Profit tax

Profit tax

Profit tax in Hong Kong is Direct tax and also classified into Income tax.

According to Cap.112 Hong Kong Ordinance, Inland Reveue Ordinance (in short, IRO) IRO Section 14, unless otherwise provides, profit tax shall be charged at the standard rate on any person who carries on a trade, profession or business in Hong Kong and assessable profits arising in or derived from Hong Kong for a year of assessment.

Tax computation

The formula is:

: HK profit tax payable = Net assessable profit X Profit tax standard rate

: Net assessable profit = Assessable profit - Loss brought forward (if any) + Loss transferred from partnership (if any)

: Assessable profit = Profit or (Loss) per financial account + (Disallowable expenses charged in account - Non-taxable income credited in account) - Depreciation allowances - Approved charitable donations

Approved charitable donations

The Approved charitable donations are limited to 10% of the amount after deducting of the Depreciation allowances, per IRO Section 16D. And after the amendment recently, it is changed to 25% of the amount after deduction of Depreciation allowances

Profit Taxpayer

The term person includes corporation, partnership, trustee and sole properiter and so on.

Year of Assessment

The period of assessment mostly is from April 1st to March 31st of the following year, but it is up to taxpayer's wish with reasonable excuse. The example is financial year of the business.

Badges of Trade

Any trade may be subject to profit tax unless a reasonable man can provide evidence to proof that there is no any revenue profit. In Hong Kong, capital profit is not subject to tax.

In order to proof the nature of a trade, the badges of trade are to be considered including the taxpayer's intention of profit, the length of ownership, frequency of similar transactions, reason for disposal, supplementary work and so on.

See also

* Inland Revenue Department (Hong Kong)
* IRO Section 5 Property tax
* IRO Section 8 Salaries tax

Reference links

* [http://www.legislation.gov.hk/blis_ind.nsf/CurAllEngDoc?OpenView&Start=112.1.28&Count=30&Expand=112.1#112.1 Cap.112 of Hong Kong Ordinance, Inland Revenue Ordinance (in short, IRO) IRO Section 14]
* [http://www.ird.gov.hk/eng/tax/bus.htm HK Inland Revenue Department: Questions and Answers]
* [http://www.ird.gov.hk/eng/tax/ind_tra.htm#item01 Different profit tax standard rates apply to corporation and unincorporated business]


Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • capital profit tax — tax imposed on profits earned by selling property …   English contemporary dictionary

  • Tax profit — or taxable profit is used to distinguish between accounting profit or earnings (the number that is generally referred to in financial results for public companies and quoted in the press). Taxable profit is the number that is used to calculate… …   Wikipedia

  • tax — ▪ I. tax tax 1 [tæks] noun [countable, uncountable] TAX an amount of money that you must pay to the government according to your income, property, goods etc, that is used to pay for public services: • The President said he would cut taxes for… …   Financial and business terms

  • tax — I (New American Roget s College Thesaurus) n. assessment, levy, duty, tariff, excise, toll, tithe; impost, custom; rate, income tax, internal revenue; informal, charge. See payment. v. assess, rate, command;charge, accuse; take to task; strain,… …   English dictionary for students

  • profit before tax — ˌprofit before ˈtax abbreviation PBT noun [countable, uncountable] ACCOUNTING TAX a company s profit before tax has been taken away: • The company reported a half year profit before tax of £72m. * * * profit …   Financial and business terms

  • Tax increment financing — Tax Increment Financing, or TIF, is a public financing method which has been used for redevelopment and community improvement projects in the United States for more than 50 years. With federal and state sources for redevelopment generally less… …   Wikipedia

  • Tax farming — was originally a Roman practice whereby the burden of tax collection was reassigned by the Roman State to private individuals or groups. In essence, these individuals or groups paid the taxes for a certain area and for a certain period of time,… …   Wikipedia

  • profit and loss statement — index ledger Burton s Legal Thesaurus. William C. Burton. 2006 profit and loss statement …   Law dictionary

  • Tax forms in the United States — are used by taxpayers and tax exempt organizations to report financial information to the Internal Revenue Service (IRS). They are used to report income and calculate taxes owed to the government of the United States. TOC Federal tax forms 990… …   Wikipedia

  • Tax File Number — (TFN) is an 8 or 9 digit number issued by the Australian Taxation Office (ATO) to each taxpayer (individual, company, superannuation fund, partnership or trust) to identify their Australian tax dealings. In the past, individuals received a 9… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”