Completion of Profits Tax Returns and the Supplementary Forms

Frequently Asked Questions & Answers on Furnishing of Profits Tax Returns by Service Provider

Introduction

For the benefit of the tax paying public and their tax representatives, some frequently asked questions and their answers are listed below for general information and guidance.

I am engaged by my client as a tax representative for undertaking only preparatory work such as preparing profits tax computations and other supporting documents, filling in the return form, etc. Am I treated as a service provider? Do I need to sign the Profits Tax return for or on behalf of my client? Will I be prosecuted for making incorrect return?

Section 51AAD(8) of the Inland Revenue Ordinance (“IRO”) defines “service provider" to mean a person engaged to carry out a taxpayer’s obligation under section 51(1) to furnish tax returns within a stipulated time. Preparatory work such as preparing profits tax computations and other supporting documents, filling in the return form, etc. is involved before a taxpayer discharges its obligation to furnish tax returns. However, as the obligation imposed on a taxpayer by section 51(1) does not concern how and by whom such preparatory work is to be performed, such preparatory work is not a taxpayer's obligation under section 51(1). Therefore, you are not a “service provider” as defined in section 51AAD(8). You do not need to sign the Profits Tax return for or on behalf of your client and the penalty provisions under section 80K are not applicable.

I am engaged by my client as a service provider to furnish the Profits Tax return for or on his behalf and an authorized representative to handle his affairs. I have obtained “Confirmation for Engagement of Service Provider to Furnish Return” (IR1476) from my client. Do both my client and I need to sign the Declaration Part of Profits Tax return?

No. You, as a “service provider” as defined in section 51AAD(8) of the IRO, will be the person signing the Profits Tax return. Your client does not need to sign the return. As you have been appointed as your client’s representative, you need to complete Part 6 of BIR 51, Part 5 of BIR 52 or Part 8 of BIR54, where appropriate.

I am engaged by my client as a service provider to furnish the Profits Tax return for or on his behalf and have obtained “Confirmation for Engagement of Service Provider to Furnish Return” (IR1476) from my client. Do I need to submit the original IR1476 together with my client’s profits tax return?

A photocopy, fax or scanned copy of IR1476 with wet ink signature thereon is acceptable. The original IR1476 need not be submitted together with your client’s Profits Tax return but should be retained for a period of not less than 7 years beginning on the date on which the Profits Tax return is furnished. You may be required to provide the original IR1476 bearing your client’s wet ink signature in case of subsequent review. Failure to retain IR1476 is subject to a fine of $10,000 and the court may order the service provider convicted to do within a specified time the act which the service provider has failed to do.