Hong Kong: Update on proposal for e-filing of profits tax returns

Updated status of the electronic filing (e-filing) of profits tax returns

Updated status of the electronic filing (e-filing) of profits tax returns

The Inland Revenue Department (IRD) updated the status of its project for the electronic filing (e-filing) of profits tax returns.

New Form IR1476

Under the existing legislative framework for e-filing of tax returns, before furnishing a profits tax return, the service provider must obtain a confirmation from the taxpayer stating that the information contained in the return is correct and completed to the best of the taxpayer’s knowledge and belief. The confirmation will need to be obtained through a new Form IR1476 to be uploaded by the IRD on its website. Taxpayers will be required to make a declaration, date and physically sign the form.

Free iXBRL conversion tools from the IRD

The IRD would provide free iXBRL (Inline eXtensible Business Reporting Language) preparation tools to assist taxpayers in converting the financial statements and tax computations in Word or Excel files to iXBRL data files.

To encourage “small businesses” (currently defined as businesses with gross income not exceeding HK$2 million and satisfying certain conditions) to voluntarily e-file profits tax returns, only certain items would need to be tagged for small businesses, such as:

  • Financial statements—Statement of Comprehensive Income, Statement of Financial Position, related-party transactions, and property, plant and equipment
  • Tax computations—profits tax computation and detailed profit and loss account

In addition, the IRD would provide specified iXBRL templates to small businesses for them to input data to the pre-defined templates for generating iXBRL format files.

Other support from the IRD

The IRD would also provide other support to taxpayers such as one-on-one “e-concierge” consultation on the use of the preparation tools, IT support-service hotline to help businesses to upgrade their own computer programs, online walkthrough demo, user guide, and frequently asked questions.

Implementation timelines

The proposed implementation timelines of the e-filing project are as follows:

  • Uploading of the IRD taxonomy onto the IRD’s website in early 2022
  • Rollout of the iXBRL Preparation Tools by the end of 2022 or early 2023
  • Launch of trail / pilot run in the fourth quarter of 2022
  • Voluntary and mandatory e-filing of profits tax returns by April 2023 and 2025 respectively for large multinational enterprises (MNEs)
  • Mandatory e-filing of profits tax returns in general by 2030 (tentatively)


For more information contact a KPMG tax professional:

David Ling | +1 609 874 4381 | davidxling@kpmg.com

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.