What’s a Profit Tax Return & What Do I Need To Do?

Michael MicheliniBlog, Corporate, Taxes1 Comment

When do you need to file your audit for your Hong Kong company? Common question, and isn’t always as straightforward as we like to hear. Today we’ll do our best to give you some insights.

Wait For The Profit Tax Return In the Mail

So once you open your company, get your bank account in order, and start doing business – you will not need to worry much about filing for about a year and a half.

Why “about”. You’re waiting for a notice from the IRD (Internal Revenue Department) – or tax department – that is called the Profit Tax Return.

What’s the profit tax return? The government has examples and outline of it here.

The short answer is – it is a request from the government to do your audited financials and submit them to the IRD.

How Much Time Do You Have?

So when is the audit due? So from the date of the profit tax return, you have 60 days (2 months) to do it.

While this may seem like a lot of time, you should get on it right away.

Some questions and tasks to put on your checklist:

  • Do you have all your bookkeeping in order?
  • Have your bank statements and other items ready to disclose?
  • Have you selected your CPA firm to do the audit?

We have had a lot of blog posts discussing bookkeeping, and it is always best to use an online solution. This comes in handy when asking a company to help you with your audit. You may want to shop around and ask a few CPA firms. You also cooperate with us and we will manage the coordinating with our CPA partner firm.

But if you don’t keep your books in order, the audit fee will be a bit more. And if everything is in paper form, you will need to also hand it over to the CPA, making it much harder for you to switch firms in the future.

We recommend at least 1 month before the audit is due (1 month after the Profit Tax Return has been received) you should have your CPA firm starting to prepare everything. It should take about 2 – 3 weeks – but again, depends on how busy the firm is and how complicated your case is.

You Can Do Your Audit In Advance (But Why Would You?)

Can’t wait to do your audit? Don’t want to wait for the profit tax return (PTR) to come in the mail? You can start earlier and submit it. Maybe the fiscal year end dates you’d prefer to modify (though you can do 2 audits in the first filing depending on which fiscal year end you choose) or you want to pay your taxes earlier.

We can’t think of many reasons you’d want to do your audit earlier, but it is possible upon request.

Main Summary – Keep Books in Order, Wait for Profit Tax Return

I know reading about taxes and audits is like drinking sawdust, but this is something we need to be aware of. Over and over again we get questions when the company needs to do their audit.

Main point, the profit tax return is the notice from the government that you need to do it. Then you have 2 months to submit it back to them. To submit the profit tax return, you need to have a HK CPA do the audit and make an auditor report, you sign off, the profit tax return is signed off, and then it’s mailed in.

Hope this is clear and helpful – any questions please let us know in the comments below!

Want To Connect with Other Hong Kong Business Owners?

We have a private community of Hong Kong directors and business owners. You can signup and connect with others in your shoes. Read the activity of what people are going through in audits, tax filing, and profit tax returns. Share in this private network your situation and get support from others in your situation. To learn more and sign up go to this page.

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