BRIDGES Tips & FAQs for Start-ups

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A savvy entrepreneur should always be equipped to cope with the tax filing season. Heed the advice from the following popular tax-related FAQs to know how to build a good filing practice.

 

1. Which Types of Tax Returns a Business Owner Needs to File?

Generally, the Inland Revenue Department (IRD) will issue 3 types of tax returns - Employer’s Return, Profits Tax Return and Individual Tax Return

The IRD will issue Employer’s Return and Profits Tax Return on the first working day of April, and issue Individual Tax Return on the first working day of May every year. It is required for taxpayers to complete the filing within 1 month from the date of issue; otherwise, penalties or even prosecution may occur.
 

2. Does the Employer’s Return Need to be Filed if A Company Has 1 Director Only with No Staff?

Whether a company has got any paid staff during the fiscal year or not, once the Employer’s Return is received, the receiver must file it within the indicated 1 month. Even without no employee, the Director will incur either Director’s fees or Director’s salary (two ways to give remuneration to a Director), and both are taxable. Thus, this needs to be reported to the IRD by filing the Employer’s Return.

There is another misconception that taxpayers should be aware of. If the company hired sub-contractors / freelancers or part-time staffs in the previous fiscal year, regardless of their location (HK or overseas), all these staffs also need to be reported in the Employer’s Return. 
 

3. Should the Details Filled in the Employer’s Return Match with the MPF Scheme?

Absolutely. The details of the Employer’s Return ought to match with the registered MPF scheme since a company can claim tax deductions for the mandatory and voluntary contributions made (if the maximum amount of contributions do not exceed 15% of the employee’s total emoluments*). Regardless of employment types, if the employment period exceeds 60 days or more, employers are required to enroll the employees in an MPF scheme and file their details in the Employer’s Return as stated in question 2. 
*declared by the Mandatory Provident Fund Schemes Authority

Eager to know more about some insider tips? Contact us at info@bridges.hk now and chat with our in-house tax strategists.

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