【Overdue Tax Payment Penalties】The government has collected 445 million HKD in penalties, did you contribute to that?
The latest figures released by the Inland Revenue Department show that the number of cases where people were fined for late tax payments increased by 22% compared to the previous year.
They issued demand notes to over 252,800 people, involving a total of 445 million HKD in penalties.
During tax season, everyone talks about saving on taxes, but ironically, many people are quietly trying to save, only to end up being fined…
● Common reasons for late tax payment, any of them apply to you?
1) Notify Tax department even the tax return is not received on time.
The most common and perplexing reasons include not receiving the tax return, and mistakenly thinking that means you don’t have to pay taxes.
According to the law, as long as you have earned income, even if you didn’t receive the tax return, you are still obligated to proactively apply to the Inland Revenue Department for the form to be issued.
For example, if your company had losses in the previous year, or if you were an employee without income during a period, you may not receive the tax return, but you would have previously received letters from the Inland Revenue Department reminding you to apply for the return again when you have profits/income.
2) When address change, remember to notify Business Registration Office and tax department
Secondly, when a company changes its address, many people think that notifying the Business Registration Office is the same as notifying the Inland Revenue Department.
In fact, until the Inland Revenue Department updates its records, the tax return will never be sent to you. This situation has become more common, especially during the past pandemic, when many offices have been downsizing, upsizing, or even converting to home offices.
3)Open the tax letter at once and ask advice from professionals
The final, almost ridiculous but not uncommon situation is “not opening the tax letter because it’s too scary”. It’s the truth – this has actually happened! You’ll have to pay eventually, so why procrastinate? Note that late tax payment will incur a 5% surcharge, and the percentage will increase over time, so the penalty will just keep snowballing.
● Turn passive into active
Receiving a penalty notice is the same as receiving a tax demand note – stay calm and handle it, because “making amends” through appeals is allowed.
Have a professional accountant follow up, and with reasonable justifications, you may be able to get the penalty waived.
It’s not recommended to appeal to the Inland Revenue Department yourself, as it’s difficult to retract what you’ve said, and “lack of organization, anxiousness, and lack of experience” often just make the situation worse.
The ideal approach is to have an accountant handle your taxes early on, as the “urgent fees”, appeal letters, and other additional costs arising from last-minute actions will only add to your burden.
Each industry has its unique business techniques. Consulting with “Maxi Solution Accounting,” an accounting company with over 20 years of experience, can help you avoid many pitfalls and facilitate the growth of your business.
“Maxi Solution Accounting” – an accounting partner that can help you prosper.
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