Fulfilling tax filing responsibilities you should know

Any business operating in Hong Kong needs to declare profits tax. Regardless of the company has earned profit or not, tax declaration is inevitable. Thinking that there is no need to file tax returns when the business is losing money, the company may incurred even more loss.

Have not received the tax return, is not an excuse for not filling one to tax department. Otherwise You will be greeted with a fine of “3 times” of your tax payment

Jeffery, a wage earner, embarked on the road of entrepreneurship in 2017 and opened a Taiwanese tea shop, focusing on popular hand-shaken drinks. However, due to the high competition in the industry and lack of business experience, the first year of operation was operated at a “loss”. Due to serious business losses, it was assessed by the tax bureau as “no need to pay taxes” in 2017, and no tax returns have been received since 2018. No tax return is received, no tax filling is required? Sounds logical? Be careful, the crisis is already ahead!

Learning from experience and making continuous progress, the business of the tea shop is gradually seeing light. In the past few years of the epidemic, takeaway has become the new normal. The small tea shop starts making unexpectedly good profit. It is always calm before a storm. When he received the “Green Bomb” again in 2022, a small act he did in the past, has turned into big problem now! A penalty letter came after tax filling. The tax office impose a penalty of three times the tax payable during the period. The Taiwanese beverage store has made money in the past 3 years, so one can imagine how scary the fines are! One mistake can turn your world upside down, what mistake did Jeffery, the owner of the tea shop, make?

Pay attention to the responsibility of tax declaration, and under the circumstances, you must “actively” notify the tax bureau?

You may ask, “If you haven’t received the tax return, you naturally didn’t file a one.” Why is it our responsibility? Because the “common sense” here is not taken for granted by the tax bureau. Even if you have been assessed not to pay taxes and the Inland Revenue Department has not sent you a tax return every year, you will be taxed when the company makes a profit. Within four months after the end of the basis period of assessment for the relevant tax year business owner need to voluntarily notify the Inland Revenue Department in writing and request for a tax return.

Taking Jeffery as an example, we can’t turn back the clock. The only way to turn the tide is to rely on accountants to minimize the amount of fines. Bosses, if you are facing the same situation, seek the assistance of a professional accountant as soon as possible. It is better to plan ahead than to remedy the situation afterwards.

Read before paying the tax, otherwise you will lose your huge tax reduction！

Business sometimes earns profit but sometimes is operated at loss. Even if the company is losing money, don’t think that tax filing is none of your business! If the tax return is not lodged in appropriate period or the tax return is not even filed, the tax bureau will make a “tax assessment” based on the company’s income in the previous years. If the company made money last year but made a loss this year, the tax amount will be “overestimated”. If the company pays taxes in accordance with the tax bills and does not take the initiative to notify the tax bureau of the loss of money, the company cannot use the losses for tax deduction when the company makes money in the future. With an experienced professional accountant on your side, you can earn more and lose less. Our company has been doing tax for more than 20 years, we can always give you the best advice. Let earn more together!

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