In this course · 2 of 4
Course 3
Handle advance tax payments
4 lessons · 4 min
The short answer
You can apply in writing to pay less or none of your Hong Kong provisional profits tax if your profits for the year are likely to be less than 90% of the profits on which it was calculated. Apply at least 28 days before the due date or within 14 days after the demand note is issued, whichever is later, using Form IR1121.
Provisional profits tax is a payment on account, so if your profits have fallen you can ask to hold over part or all of it. The grounds in the Inland Revenue Ordinance include:
- Assessable profits for the year are, or are likely to be, less than 90% of the profits for the preceding year (or of the estimated sum on which provisional tax was charged). Send properly signed draft accounts covering at least 8 months.
- A loss brought forward for set-off was omitted or is incorrect.
- You have ceased, or will cease before year-end, and profits will be lower.
- You have elected personal assessment and it will likely reduce your tax.
- You have objected to the preceding year's assessment.
Time limit. The application must be lodged not later than 28 days before the payment due date, or 14 days after the date the demand note was issued, whichever is later. If you have paid the first instalment you can still apply for the second, subject to the same limits.
How. In writing, using Form IR1121, sent to the Inland Revenue Department (IRD).
Note: the two-tiered rates are not a ground for holdover (the 2018/19 year was a one-off exception).
Legal basis and sources
The law
- Inland Revenue Ordinance (Cap. 112), Part 10A (provisional profits tax), s.63E (holding over)
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
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