New Era of Profits Tax Filing - iXBRL Filing

Yes, all corporations and businesses are still required to prepare audited financial statements same as the existing requirements prescribed by law.

No, corporations and businesses can use the IRD iXBRL Data Preparation Tools developed by the Department to prepare the required iXBRL data files.  The Department also encourages corporations and businesses to upgrade or develop their own computer programs which are capable of converting their supporting documents into iXBRL format and generating the required iXBRL data files for e-filing purposes.

The minimum hardware and software requirements are as follows:

The IRD iXBRL Data Preparation Tools is an offline tool.  However, you are suggested to use it with an internet connection that can ensure you are using the latest version of the IRD iXBRL Data Preparation Tools to prepare data files.  Otherwise, the data files prepared under the old version might not be valid and would be rejected in the e-filing submission.

Yes, you need to update the IRD iXBRL Data Preparation Tools using the latest version.  For details of updating the IRD iXBRL Data Preparation Tools, please refer to User Guide of the IRD iXBRL Data Preparation Tools. 

The IRD iXBRL Data Preparation Tools consist of the Tagging Tools and the Template Tool. Corporations and businesses can import their financial statements in Microsoft Word format and tax computations in Microsoft Excel format into the Tagging Tool and tag the accounting and tax data for generating the iXBRL files.  Small corporations and businesses with gross income not exceeding HK$5,000,000 can use the Template Tool to input figures and text in pre-defined templates for generating iXBRL data files.  Each item in the templates has already been matched with a default tag.   Businesses can simply fill in the generated templates based on the data shown in their own financial statements and tax computations without the necessity of matching the data with relevant tags.

No, the Tagging Tool only accepts financial statements in Microsoft Word (.doc or .docx) format and tax computations in Microsoft Excel (.xls or .xlsx) format.

No, it is not necessary for corporations and businesses to submit their source of Word file with signatory for importation.  However, corporations and businesses may be required to provide the signed audited financial statements in case of subsequent review. 

The Tagging Tool of the IRD iXBRL Data Preparation Tools performs automatic detection of figures and labels from financial statements and tax computations and matching with elements in the taxonomies according to rules already built in the tool.  It is not a means to check the correctness of financial statements and tax computations.  Therefore, corporations and businesses should ensure the correctness and accuracy of the documents by their own. 

To be eligible to use the Template Tool for preparing financial statements and tax computations data files, corporations/persons other than corporations should have their gross income not exceeding HK$5,000,000 in the relevant year as specified in User Guide of the IRD iXBRL Data Preparation Tools.

There are two financial statements templates which are applicable to corporations/persons other than corporations whose financial statements are prepared in accordance with full HKFRSs / HKFRS for Private Entities / SME-FRF & SME-FRS; and four tax computation templates, including

1. Template for Corporation (General);
2. Template for Corporation (Manufacturing);
3. Template for Corporation (Trading); and
4. Template for Person Other Than Corporation (General).

Template for Corporations (General) can be used for company with dual business.

If the financial statements or tax computations do not contain all the mandatory items as required in the List of Mandatory Items, corporations and businesses should confirm the items are in zero amount using the "Set zero" function during the validation process. For further details, please refer to Part H or Part I of User Guide of the IRD iXBRL Data Preparation Tools.

No, apart from the mandatory tags as required by the List of Mandatory Items, you are still required to tag the following sections of primary statements / main tax computation schedules unless your financial statements and tax computations do not contain these sections:

1. Financial statements – Statement of comprehensive income, profit or loss; 
2. Financial Statements – Statement of financial position;
3. Notes to financial statements – Related party transactions;
4. Notes to financial statements – Property, plant and equipment; and
5. Main tax computation schedules in the tax computations (i.e. items with tax adjustments, Depreciation Allowance / Industrial Building Allowance / Commercial Building Allowance schedule and detailed profit and loss account).  

Corporations only need to submit the audited financial statements in iXBRL format at the company level.  For detailed requirement, please refer to User Guide of the IRD iXBRL Data Preparation Tools.

Yes, a further extension of 1 month will be granted by the Department on application if the Profits Tax returns are filed electronically.

For penalty or other consequences in respect of errors made in preparing the iXBRL data files, the Department will consider whether the taxpayer without reasonable excuse commits an offence in the Inland Revenue Ordinance (e.g. late filing of returns, furnishing an incorrect return or making incorrect statement), depending on the facts and circumstances of each individual case.  Taxpayers should have reasonable knowledge of the taxonomies and iXBRL filing as well as their own financial position before proceeding to the tagging process and preparing the iXBRL date file.  Having said that, the Department will take a lenient approach in assessing the accuracy of tagging, especially in the early years of voluntary adoption of iXBRL filing of supporting documents. For example, where there is an element, “entertainment” in the Profits and Loss account, you may incorrectly tag it as “motor vehicle expenses”, which will not give rise to the understatement of profits. No penal action will be taken in such circumstance.