New Era of Profits Tax Filing – iXBRL Filing

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Background

As part of the tax digitalization journey, the Inland Revenue Department has committed to taking forward the full adoption of electronic filing (“e-Filing”) of Profits Tax returns for corporations and businesses (excluding sole-proprietorship businesses) in Hong Kong by phases.  In the first place, the Inland Revenue (Amendment) (Miscellaneous Provisions) Ordinance 2021, which was enacted in June 2021, among others, enhances the statutory framework for e-filing of tax returns in Hong Kong. In April 2023, the Department launched voluntary e-filing of Profits Tax returns where taxpayers can e-file their Profits Tax returns together with supporting documents (including financial statements and tax computations) in inline eXtensible Business Reporting Language (“iXBRL”) format on a voluntary basis, and then will implement mandatory e-filing of Profits Tax returns by phases.  The ultimate goal of the Department is to achieve full-scale implementation of mandatory e-filing by 2030.

To pave way for the implementation of mandatory return e-filing, the Department has gradually enhanced the functions of e-filing services under eTAX provided in GovHK. The enhanced e-filing services will provide better user experience and enhance the efficiency, reliability and accuracy of the collection of accounting and financial data from corporations and businesses, thereby bringing about the benefits to taxpayers and tax practitioners, such as-

• minimizing possible manual errors in tax filing;

• achieving efficient filing of documents regardless of geographical location; and

• reducing the turnaround time for signature or authorisation arrangement, especially for taxpayers with approval process carried out outside Hong Kong. 

To let corporations and businesses familiarise themselves with the iXBRL tax filing requirements and encourage early adoption of e-filing of Profits Tax returns, the Department has put in place various support measures which will be explained in the ensuing paragraphs.

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Consultation

During the development process of the e-Filing Project, the Department has leveraged and taken into consideration the experience in various overseas jurisdictions in the context of transition, initial adoption and continuous management of iXBRL tax filing requirements. Rounds of consultation and briefings have been conducted to solicit stakeholders’ feedback on the proposals for taking forward the project on the e-filing of Profits Tax returns.

For more details on the consultation, please click here.

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iXBRL Filing of Supporting Documents

Starting from 3 April 2023, supporting documents in iXBRL format can be e-filed together with Profits Tax returns on a voluntary basis to the Department through eTAX.  

The Department 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.  As an alternative, corporations and businesses can use the IRD iXBRL Data Preparation Tools developed by the Department to prepare the required iXBRL data files. The IRD iXBRL Data Preparation Tools are available for download free of charge.   The functions of the IRD iXBRL Data Preparation Tools are elaborated in the ensuing paragraphs.

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The IRD Taxonomy Package

For tagging purposes, the Department has developed and published the IRD Taxonomy Package which includes:

• IRD FS Taxonomy - the IRD Taxonomy for financial statements prepared in accordance with full Hong Kong Financial Reporting Standards ("HKFRSs") as issued by the Hong Kong Institute of Certified Public Accountants;
• IRD FS-PE Taxonomy - the IRD Taxonomy for financial statements prepared in accordance with the Hong Kong Financial Reporting Standard for Private Entities ("HKFRS for Private Entities") and also applicable to corporations and businesses adopting Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard ("SME-FRF & SME-FRS"); and
• IRD TC Taxonomy - the IRD Tax Computational Taxonomy which covers major tax data and schedules to tax computations as specified by the Department.

The IRD Taxonomy Package lists and defines the specific codes (elements) for preparers to identify (tag) the information disclosed within financial statements prepared in accordance with full HKFRSs / HKFRS for Private Entities / SME-FRF & SME-FRS and tax computations. It also includes the content that describes the accounting meaning / relevant reference of an element or helps preparers find the correct element.  Elements will be organized into distinct groups so that it is easier to navigate the IRD Taxonomy Package. The IRD Taxonomy Package does not drive or prescribe the content and presentation of financial statements and tax computations. Instead, it provides a means of tagging the financial and tax information or disclosures. 

The Department will keep updating and refining the IRD Taxonomy Package and related guidance materials to reflect changes in accounting standards and amendments in tax legislation.  A new edition of the IRD FS Taxonomy and IRD FS-PE Taxonomy will be yearly published for use with the corresponding year of assessment.  Meanwhile, a new edition of the IRD TC Taxonomy, which is applicable for all years of assessment, will also be published to supersede its previous edition to reflect the annual changes in Profits Tax returns.  In any event, iXBRL data files for tax computations should be prepared and submitted using the latest edition of IRD TC Taxonomy.  Different editions of taxonomy packages will be posted on the Department’s website with their respective publication dates and applicable years of assessment.  The Department published the first edition of the English IRD Taxonomy Package and the first edition of the Traditional Chinese IRD Taxonomy Package onto its website on 1 April 2023 and 1 April 2024 respectively.

Please click here to download the respective versions of IRD Taxonomy Package and read the related guide and materials for more details.

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The IRD iXBRL Data Preparation Tools

The Department provides free conversion tools, namely IRD iXBRL Data Preparation Tools, for corporations or businesses to convert their financial statements and tax computations into iXBRL data files. The IRD iXBRL Data Preparation Tools, which consist of two tools (i.e. Tagging Tool and Template Tool), are user-friendly interfaces for users to generate the required iXBRL data files which conform to XBRL specifications and the IRD Taxonomy schema. The basic features of the two tools are as follows: 

• Tagging Tool - corporations or businesses can import their financial statements in Microsoft Word format and tax computations in Microsoft Excel format into the Tagging Tool and then tag the accounting and tax data for generating the iXBRL files. The Tagging Tool involves automatic detection of figures and labels from financial statements and tax computations and matching with elements in the taxonomies according to the rules already built in the tool. The tagging effort is expected to be largely reduced by this auto-tagging capability.
• Template Tool - small corporations or businesses with gross income not exceeding $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 been already matched with a default tag. Small corporations and 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.

List of versions of the IRD iXBRL Data Preparation Tools released:

If the English IRD iXBRL Data Preparation Tools (Version 1.0.0.0) have been installed, you have to update it using the latest version by following steps set out in the user guide.  To ensure you are using the latest version to prepare data files, you can click “Help” and then “About” on the top left menu of the IRD iXBRL Data Preparation Tools to check the version number.

Please click here to download the current version of IRD iXBRL Data Preparation Tools and to read the user guide and other guidance materials.

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Videos on use of the IRD iXBRL Data Preparation Tools

Please click here to watch the online demonstration on use of the IRD iXBRL Data Preparation Tools.

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Requirements of iXBRL Data Files

Irrespective of whether corporations and businesses use their own software with iXBRL enabled features or the IRD iXBRL Data Preparation Tools to tag their supporting documents, the iXBRL data files prepared should be in conformance with the IRD Taxonomy Package and comply with the following requirements:

• the technical specifications and guidance in the XBRL specifications;
• the technical specifications and guidance in the IRD iXBRL Style Guide; and
• the tagging requirements as explained below.

The iXBRL data files should not exceed 20MB and should not contain JavaScript. The fact attributes such as accuracy attribute, sign attribute and format attribute should be specified as per the IRD iXBRL Style Guide.  The iXBRL data files must also contain the following:

• all tags as required in the List of Mandatory Items; and
• a covering page for tax computations which contains the mandatory items as required in the Profits Tax Return - Corporations (BIR51) or Profits Tax Return - Persons other than Corporations (BIR52), especially those elements not covered in the tax computations, to be embedded in the data files. For the layout and requirements, please refer to A Guide to Cover Page for Tax Computation.

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The IRD Tagging Requirements

Descriptions used by corporations or businesses for accounting and tax items may vary.  The tags provided in the IRD Taxonomy Package may not have the same descriptions or terminologies used by businesses in the documents.  Corporations or businesses should refer to the information provided for the tags in the IRD Taxonomy Package and select the closest available tag with the same accounting or tax concept for the accounting or tax data respectively.  Reasonable judgment should be made when tagging is performed.  If they cannot find a tag with the same concept, they may leave such accounting or tax data untagged.

The Department understands that iXBRL filing of supporting documents is new to Hong Kong.  It will inevitably involve time and effort in tagging.  To ease the burden of corporations and businesses at the initial stage, the Department does not require corporations and businesses to tag all and every data item in their financial statements and tax computations. Corporations and businesses must tag at least the following primary statements in financial statements and/or main tax computation schedules in the tax computations in order to comply with the minimum tagging requirements:

• Financial statements – Statement of comprehensive income, profit or loss;

• Financial statements – Statement of financial position;

• Notes to financial statements – Related party transactions;

• Notes to financial statements – Property, plant and equipment; and

• 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).

If their financial statements or tax computations do not contain any of the sections listed above, tagging of that particular section is not required. For example, if corporations or businesses do not have any related party transactions disclosure in their notes to financial statements, they are not required to tag any elements in relation to related party transactions.

Or if the closest available tag cannot be found in the taxonomy when tagging the particular item in the above sections, you can leave that item untagged.

In addition to the above minimum tagging requirement, corporations and businesses must tag and provide the values for the mandatory items as required by the List of Mandatory Items.  Unlike the above-mentioned minimum tagging requirement, even though their financial statements or tax computations do not contain these mandatory items, they still have to tag and provide values for them in the iXBRL data files.  For example, for monetary elements, they should tag and present “0” for such mandatory item.

Corporations and businesses are welcome to tag more items in the financial statements and/or tax computations than those listed in the minimum tagging requirement and List of Mandatory Items.

For more details, please click here to read the tips for tagging.

Validation of iXBRL Data Files

Before the submission of Profits Tax return, corporations or businesses should use the Uploading Service under eTAX to validate their iXBRL data files for financial statements and tax computations. The system will check the iXBRL data files submitted by corporations or businesses against the XBRL Specifications, the IRD iXBRL Style Guide, the IRD Taxonomy schema and the List of Mandatory Items. A notification email will be sent to the corporations or businesses when the validation result is available under the Uploading Service.  In case the validation checking fails, corporations or businesses should rectify the error(s) in their iXBRL files in offline mode and upload the corrected version of iXBRL files again through the same service.  Upon passing the validation, corporations or businesses can proceed to complete and submit the iXBRL data files with the Profits Tax return via the respective "Completion of Profits Tax Return" and "Submission of Profits Tax Return" services under eTAX.

Please click here to download the List of Validations and Error Messages.

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Exception

Where corporations and businesses do not adopt full HKFRSs / HKFRS for Private Entities / SME-FRF & SME-FRS (i.e. using other accounting standards in preparing their financial statements), they may submit their financial statements in PDF format. In view that HKFRS is virtually identical to IFRS Accounting Standards, corporations and businesses which adopted International Financial Reporting Standards (“IFRS”) issued by the IFRS Foundation in preparing their accounts may also use the IRD Taxonomy Package for tagging purpose. Some corporations or businesses may have already prepared their non-HKFRS financial statements in iXBRL format to comply with other jurisdictions’ requirements. The Department also welcomes the submission of iXBRL data files for non-HKFRS financial statements by these corporations or businesses. It should be noted that electronic submission of financial statements in PDF format via eTAX would only be allowed under exceptional circumstances. In any event, iXBRL data files for tax computations should still be prepared and submitted electronically.

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Frequently Asked Questions

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Enquiries / e-Appointment

If you have any question regarding the iXBRL filing of supporting documents and the use of the IRD iXBRL Data Preparation Tools, you may send your enquiry to the dedicated e-mail account:ixbrl_reporting@ird.gov.hk

You can access e-Appointment to book-in-advance a specified timeslot for answering your enquiries in relation to the use of the IRD iXBRL Data Preparation Tools.  We will contact you by phone at the booked timeslot.

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Disclaimer

The above materials are provided for the purposes of general information and guidance on the subject concerned.  They are only for reference and illustrative purposes.  They are subject to changes without notice.

If there is any discrepancy between English and Traditional Chinese edition of the IRD Taxonomy Package, IRD iXBRL Data Preparation Tools and other related materials, the English edition will prevail. 

The Department takes no responsibility for any errors or omissions in, or for the loss incurred by individuals, companies or other entities due to the use of, the materials or the Traditional Chinese version provided. 

No claims, actions or legal proceedings in connection with these materials brought by any individuals, companies or other entities having reference to, or placing reliance on, the materials will be entertained.

Please click here to view the notice of copyright from the IFRS Foundation and trademark from XBRL International, Inc..