Consultation on Profits Tax Filing

The Department conducted two consultation exercises from January 2021 to January 2022 to solicit (i) views of various interested parties including but not limited to businesses, professional bodies and tax practitioners on the introduction of iXBRL tax filing requirements based on the proposed IRD Taxonomy Package; and (ii) their feedback on the proposals for taking forward the project on electronic filing (e-filing) of Profits Tax returns (the e-Filing Project). Before the production launch of voluntary e-filing in April 2023, relevant stakeholders were invited to participate in a trial run exercise of using the IRD iXBRL Data Preparation Tools (the Tools) from December 2022 to January 2023.

First Consultation Exercise

We received eight written submissions on the proposed IRD Taxonomy Package for the purposes of iXBRL tax filing requirements. We have carefully analysed the submissions. Overall, the respondents generally supported the introduction of iXBRL tax filing requirements and the implementation of mandatory e-filing of Profits Tax returns in phases. The respondents also expressed views regarding the transition matters, penal provisions, availability of conversion tools for generating iXBRL data files, obligations of taxpayers and tax representatives and tagging issues. The views gathered in relation to those three specific questions raised in the first consultation paper together with our responses were reported and attached at Annex to the second consultation paper issued in November 2021.

Second Consultation Exercise

We received eight written submissions in response to the proposals for taking forward the e-Filing Project. We have carefully analysed the submissions. Overall speaking, the respondents generally supported the adoption of a phased approach for taking forward the e-Filing project and the provision of assistance offered by the Department. The respondents expressed views mainly on four key issues: tagging requirements, implementation timeline, consequence of incorrect tagging and provision of additional support. They also suggested enhancing other electronic services to be provided by the Department.

During the consultation period, we attended 17 consultation sessions, webinars and meetings to brief representatives from the professional bodies, information technology and professional accounting firms on our tax digitalization roadmap and seek their views on our proposals for taking forward the e-Filing Project. There were over 4,800 participants in these consultation briefing sessions.

The summary of major views from our stakeholders and the Department’s responses and a list of the professional bodies, industry associations and professional accounting firms which attended the consultation sessions are available through the following links:

Summary of stakeholders’ views and the Department’s responses

List of participants in the consultation sessions

Trial Run

A trial run exercise of using the preliminary version of the IRD Taxonomy Package and the IRD iXBRL Data Preparation Tools was conducted from 19 December 2022 to 18 January 2023. During the trial run, the participants experienced using the preliminary version of the IRD Taxonomy Package and the IRD iXBRL Data Preparation Tools to generate iXBRL data files for financial statements and tax computations and upload their self-prepared iXBRL files to the Department’s testing site for checking their validity.

There were 41 organizations and companies participating in the trial run. A total of 303 iXBRL data files were uploaded to the testing site for checking the validity. Eight written submissions in response to the trial run exercise were received. Overall speaking, the major views received focused on five key issues: tagging requirements, selection of appropriate tags for tagging purpose, functions and design of the IRD iXBRL Data Preparation Tools, consequence of incorrect tagging and provision of additional support. The stakeholders also offered some suggestions on enhancing other electronic services to be provided by the Department.

Please click here to read the summary of major views of our stakeholders and the Department’s responses

Way Forward

We take this opportunity to thank all respondents who sent in submissions or participated in the consultation sessions or trial run exercise for their valuable views and comments on the proposals of the e-Filing Project. Having regard to the responses, we have fine-tuned the design of the IRD iXBRL Data Preparation Tools before the production roll-out in April 2023. With the general support from the respondents for the e-Filing Project, we proceed to prepare the subsidiary legislation for the implementation of mandatory e-filing of Profits Tax returns. Our target is to introduce the subsidiary legislation into the Legislative Council for negative vetting in the first half of 2024.

We will maintain a close dialogue with the accounting and tax practitioners and interested parties and will consult them on the implementation plan of mandatory e-filing of Profits Tax returns later this year. Meanwhile, if you have further comments on or enquiries relating to the voluntary e-filing of Profits Tax returns, please send them to the e-mail address: ixbrl_reporting@ird.gov.hk.