor's associate) during any part in the year of assessment, the resident investor is required to fill in Item 3.2 of BIR51 / Item 2.2 of BIR52 to confirm having the deemed assessable profits under sections 20AE, 20AF, 20AX and/or 20AY of the IRO, or under section 22 and/or 23 of Schedule 16E to the IRO, where applicable, and furnish information as required in the Notes and Instructions. Such deemed profits must be included in your Assessable Profits or Adjusted Loss as stated in Part 1 of the tax return.

Item 10.8, 10.9 and 10.10 of BIR51 and BIR52 are targeted on certain non-resident, fund and the family-owned investment holding vehicle respectively. If you are a resident investor in one of the entities listed above, you may enter "0" in Items 10.8, 10.9 and 10.10.

The question of whether a non-Hong Kong resident person has a PE in Hong Kong is to be determined in accordance with Schedule 17G to the IRO.  For a person that is resident for tax purposes in a territory which has entered into a double taxation agreement or arrangement (DTA) with Hong Kong (i.e. DTA territory), the applicable rules are the relevant provisions under the DTA concerned.  For a non-DTA territory resident person, regard should be made to the provisions under Part 3 of Schedule 17G. 

In general, a PE is a fixed place of business through which a person’s business is wholly or partly carried on, including a place of management; a branch; an office; a factory; a workshop; and a place of extraction of natural resources such as a mine, an oil or gas well or a quarry.  A building site or a construction/ installation project may constitute a PE if the duration of the site or project exceeds a specified period of time.  Even in the absence of a fixed place of business, a person may be deemed to have a PE in a territory if the person provides services in the territory for a period exceeding a specified period of time, or another person acts for the person as a dependent agent in the territory.

A company and its owner are separate legal entities.  Unless the conditions of PE under the relevant provisions of the DTA concerned or Part 3 of Schedule 17G are satisfied, the mere fact that a non-Hong Kong resident owner controls a Hong Kong resident company does not of itself render the owner having a PE in Hong Kong. 

For more details about the meaning of PE in Hong Kong, please refer to paragraphs 37 to 57 of Departmental Interpretation and Practice Notes No. 60 (DIPN 60).

Under section 50AAK(1) of the IRO, a non-Hong Kong resident person is regarded as carrying on a trade, profession or business in Hong Kong for the purposes of profits tax if the person has a PE in Hong Kong.  Section 50AAK(2) requires the profits or loss of a non-Hong Kong resident person attributable to the person’s PE in Hong Kong to be ascertained as if the PE were a distinct and separate enterprise.  The purpose of section 50AAK is to prevent under-attribution of profits or over-attribution of loss to a non-Hong Kong resident person’s PE in Hong Kong.  As a revenue protection provision, section 50AAK should be read in a negative sense (i.e. only upward adjustments are intended).  Downward adjustments would be considered by way of corresponding relief pursuant to the relevant double taxation agreement or arrangement under section 50AAO.

The Authorised OECD Approach (AOA) is a preferred approach to the application of section 50AAK.  The AOA is a two-step approach to attribute profits or loss through: (a) using functional and factual analysis to hypothesize the PE as a distinct and separate enterprise; and (b) applying the arm’s length principle to the hypothetical enterprise in accordance with the OECD Transfer Pricing Guidelines for Multilateral Enterprises and Tax Administrations by analogy.  For more details about the application of the AOA, please refer to paragraphs 58 to 89 of DIPN 60.

In its Profits Tax return, a non-Hong Kong resident person should provide information relevant for the purpose of ascertaining the profits or loss attributable to its PE in Hong Kong, including the financial statements of the PE and the person as a whole, the tax balance sheet of the PE and the schedules relating to attribution of profits, expenses and capital to the PE.  The person is also required to retain appropriate documentation to support its compliance with the AOA in respect of the PE as per Appendix 2 to DIPN 60.

It is not uncommon that a PE of a non-Hong Kong resident person in Hong Kong has dealings with other parts of the person.  For example, the Hong Kong branch of a foreign bank borrows money from its head office, or provides management services to branches in other jurisdictions.  Strictly, such a dealing has no legal consequences for the person as a whole.  But where the functional and factual analysis determines that a dealing constitutes a real and identifiable event and is of economic significance between the PE and another part of the person, with appropriate accounting record and contemporaneous documentation in support, the dealing should be recognised as equivalent to a transaction for the purpose of attributing profits or loss to the PE.  Under section 50AAK(5) of the IRO, a transaction between a PE of a non-Hong Kong resident person and any other part of the person should be treated as taking place on the terms that would have been agreed between parties dealing at arm’s length.

Hong Kong Standard Industrial Classification Code is a 6-digit industry code of the Hong Kong Standard Industrial Classification (version 2.0) maintained by the Census and Statistics Department ("C&SD"). For the index of industry codes, you may refer to C&SD's web site (www.censtatd.gov.hk).

The company should only state one industry code with reference to the principal business activity, where appropriate.

As an industrial classification system, the HSIC is devised by using the United Nations' ISIC as a framework and adapting it to reflect the structure of the local economy. HSIC system classifies establishments to industry classes according to their major kind of activities, based mainly on the principal class of goods produced or services rendered. Taxpayer is advised to report the HSIC code with reference to the principal business activity of the company.

No, you should state "000000" as the industry code.

Yes, you may leave the item blank

You should use the yearly average rate as at the accounts closing date. You can find the conversion rate for major foreign currencies in this web site.  If you require an exchange rate for other foreign currency, you may use any reasonable externally sourced average exchange rate for that currency and use it consistently.

No. Certain specified conditions have to be satisfied before an allowance is granted. For details, please refer to the Departmental Interpretation & Practice Notes No. 2 (Revised).

The IRO does not contain any definition of "non-resident person" but the Department has long accepted that the term refers to a person who has no permanent business presence in Hong Kong.

A BVI incorporated company should not be regarded as a non-resident if its directors are resident in Hong Kong and its central management and control is in Hong Kong.

"Fees in respect of professional services" include management, consultancy or service fees, etc. paid or accrued in respect of professional services which may include scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists, accountants, etc.

The full amount paid or accrued should be included.

No. You only have to complete the corresponding supplementary forms if you fall within any of the descriptions in Part 9 of the Notes. For further details, please refer to the FAQ for supplementary forms in this web site.

The Profits Tax return does not enclose with the supplementary forms. You need to download the relevant supplementary forms from Department's web site www.ird.gov.hk/e_pfr for completion.

The supplementary forms are part of the tax return that should be filed together with the Profits Tax return. Please refer to FAQ32 for details on submission of supplementary forms.

All required supplementary forms and other forms must be submitted electronically through the eTAX irrespective of the filing mode of Profits Tax return for any year of assessment from 2018/19 to 2024/25 (both inclusive). In case your tax return and Supporting Documents will be submitted in paper form, please print and sign the Control List and submit the Control List together with the Profits Tax return. The Control List must be signed by the same person signing the tax return. If the tax return will be submitted under the electronic filing or semi-electronic filing mode, please proceed to the Completion Service and the Submission Service. These services will link up the uploaded data files with the Profits Tax return of the same Profits Tax File Number and RIN. Please refer to "Uploading of Data Files for Required Forms and Supporting Documents to Profits Tax Return" for further details.

Business as an owner of ships means a business of chartering or operating ships, but does not include dealing in ships or agency business in connection with shipping. If your business is only engaged in dealing in ships or agency business in connection with shipping, you do not need to tick the box 9.5 in BIR51/BIR52 respectively and do not need to submit supplementary form S5.

Yes. You must fill in supplementary form S5 as long as you are carrying on a business as an owner of ships, even if you do not earn any income from operation of ships within Hong Kong or commencing from Hong Kong waters during the year.

Yes. You need to submit supplementary form S5.

No. You have to submit both the profits tax return and supplementary form S5 all together at the same time. The due date for both forms is the same.

"Professional reinsurer" means a company authorized under section 8 of the Insurance Ordinance (Cap.41) to carry on in or from Hong Kong reinsurance business only. The assessable profits of the corporation derived from the business of reinsurance as a professional reinsurer will be subject to concessionary tax rate if the corporation has made the election.

The concessionary tax rate is one-half of the rate specified in Schedule 8 to the IRO.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a professional reinsurer who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S6 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary forms does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S6, in determining whether you are a qualified professional reinsurer for the year. You may be required to provide further information to support the claim.

Yes. You need to submit supplementary form S6.

Yes. You need to submit supplementary form S6.

No. You have to submit both BIR51 and supplementary form S6 all together at the same time. The due date for both forms is the same.

"Authorized captive insurer" means a company which is a captive insurer as defined by section 2(7)(a) of the Insurance Ordinance (Cap.41) (“the IO”) and is authorized under section 8 of the IO to carry on in or from Hong Kong insurance business as such a captive insurer. The assessable profits of the corporation derived from the business of insurance as an authorized captive insurer will be subject to concessionary tax rate if the corporation has made the election.

The concessionary tax rate is one-half of the rate specified in Schedule 8 to the IRO.

No. The two-tiered profits tax rates are not applicable to the assessable profits of an authorized captive insurer who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S7 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary forms does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S7, in determining whether you are a qualified authorized captive insurer for the year. You may be required to provide further information to support the claim.

Yes. You need to submit supplementary form S7.

Yes. You need to submit supplementary form S7.

No. You have to submit both BIR51 and supplementary form S7 all together at the same time. The due date for both forms is the same.

The concessionary tax rate is one-half of the rate specified in Schedule 8 to the IRO.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a QCTC who has made the election under for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S8 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary forms does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S8, in determining whether you are a QCTC for the year. You may be required to provide further information to support the claim.

Yes. You need to submit supplementary form S8.

Yes. You need to submit supplementary form S8.

No. You have to submit both BIR51 and supplementary form S8 all together at the same time. The due date for both forms is the same.

"Qualifying aircraft lessor" is a corporation which is not an aircraft operator and has carried out in Hong Kong one or more qualifying aircraft leasing activities. It also has not carried out in Hong Kong any activity other than a qualifying aircraft leasing activity. The qualifying profits of the corporation derived from the business of qualifying aircraft leasing activities will be entitled to profits tax concessions if the corporation has made the election.

If the conditions under section 14H(4) of the IRO are met, a qualifying aircraft lessor is entitled to have its profits derived from its qualifying aircraft leasing activity for a year to be charged at the concessionary tax rate, which is one-half of the rate specified in Schedule 8 to the IRO. In addition, the qualifying aircraft lessor is entitled to have the taxable amount of the lease payments calculated at 20% of tax base (i.e. gross lease payments less deductible expenses) if it further meets the conditions under section 14I of the IRO.

For details, please refer to paragraphs 10-21 of Departmental Interpretation & Practice Notes No. 54.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a qualifying aircraft lessor who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S9 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary forms does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S9, in determining whether you are a qualifying aircraft lessor for the year. You may be required to provide further information to support the claim.

No. You do not need to tick the box 9.9 and do not need to submit supplementary form S9.

Yes. You need to submit supplementary form S9.

Yes. You need to submit supplementary form S9.

No. You have to submit both BIR51 and supplementary form S9 all together at the same time. The due date for both forms is the same.

If the conditions under section 14J(5) of the IRO are met, a qualifying aircraft leasing manager is entitled to have its profits derived from its qualifying aircraft leasing management activity for a year to be charged at the concessionary tax rate, which is one-half of the rate specified in Schedule 8 to the IRO.

For details, please refer to paragraph 38 of Departmental Interpretation & Practice Notes No. 54.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a qualifying aircraft leasing manager who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S10 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary forms does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S10, in determining whether you are a qualifying aircraft lessor for the year. You may be required to provide further information to support the claim.

No. You do not need to tick the box 9.10 and do not need to submit supplementary form S10.

Yes. You need to submit supplementary form S10.

Yes. You need to submit supplementary form S10.

No. You have to submit both BIR51 and supplementary form S10 all together at the same time. The due date for both forms is the same.

"Qualifying ship lessor" is a corporation which is not a ship operator and has carried out in Hong Kong one or more qualifying ship leasing activities. It also has not carried out in Hong Kong any activity other than a qualifying ship leasing activity. The qualifying profits of the corporation derived from the business of qualifying ship leasing activities will be entitled to profits tax concessions if the corporation has made the election.

If the conditions under section 14P(4) of the IRO are met, a qualifying ship lessor is entitled to have its profits derived from its qualifying ship leasing activity for a year to be charged at the concessionary tax rate, which is specified in Schedule 8C to the IRO. In addition, the qualifying ship lessor is entitled to have the taxable amount to be calculated in accordance with the formula set out in section 14R(2) or (3) of the IRO at the net lease payments for operating leases, and in accordance with the formula set out in section 14S(2) of the IRO at the net payments of finance charges or interest in relation for funding leases.

For details, please refer to paragraphs 6-12, 28-44 of Departmental Interpretation & Practice Notes No. 62.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a qualifying ship lessor who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S11 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary form does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S11, in determining whether you are a qualifying ship lessor for the year. You may be required to provide further information to support the claim.

No. You do not need to tick the box 9.11 and do not need to submit supplementary form S11.

Yes. You need to submit supplementary form S11.

Yes. You need to submit supplementary form S11.

No. You have to submit both BIR51 and supplementary form S11 all together at the same time. The due date for both forms is the same.

If the conditions under section 14T(5) of the IRO are met, a qualifying ship leasing manager is entitled to have its profits derived from its qualifying ship leasing management activity for a year to be charged at the concessionary tax rate, which is (a) one-half of the rate specified in Schedule 8 to the IRO if its qualifying activity is carried out other than for an associated corporation, or (b)  the concessionary tax rate specified in Schedule 8C to the IRO if its qualifying activity is carried out for an associated corporation.

For details, please refer to paragraph 50 of Departmental Interpretation & Practice Notes No. 62.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a qualifying ship leasing manager who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S12 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary form does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S12, in determining whether you are a qualifying ship leasing manager for the year. You may be required to provide further information to support the claim.

No. You do not need to tick the box 9.12 and do not need to submit supplementary form S12.

Yes. You need to submit supplementary form S12.

Yes. You need to submit supplementary form S12.

No. You have to submit both BIR51 and supplementary form S12 all together at the same time. The due date for both forms is the same.

The concessionary tax rate is one-half of the rate specified in Schedule 8 to the IRO.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a specified insurer who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S13 for each year that you wish to claim the relevant assessable profits subject to concessionary tax rate.

The completion of the supplementary form does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S13, in determining whether you are a qualifying specified insurer for the year. You may be required to provide further information to support the claim.

Yes. You need to submit supplementary form S13.

Yes. You need to submit supplementary form S13.

No. You have to submit both BIR51 and supplementary form S13 all together at the same time. The due date for both forms is the same.

"Licensed insurance broker company" means a company which is a licensed insurance broker company as defined by section 2(1) of the Insurance Ordinance (Cap.41).  The assessable profits of the corporation derived from the business of carrying on qualifying regulated activity as a licensed insurance broker company will be subject to concessionary tax rate if the corporation has made the election. For the definition of qualifying regulated activity, please refer to section 14AB of the IRO.

The concessionary tax rate is one-half of the rate specified in Schedule 8 to the IRO.

No. The two-tiered profits tax rates are not applicable to the assessable profits of a specified insurer who has made the election for the concessionary tax rate.

You have to complete and submit both BIR51 and supplementary form S14 for each year that you wish to claim the assessable profits subject to concessionary tax rate.

The completion of the supplementary form does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S14, in determining whether you are a qualifying licensed insurance broker company for the year. You may be required to provide further information to support the claim.

Yes. You need to submit supplementary form S14.

Yes. You need to submit supplementary form S14.

No. You have to submit both BIR51 and supplementary form S14 all together at the same time. The due date for both forms is the same.

Eligible carried interest, as defined in section 3 of Schedule 16D to the IRO, is a sum received by, or accrued to, a person by way of profit-related return from the provision of investment management services by the person for a certified investment fund or a specified entity. The term "profit-related return" encompasses four conditions –

• the sum is received or accrued after the payment of a return on investments in the fund or entity subject to the fulfilment of the hurdle rate which is a preferred rate of return on investments in the fund or entity, that is stipulated in the agreement governing the operation of the fund or entity;
• the sum arises only if there are profits for a period on the investments, or on particular investments, made for the fund or entity, or there are profits arising from a disposal of investment made for the fund or entity;
• the sum that is to be, or may be, received or accrued is variable by reference to those profits;
• the returns to external investors of the fund or entity are also determined by reference to those profits.

Investment management services, in relation to a certified investment fund or a specified entity, as defined in section 1 of Schedule 16D to the IRO, include:

• seeking funds for the fund or entity from external investors or potential external investors;
• researching and advising on potential investments to be made for the fund or entity;
• acquiring, managing or disposing of property or investments for the fund or entity; and
• acting for the fund or entity with a view to assisting an entity in which the fund or entity has made an investment to raise funds.

Certified investment fund, as defined in section 2 of Schedule 16D to the IRO, means a fund that is certified by the Monetary Authority (“MA”) to be in compliance with the criteria for certification published by the MA and within the meaning of section 20AM of the IRO.

Specified entity, as defined in section 2 of Schedule 16D to the IRO, means The Innovation and Technology Venture Fund Corporation (“ITVFC”) incorporated under the Companies Ordinance (Cap. 622).

For a year of assessment commencing on or after 1 April 2020, profits tax is chargeable on the net eligible carried interest at the concessionary tax rate specified in section 7 of Schedule 16D to the IRO, if all the following conditions are satisfied:

• You are a qualifying person.  “Qualifying person”, as defined in section 4(3) of Schedule 16D to the IRO, means a person who:
  • is a corporation licensed under Part V of the Securities and Futures Ordinance (Cap. 571) to carry on, or an authorized financial institution registered under that Part for carrying on, a business in any regulated activity as defined by Part 1 of Schedule 5 to that Ordinance;
  • carries out investment management services in Hong Kong, or arranges such services to be carried out in Hong Kong, for a certified investment fund that is a qualified investment fund as defined by section 20AN(6) of the IRO; or
  • carries out investment management services in Hong Kong, or arranges such services to be carried out in Hong Kong for a specified entity.

• The eligible carried interest was received by, or accrued to, you from one or more than one qualifying payer.  "Qualifying payer", as defined in section 2 of Schedule 16D to the IRO, means:
  • a certified investment fund or its associated corporation/associated partnership; or
  • a specified entity (i.e. ITVFC).
• The eligible carried interest must arise from profits on investments, profits on particular investments, or profits on a disposal of investment, that are earned from the following transactions:
  • in shares, stocks, debentures, loan stocks, funds, bonds or notes of, or issued by, a private company as specified in Schedule 16C to the IRO;
  • in shares of, or comparable interests in, a special purpose entity or an interposed special purpose entity which solely holds (whether directly or indirectly) and administers one or more investee private companies;
  • in shares, stocks, debentures, loan stocks, funds, bonds or notes of, or issued by, an investee private company; or
  • incidental to the carrying out of the above-mentioned qualifying transactions.
• If the profits earned from any above-mentioned transaction are from a transaction by a certified investment fund or a special purpose entity, those profits are exempt from profits tax in accordance with section 20AN or 20AO of the IRO. 
• You carried out the investment management services in Hong Kong or arranged such services to have been carried out in Hong Kong.
• You met the substantial activities requirements as specified in section 5(2) and 5(3) of Schedule 16D to the IRO (including the number of qualified full-time employees in Hong Kong and the amount of operating expenditure incurred in Hong Kong).

Net eligible carried interest is computed as: 
eligible carried interest – outgoings and expenses – depreciation allowances/balancing allowances + balancing charge.

Yes. The two-tiered profits tax rates are still applicable to your assessable profits.

No. A fund has to apply for certification by the MA before you can apply for profits tax concessions in respect of eligible carried interest.

You have to complete and submit both BIR51/BIR52 and supplementary form S15 for each year that you wish to claim the profits tax concessions in respect of eligible carried interest.

The completion of the supplementary form does not mean you are automatically eligible for the claim. IRD will consider, including but not limited to, the information provided on supplementary form S15, in determining whether the profits tax concessions apply to your eligible carried interest for the year.  You may be required to provide further information to support the claim.

No. You do not need to tick the box 9.15 (BIR51)/9.6 (BIR52) and do not need to submit supplementary form S15.

No. You have to submit both BIR51/BIR52 and supplementary form S15 all together at the same time. The due date for both forms is the same.

You should insert "0" in the input box if the net amount of offshore income as reduced by all the related expenses incurred in earning that income is nil or a negative figure.

Just put "0" in the input box.

You should still enter the amount of offshore profits from using the Internet in Item 10.2.1 / 10.2, even though you have inserted "0" for offshore profits in Item 10.1.

Yes. However, "fax" is excluded.

Yes. This includes orders received by using a form on a web site and e-mail etc.

"The Internet was used to accept payment" here includes e-banking and credit card payments through the Internet.

You should insert "0" in the input box.

You should insert "0" in the input box.

For details, please refer to the Departmental Interpretation & Practice Notes No. 34 (Revised) in this web site.

You should state the amount of interest income, profits or gains derived from a qualifying debt instrument issued on or after 1 April 2018 where you are not an associate of the respective issuer.

You should insert "0" in the input box.

It refers to tax-exempted profits derived from transactions in Schedule 16C Assets and incidental transactions, which are conducted by a fund falling within the meaning given by section 20AM of the IRO and satisfying the exemption conditions in section 20AN. Schedule 16C Assets are 11 classes of assets specified for qualifying transactions for the purposes of section 20AN. Schedule 16C covers typical transactions carried out by funds, including securities, shares or notes of private companies, futures contracts, foreign exchange contracts, deposits other than those made by way of a money-lending business, deposits made with a bank, certificates of deposit, exchange-traded commodities, foreign currencies, OTC derivative products and an investee company’s shares co-invested by a partner and ITVFC under the ITVF Scheme.

You should state the amount of exempted profits from transactions in Schedule 16C Assets and incidental transactions derived by a fund falling within the meaning given by section 20AM of the IRO and satisfying the exemption conditions in section 20AN. In case of an open-ended fund company with sub-funds, the aggregate amount of exempted profits of each sub-fund should be stated in this item and you are required to provide a computation of such amount.

You should insert "0" in the input box.

You should state the amount of exempted profits from transactions in securities in section 20AO(2)(a) to (e) of the IRO derived by a special purpose entity owned by a fund that is exempted under 20AN of IRO.

You should insert "0" in the input box.

You should state the amount of exempted profits from transactions in securities specified in section 16(3) of Schedule 16E to the IRO derived by a family-owned special purpose entity whose beneficial interest is held, whether directly or indirectly, by a family-owned investment holding vehicle that is chargeable at concessionary tax rate.

You should insert "0" in the input box.

You should state the amount claimed as deduction. For 2008/09 onwards, deduction is limited to 35% of the adjusted assessable profits.

For details, please refer to the Departmental Interpretation & Practice Notes No. 5 (Revised) in this web site.

It is a right mentioned in section 215(1)(a), (b), (c) or (d) of the Copyright Ordinance (Cap. 528) and conferred by Part III of that Ordinance on a performer, or a right that corresponds to the foregoing right and subsists under the law of a place outside Hong Kong.

It is a right in a layout-design (topography) that is protected under section 3 of the Layout-design (topography) of Integrated Circuits Ordinance (Cap. 445); or a right that corresponds to the foregoing right and subsists under the law of a place outside Hong Kong.

It is a right granted under Part III of the Plant Varieties Protection Ordinance (Cap. 490); or a right that corresponds to the foregoing right and subsists under the law of a place outside Hong Kong.

You should only enter the sum of mandatory contributions made on behalf of the proprietor or partners which can be claimed for deduction under Profits Tax. Voluntary contributions, any amount exceeding the value which can be claimed for deduction under Profits Tax and contributions made for the proprietor's or partners' spouses and contributions for employees should be excluded.

No. Claims for deduction for partner's own contributions can only be made for sums which have been paid. Provisions charged to account are not deductible.

Yes, such amounts can be claimed in the tax computations.

In arriving at the deductible amount, sums already deducted in the partner's Salaries Tax Assessment or Personal Assessment and Profits Tax Assessments of his businesses have to be taken into account. In other words, the aggregate amount to be deducted should not exceed $18,000 in a year ($14,500 for 2012/13, $15,000 for 2013/14, $17,500 for 2014/15 and $18,000 for 2015/16 onwards).

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The listed items are intended to refer to items of an identical or similar nature, irrespective of the actual accounting terminology which may have been used in the financial statements. In the case where more than one entry in the financial statements match a particular item, you should fill in the total of these entries.

Total gross income means ALL TYPES OF INCOME including sales and other ordinary business income, sales income from closely connected persons, proceeds from the sale of capital assets and other non-taxable income, whether or not derived from the principal business activity.

Yes.

According to the Hong Kong Accounting Standard 1 (Revised), "turnover" should consist of revenue arising from the principal activities of the entity and therefore should not usually include those items of revenue and gains that arise incidentally.

In cases where companies are not engaged in the trading of goods or commodities [e.g. companies having rental income, interest income and/or dividend income as their only business receipts] and there are no purchases of trading stock, insert "0" in the input box.

In some cases where companies are not engaged in the trading of goods or commodities [e.g. companies having rental income, interest income and/or dividend income as their only business receipts], the Statement of Comprehensive Income/Profit and Loss Account may not have any figure for "Gross profit/Gross loss". In such cases, insert "0" in the input box.

If there is more than one entry in the financial statements for interest income [e.g. bank interest, inter-company interest income, loan interest received etc.], add up all items of an identical or similar nature and insert the total in the input box.

When the interest income has been included under other entries [e.g. as part of the sales proceeds] in the Statement of Comprehensive Income/Profit and Loss Account, you need not separate them from those entries.

X Limited should provide the following information:

For further details relating to the specific conditions under section 16(2) of the IRO, please refer to the Departmental Interpretation & Practice Notes No. 13A.

If there is more than one entry in the financial statements for interest expense [e.g. bank interest, hire-purchase interest, inter-company interest, mortgage loan interest, Trust Receipt interest etc.], add up all items of an identical or similar nature and insert the total in the input box.

Bank charges are usually in the nature of handling charges for making available loan facilities and are therefore not interest. They are not to be included here.

Fringe benefits such as quarters expenses, reimbursement of travelling expenses, share options granted, passages, medical expenses etc. need not be added unless these have already been grouped under "employee remuneration" in the Statement of Comprehensive Income/Profit and Loss Account of the company.

If such expenses have been included under other entries in the Statement of Comprehensive Income/Profit and Loss Account [e.g. commission payments to estate agents having been included as part of the purchase cost of landed properties, commission payments to employees having been included under employee remuneration etc.], it can be excluded here.

This term refers to payments for management, administrative and professional services, whether to third parties and / or related parties. Professional services may include property or asset valuation, technical and /or feasibility studies, consultancy, etc. Such payments, however, should exclude building management fees, accountancy fees, audit fees and legal fees, which in normal circumstances are seldom included under "management and consultancy fees".

Building management fees paid are NOT to be included.

If minor items falling within this category have been included in other items in the Statement of Comprehensive Income/Profit and Loss Account [e.g. small amount of consultancy fee may have been included under "sundries" or "miscellaneous expenses"], such items can be excluded here.

Bad debts can usually be found in the Statement of Comprehensive Income/Profit and Loss Account if they have been charged in the accounts. It includes provision for bad debts [whether specific or general provision] charged in the accounts, irrespective of whether or not the sums concerned have been claimed as a "deduction" for Profits Tax purposes.

This item can be found in the Statement of Comprehensive Income/Profit and Loss Account. It is the net profit or net loss figure BEFORE tax.

The term "Total value of assets" refers to the total value of your assets shown in the Statement of Financial Position / Balance Sheet.

Yes. Particulars of the partners, change of partners during the year and allocation of Assessable Profits/(Adjusted Loss) among partners (including corporate partners or non-corporate partners of limited partnership fund) are still required to be provided in Items 6.1 and 6.2. These details will be useful in calculating the tax liability of an individual partner when loss set-off arises or change occurs in Personal Assessment election by any partner.

Yes. These 'Date' fields should be left blank. For any change of partners after the basis period, you should notify Business Registration Office separately by form IRBR64 or by letter.

Provide the details on a separate sheet of paper if the space is insufficient.

A detailed example can be found on page 4 of the Pro Forma Profits Tax Computation (IR957) which is a step by step guide for making the allocation of Assessable Profit or Adjusted Loss among partners. This form can be obtained through the Fax-A-Form service (Telephone No. 2598 6001) or downloaded from this web site.

Yes. You should make an election for Personal Assessment in your own Tax Return - Individuals (BIR60). If the proprietor or partner who is required to complete a BIR60 does not make a valid election in the BIR60, the election in Item 6.2 will be ignored and profits tax demand note may be issued if it is a profit case.

No. Negative signs or brackets are not required in the last column of Item 6.2, but the total should match the adjusted loss reported in Item 1.2 of BIR52.

As explained on page 4 of the Pro Forma Profits Tax Computation (IR957), each partner should have a share of profit if the business as a whole has assessable profits. Similarly, each partner should have a share of loss if the business has an adjusted loss. It is not possible that one partner has a share of profit and the other has a share of loss. Your allocation should be wrong. You are advised to study the example on page 4 of the IR957 and re-compute the allocation. You can obtain a copy of IR957 through the Fax-A-Form service (Telephone No. 2598 6001) or from this web site.

Yes, you should provide the amount of mandatory contributions made for proprietor / each partner under Mandatory Provident Fund Schemes Ordinance. The total amount should match the deduction claimed for mandatory contributions under Item 10.19 of BIR52.