Completion of Profits Tax Returns and Supplementary Forms

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

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) of the IRO 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) of the IRO 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) of the IRO. Therefore, you are not a “service provider” as defined in section 51AAD(8) of the IRO. You do not need to sign the Profits Tax Return for or on behalf of your client and the penalty provisions under section 80K of the IRO 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 Inland Revenue Ordinance, will be the person signing the Profits Tax Return. Your client does not need to sign the return. As you have been appointed also as your client’s tax 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.

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. Does my client need to sign a fresh IR1476 yearly if I continue to be my client’s service provider for subsequent years of assessment?

Yes, the IR1476 has to be signed by the client in each year of assessment, and must be furnished together with the paper return. For return filed through electronic or semi-electronic mode, uploading of Form IR1476 is not required and you must keep the duly signed Form IR1476 for submission upon request.

I am engaged by my client as a service provider to furnish the Profits Tax Return for or on his behalf. Can I, being the service provider, request for a photocopy of the Profits Tax Return or the provision of some information reported in the Profits Tax Return previously submitted to the Department?

No. 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) of the IRO to furnish tax returns within a stipulated time. Your statutory duty is to furnish the Profits Tax Return for or on behalf of your client. Unless you are appointed by your client as a tax representative to handle his tax affairs, your request for a photocopy of the Profits Tax Return or some information reported in the Profits Tax Return previously submitted by your client cannot be entertained.

Will the Department accept the Profits Tax Return which is signed by a service provider while the Control List for Supplementary Form (IR1477) is signed by the director of the company?

No. The supplementary forms are part of the Profits Tax Return that should be filed together with it. The person who signed the Control List must be the one signing the Profits Tax Return.

I am the secretary / manager of a corporation. Can I sign the Profits Tax Return of the corporation in the capacity of a service provider?

The Profits Tax Return is accepted as a valid return if it is signed by one of the persons stipulated in section 57(1)(b) (that is, secretary, manager, director, the provisional liquidator or liquidator of a corporation) of the Inland Revenue Ordinance (“IRO”). You, being the secretary / manager of the corporation, is empowered to sign the Profits Tax Return. The corporation is not required to engage you as the service provider under section 51AAD(8) of the IRO. Concerning the Declaration Part of the Profits Tax Return of the corporation, you only need to tick the appropriate box, declare that you are the secretary / manager of the company and sign thereon.

My firm is a professional secretarial company and has been appointed as the secretary / manager / director of a corporation. Can my firm sign the Profits Tax Return of my client in the capacity of a service provider?

The Profits Tax Return is accepted as a valid return if it is signed by one of the persons stipulated in section 57(1)(b) (that is, secretary, manager, director, the provisional liquidator or liquidator of a corporation) of the Inland Revenue Ordinance (“IRO”). Your firm, being the secretary / manager / director of the corporation, is empowered to sign the Profits Tax Return. Your client is not required to separately engage you as the service provider under section 51AAD(8) of the IRO. Concerning the Declaration Part of the Profits Tax Return, your firm only needs to tick the appropriate box, declares that your firm is the secretary / manager / director of the corporation and sign thereon.