A new limited company in Hong Kong will typically receive its first profits tax return 18 months after it is incorporated. Your company may need to pay a penalty and additional tax if it is filed late. Below are the 4 things that you need to do when your company receives its first profits tax return.
#1 Keep an eye on the deadline
It’s important that you don’t let the deadline pass. The deadline for submitting the first profits tax form is 3 months after the form is issued. You can find the date the return is issued by looking at the date on the front page of the tax return. When it is issued and when you receive it are two entirely different dates. Also, make sure that you don’t throw this form away. Every tax form is unique and you can’t just download another copy from the Internet. Though if you do throw it away or lose it there’s no need to panic. Just ask the Inland Revenue Department to issue a duplicate. If your company returns the form late your company may face a fine and also pay additional tax so make sure to submit it on time.
#2 Prepare your accounts beforehand
The next step is to prepare your accounts. You need all the financial information from the date the company was incorporated to the year-end date. You can find some advice on choosing the right financial year-end date for your company here. If you’re not familiar with accounting you should find an accountant to do it for you. An accountant would typically provide you with the general ledger, profit and loss and balance sheet you need.
#3 Submit the accounts to your auditor
The third thing to do is to submit the general ledger, profit and loss and balance sheet to your auditor. Your auditor will normally require you to sign a bank confirmation form which they need to send to your bank if your company has a bank balance. They will also ask you for some copies of the sales and expenses invoices based on your financial record. Lastly, they will ask you for copies of documents from the company secretary e.g. company formation documents.
#4 Review the financial statements and sign them
After the auditors complete their audit they will send you the draft financial statements and tax computation statements for you to review. When you are fine with these they will send you the finalised financial statements along with the representation letter and other confirmation letters you need to sign. You then sign these and send them together with your profits tax return. After your auditor receives these and signs their auditor’s report the audit is completed at last. Your auditor will then help you submit the profits tax return together with the tax computation statements to the Inland Revenue Department.
These are the four steps you should follow after your company receiving its first profits tax return. Remember to keep an eye on the deadline and not to let it pass. Feel free to leave us any comments you may have.