NOTES AND INSTRUCTIONS

It is obligatory for you to supply the personal data as required by the return and any required supplementary forms. Breach of the statutory requirement may render you liable to penalty or other actions as provided under the Ordinances administered by the Department. Moreover, if you fail to supply the required information, your application/request/notification will not be accepted for processing. The Department will use the information provided by you for the purposes of the Ordinances administered by it and may disclose/transfer any or all of such information to any other parties provided that the disclosure/transfer is authorized or permitted by law. Except where there is an exemption provided under the Personal Data (Privacy) Ordinance, you have the right to request access to and correction of your personal data. You should send such request in writing to the Assessor at GPO Box 132, Hong Kong and quote your file number in this Department.

If after reading these notes you still have difficulty in completing the return, or if you require further information, please:-

The term "relevant year" refers to the particular year of assessment printed on page 1 of the return for final assessment.

The Assessable Profits shown in Part 1 of the return will be used to determine the amount of your Profits Tax liability for the relevant year and the amount of the Provisional Profits Tax payable for the year of assessment following the relevant year. Any Provisional Profits Tax charged for the relevant year will be allowed against the Profits Tax liability for that year.

All amounts must be shown in HK dollars (excluding cents). If your financial statements are prepared in a foreign currency, you should convert the amounts into HK dollars before filling in the items. In the tax computation, you should state the conversion rate used.

NOTICE FOR COMPLETION OF RETURN UNDER SECTION 51(1) OF THE INLAND REVENUE ORDINANCE

The Assessable Profits (or Adjusted Loss) are the net profits (or loss) [other than profits (or loss) arising from the sale of capital assets] for the basis period, arising in or derived from Hong Kong, calculated in accordance with the provisions of the Inland Revenue Ordinance (Cap. 112)("the IRO"), from any trade, profession or business carried on in Hong Kong. Any claim that profits are offshore (non-taxable) must be accompanied by a statement setting out the reasons for the claim. These reasons should be capable of being substantiated by evidence, if requested.

where the annual accounts are made up to any day other than 31 March, the year ended on that day in the relevant year; or

where a corporation commenced or ceased to carry on a business or changed its accounting date, the special period prescribed by section 18C, 18D or 18E of the IRO:-

for commencement cases, if accounts for this period have not been prepared, the profits (or loss) to be returned may be calculated by apportioning the profits (or loss) shown by the accounts which cover the period; or

where the business does not cease but, in whole or in part, is transferred to or carried on by another person; or

Starting from 1 April 2023, all required supplementary forms must be submitted electronically. If you are required to file any aforesaid form, you must download the relevant form and fill in the form electronically. After completion, you must export the filled form to XML file and upload the XML file via the eTAX services under GovHK for submission. If you do not choose to submit Profits Tax Return through electronic filing or semi-electronic filing, you have to print and sign a paper Control List (containing details of XML files uploaded and QR code) generated by the eTAX services for submission together with the Profits Tax Return.

CRITERIA FOR SUBMISSION OF PROFITS TAX RETURN THROUGH ELECTRONIC FILING OR SEMI-ELECTRONIC FILING

You can submit Profits Tax Return - Corporations (BIR51) and the required financial statements, Profits Tax computation and supplementary forms (S1 to S22) in the form of electronic records if the following criteria are met:-

The IRO requires each person carrying on a trade, profession, or business in Hong Kong to keep sufficient records of his income and expenditure and assets and liabilities in relation to that trade, profession or business to enable his assessable profits to be readily ascertained. Such records should be retained for at least 7 years after the date of the transactions to which they relate, or until the corporation is dissolved, if this is sooner. Failure to keep sufficient records may result in a fine of up to $100,000.

fails to comply with the requirements of a notice to make a return without reasonable excuse;

fails to keep sufficient business records of income and expenditure and assets and liabilities without reasonable excuse;

fails to give notice of the cessation of a trade, profession or business without reasonable excuse;

fails to notify a change of ownership of property in respect of which exemption from Property Tax has been granted.

EVASION OF TAX IS A CRIMINAL OFFENCE. MAXIMUM PENALTY is a fine of $50,000 PLUS a further fine of 3 times the undercharged amount and imprisonment for 3 years.

fails to furnish the return;

The above offence 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.

If there are salaries, wages, commission and subcontracting fees charged to the accounts, these payments should also be reported under your Employer's Return file reference with this Department. If you do not have a file reference, dial 187 8022 for assistance.

The profits or loss shown by the financial statements must be converted to the Assessable Profits or Adjusted Loss computed in accordance with Part 4 of the IRO. The adjustments include, but not limited to, the following items:-

expenses or outgoings to the extent to which they are not incurred in the production of profits in respect of which you are chargeable to Profits Tax, e.g. gifts, fines, penalties, gratuitous payments, interest on monies not specifically employed in the production of such profits, except that donations of not less than $100 in aggregate to charitable bodies which are exempt from tax under section 88 of the IRO or to the Government for charitable purposes, may be deducted, provided the deduction does not exceed 35% of the Assessable Profits before set off of losses;

any expenditure of a capital nature e.g. the cost of plant, machinery, buildings, furniture, office equipment, etc. and improvements or extraordinary repairs;

an ordinary / regular contribution to a fund established under a recognized retirement scheme to the extent that it exceeds 15% of the total emoluments of each employee concerned for the period in respect of which the payment is made;

any part of the losses of a trade, profession or business carried on by another person who is chargeable to Hong Kong Profits Tax which is included in your financial statements;

any deemed assessable profits under section 20AE, 20AF, 20AX and/or 20AY of the IRO or section 22 and/or 23 of Schedule 16E to the IRO;

any loss from qualifying debt instruments as defined in section 14A(4) of the IRO and issued on or after 1 April 2018;

any part of the profits of a trade, profession or business carried on by another person who is chargeable to Hong Kong Profits Tax which is included in your financial statements;

net interest income derived from deposits placed in Hong Kong with an authorized institution which is exempted from payment of Profits Tax under the Exemption from Profits Tax (Interest Income) Order;

interest, profits or gains from qualifying debt instruments as defined in section 14A(4) of the IRO and issued on or after 1 April 2018.

detailed Statement of Financial Position/Balance Sheet, Statement of Comprehensive Income/Profit and Loss Account, if the certified copy of the audited financial statements is an abridged version and does not provide sufficient details to enable the Assessable Profits to be readily ascertained;

details of capital expenditure incurred, capital assets sold, depreciation charged to the financial statements and assets not in use at the end of the basis period (where capital assets have been acquired by hire purchase, details of the terms of the agreement for each asset must be submitted);

details of expenditure incurred on, and proceeds from the disposal of any rights in or arising out of, research and development;

details of expenditure incurred on refurbishment of a building (other than a domestic building), the location and how the building has been used during the year;

details of expenditure incurred on, and proceeds from the sale of, environmental protection machinery, environment-friendly vehicles, and environmental protection installation, including any part of expenditure on environmental protection installation that remains to be deducted (and is to be fully deducted) in the year of assessment 2018/19;

details of any service / management fee received including full name and address of each payer, and where available, the Hong Kong Identity Card Number or Business Registration Number of each payer;

details of interest paid or payable, including the name and address of the lender, his relationship with you, the purpose for which the loan was obtained, any security given to the lender and the specific condition under section 16(2) of the IRO which you rely on for the claim for deduction;

details of profits / income / interest received and claimed to have an offshore source and the related direct and indirect expenses;

details showing the name, address and Hong Kong Identity Card Number / Business Registration Number of each recipient, amount paid to each recipient and nature of service in respect of the following items:-

details of and reasons for bad debt provisions and write-offs, showing name and address of each debtor, and the respective amounts;

details of any change in the method of valuation of opening or closing inventories or work-in-progress from that previously used (not applicable to the commencement of a trade, profession or business);

other reconciliation statements and particulars of any unusual transactions which might affect the tax position;

for letting or sale of the business or any of its assets, the name and address of any transferee together with particulars of the terms of transfer;

the names of the persons now occupying your former business premises and, if they are carrying on business, the nature of that business and the name under which it is carried on, if known;

a computation of the deemed assessable profits together with the name and address of each non-resident person, special purpose vehicle, fund, special purpose entity, family-owned investment holding vehicle and family-owned special purpose entity, where applicable (See Notes Item 3.2 in Part 3);

For each category, state the amount involved and basis of computation. For (ii) & (iii), also state the amount in respect of option exercised / award vested during the basis period; and the amount of deduction previously allowed in respect of option / award subsequently forfeited or cancelled during the basis period (if any);

for each fund provided by the non-Hong Kong resident person to the PE, the amount of fund, nature, interest rate and interest expense for the year of assessment;

State the amount of tax payable or repayable in Item 2.1 or 2.2 respectively. Your computation should take into account the amount of Provisional Profits Tax payable for the year of assessment following the relevant year and deduct any Provisional Profits Tax charged for the relevant year. If you have any loss brought forward, you can use it to set-off the Assessable Profits as stated in Part 1 of the return (if applicable) when computing the amount of tax payable or repayable.

State whether you are chargeable at two-tiered rates in Item 2.3 (applicable to year of assessment 2018/19 and subsequent years). If you have no connected entity or no other connected entity elects to be so chargeable for the subject year, you are chargeable at two-tiered rates. For connected entities, the two-tiered rates will only be applicable to one of them. The entity electing for the two-tiered rates must complete Item 9.1 and provide a complete list of connected entities carrying on a trade, profession or business in Hong Kong in supplementary form (S1) unless the entity is a member of a group of companies, one of which is listed on the Stock Exchange of Hong Kong. For details of the two-tiered profits tax rates regime, please refer to the Department's web site.

You must submit, for each recipient, the name, identity (i.e. individual, partnership or corporation), amount, type of intellectual property and the IRD file number with which you submit the Profits Tax Return (BIR54) for the recipient in respect of sums paid or accrued to a non-resident person:-

for the exhibition or use in Hong Kong of cinematograph or television film or tape, sound recording or their connected advertising material;

for the use, or the right to the use, in Hong Kong or outside Hong Kong when such sums are deductible in ascertaining your assessable profits, of any patent, design, trade mark, copyright material, *layout-design (topography) of an integrated circuit, *performer's right, *plant variety right, secret process or formula;

for an assignment of, or agreement to assign, a performer's right in relation to a performance given by the performer in Hong Kong on or after 29 June 2018 and the sums were paid or accrued to the performer or an organizer.

(*information is only required for sums paid or accrued on or after 29 June 2018.)

DEEMED ASSESSABLE PROFITS UNDER SECTION 20AE, 20AF, 20AX AND/OR 20AY OF THE INLAND REVENUE ORDINANCE OR SECTION 22 AND/OR 23 OF SCHEDULE 16E TO THE INLAND REVENUE ORDINANCE

You must include the deemed assessable profits under section 20AE and/or 20AF or 20AX and/or 20AY of the IRO or section 22 and/or 23 of Schedule 16E to the IRO in your Assessable Profits or Adjusted Loss, as stated in Part 1, if:-

In addition, you are required to provide the following information:-

In calculating the deemed assessable profits, please refer to Schedule 15, 15A, 15C, 15D, 16J and/or 16K to the IRO and to the related information on the Department's web site.

SHORT TERM DEBT INSTRUMENTS AND MEDIUM TERM DEBT INSTRUMENTS (ISSUED BEFORE 1 APRIL 2018)

Profits/loss from short/medium term debt instruments (issued before 1 April 2018) are assessable under section 14A of the IRO at concessionary tax rate equivalent to one-half of the profits tax rate and they must be included in the Assessable Profits or Adjusted Loss as stated in Part 1:-

Double taxation relief is available only for territories with which the Hong Kong Special Administrative Region has arrangements for avoidance of double taxation. The Commissioner may verify your claim with the tax authority of the territory concerned.

If a tax credit is claimed, give the foreign tax computation showing the nature and amount of the income taxed. The amount of tax credit claimed must be the final amount of tax charged and paid by you. You must notify the Commissioner in writing of any changes in the amount claimed.

If any income or profits are claimed to be tax exempted pursuant to an arrangement for avoidance of double taxation, provide details of the income or profits so claimed and show the computation.

If you have obtained an Advance Ruling under section 88A of the IRO, and in preparing the return you are required to take into account the way in which a provision of the IRO applies to the arrangement(s) identified in the Ruling, you must submit the following information:-

If you have obtained the Commissioner's opinion / Advance Ruling on the compliance with the economic substance requirements in relation to specified foreign-sourced income, you only need to provide the requested information on the Commissioner's opinion / Advance Ruling in supplementary form (S19) when required to complete such form (See Notes Item 9.19 in Part 9).

A Hong Kong resident person means a person who is resident for tax purposes in Hong Kong. A non-Hong Kong resident person means a person who is not a Hong Kong resident person.

A non-Hong Kong resident person who has a PE in Hong Kong is regarded as carrying on a trade, profession or business in Hong Kong for the purpose of charging profits tax.

If you are a DTA territory resident person, the meaning of a PE is to be determined in accordance with the relevant provisions under the double taxation arrangements concerned.

If you are a non-DTA territory resident person, PE includes a fixed place of business as defined in Section 4 in Part 3 of Schedule 17G to the IRO and agent's activities as defined in Section 7 in Part 3 of Schedule 17G to the IRO.

The income or loss of the person attributable to the PE is to be assessed in accordance with section 50AAK of the IRO.

The IRO requires that the Commissioner be informed of a change of address WITHIN 1 MONTH.

The Business Registration Ordinance (Cap. 310) requires changes of specified particulars of a business to be notified WITHIN 1 MONTH. Information in Item 4.3 will be accepted as a notification under section 8 of the Business Registration Ordinance. Any notification of change of business address should be given to the Business Registration Office separately.

If you cease to carry on any trade, profession or business, the Commissioner must be informed WITHIN 1 MONTH.

You must state your 6-digit industry code of the Hong Kong Standard Industrial Classification (version 2.0) maintained by the Census and Statistics Department ("C&SD"). For the index of industry codes, please refer to C&SD's web site (www.censtatd.gov.hk). If you engaged in more than one business activity in the basis period, please state the industry code with reference to your principal business activity. If you did not have any business activity during the basis period, please state "000000" as the industry code.

You must complete this Part if you have appointed a representative. The authorized representative's reference number must be any combination of a maximum of 10 alpha-numeric characters. Symbols and punctuation marks such as commas, hyphens, colons and the like cannot be used. The authorized representative should quote this reference number in all correspondence with the Department.

"Hong Kong practice unit" means-

a certified public accountant (practising) who practises accountancy on the accountant's own account under the accountant's own name as registered under section 22(2) of the Professional Accountants Ordinance (Cap. 50) ("PAO");

a certified public accountant (practising) who practises accountancy on the accountant's own account under a firm name registered under Division 2 of Part 2A of the Accounting and Financial Reporting Council Ordinance (Cap. 588) ("AFRCO");

a firm of certified public accountants (practising) that practises accountancy in partnership and registered under Division 2 of Part 2A of the AFRCO; or

a company registered as a corporate practice under Division 3 of Part 2A of the AFRCO.

"Certified public accountant (practising)" means a person registered as a certified public accountant under section 22 of the PAO and holding a practising certificate issued under section 20AAD or 20AAI of the AFRCO. The practising certificate number of the certified public accountant (practising) who signed the Auditor's Report of which the certified copy is filed along the Profits Tax return may be retrieved from the Auditor's Report in question. If the Auditor's Report does not contain such information, you should request the information from the certified public accountant (practising) concerned. Reference may also be made to the register of certified public accountants (practising) accessible via the official website of the Accounting and Financial Reporting Council.

Information in Item 7.4.1 will be accepted as a notification under section 8 of the Business Registration Ordinance. The Business Registration Ordinance requires changes of specified particulars of a business to be notified WITHIN 1 MONTH.

"Associated person" means a person controlled by you, a person who controls you, or a person who is under the control of the same person as you are.

You can elect to align the tax treatment of financial instruments with their accounting treatment under section 18H(2) of the IRO and have the related profits assessed in accordance with sections 18I to 18L of the IRO. Sections 18G to 18L of the IRO apply in relation to a year of assessment for which the basis period begins on or after 1 January 2018. For revocation, state the reason(s).

"Amount of one-off adjustment"

In relation to life insurance business-means the amount arrived at by: deducting the net asset value of the life insurance fund immediately before the date of implementation of the risk-based capital ("RBC") regime from the net asset value of the life insurance fund as at the date of implementation of the RBC regime;

In relation to non-life long term insurance business-means the amount arrived at by: deducting the net asset value of the non-life long term insurance fund immediately before the date of implementation of the RBC regime from the net asset value of the non-life long term insurance fund as at the date of implementation of the RBC regime;

In relation to general insurance business-means the amount arrived at by: deducting the premium liabilities attributable to general insurance business in Hong Kong as at the date of implementation of the RBC regime from the reserve for unexpired risks immediately before that date;

In relation to qualifying insurance business-means the amount arrived at by: deducting the premium liabilities attributable to qualifying insurance business as at the date of implementation of the RBC regime from the reserve for unexpired risks immediately before that date.

A family-owned special purpose entity whose beneficial interest is held, whether directly or indirectly, by an eligible family-owned investment holding vehicle can enjoy profits tax concession. If you wish to claim profits tax concession, you are required to complete Item 10.9.

If you are an eligible single family office managing one or more than one eligible family-owned investment holding vehicle ("FIHV") which benefits from the profits tax concession as provided in Schedule 16E to the IRO during the basis period for the year of assessment, you must submit the following information on a separate sheet:-

total number of FIHVs managed by you. A cap is imposed such that not more than 50 FIHVs managed in Hong Kong by you may benefit from the profits tax concession;

name, address and business registration number (if any) of each FIHV managed in Hong Kong by you; and

whether you have complied with the specified net asset value rule under section 11 of Schedule 16E to the IRO.

Where goods are sold on behalf of a non-resident person a separate quarterly return must be submitted on Form BIR52B. This will be issued on application. Where you have, as agent, received on behalf of a non-resident person any other trade or business income arising in or derived from Hong Kong, you will be asked to give further details of the agency. In this context, "agent" has the meaning given by section 2 of the IRO to include the agent, attorney, factor, receiver or manager in Hong Kong of the non-resident person, or any person in Hong Kong through whom such person is in receipt of any profits or income arising in or derived from Hong Kong.

Value creation contributions include performing the functions of, or providing assets in and assuming risks relating to the development, enhancement, maintenance, protection or exploitation of the intellectual property.

For hire, rental or similar charges paid or accrued to non-resident persons for the use of or the right to use movable property in Hong Kong.

For fees, including management, consultancy or service fee, paid or accrued to non-resident persons in respect of professional services rendered in Hong Kong. Include the full amount of fees paid to non-resident persons in respect of services rendered partly outside Hong Kong.

If you have connected entities and elect to be chargeable at the two-tiered rates for the subject year, a complete list of the connected entities carrying on a trade, profession or business in Hong Kong should be provided. Please download supplementary form (S1) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission. If you had no connected entity or you were a member of a group of companies, one of which was listed on the Stock Exchange of Hong Kong for the subject year, you are not required to submit supplementary form (S1).

Please download supplementary form (S2) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission if one or more of the following apply:-

You are required to complete section 1 of S2 if you had transactions with non-resident associated persons / other parts of the non-Hong Kong resident person during the basis period.

A person is associated with another person (each an affected person) if, as between them, the participation condition is met. The participation condition is met as between two persons if, at the time of carrying out the transaction, one of the affected persons was participating in the management, control or capital of the other affected person, or the same person or persons was or were participating in the management, control or capital of each of the affected persons. You have transactions with other parts of the non-Hong Kong resident person if you are a Hong Kong PE of a non-Hong Kong resident person and have transactions with the other parts of that non-Hong Kong resident person, e.g. transactions between the head office and its branch.

You are required to complete section 2 of S2 if an advance pricing arrangement has been made for the basis period under section 50AAP of the IRO.

You are required to complete section 3 of S2 if you belonged to a multinational enterprise group in the basis period and the group is obliged to file a country-by-country report for the accounting period in which the basis period begins.
Part 9A of the IRO provides that a country-by-country return must be filed in respect of a multinational enterprise group of which its consolidated group revenue is not less than the threshold amount prescribed under section 58D of the IRO pursuant to the requirements of the Organisation for Economic Co-operation and Development ("OECD") (applicable to accounting period beginning on or after 1 January 2018).
"Multinational enterprise group" means a group that includes:

(a) two or more enterprises of which the tax residence is in different jurisdictions; or

(b) an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax in another jurisdiction with respect to the business carried out through a PE in that other jurisdiction.

You are required to complete section 4 of S2 if you are a constituent entity of a multinational enterprise group with a total consolidated group revenue of at least EUR 750 million, or an equivalent amount as at the accounting year end date, for the immediate preceding accounting period.

If you wish to claim deduction for R&D expenditure under section 16B of the IRO and/or you had trading receipts or sale proceeds from intellectual property rights generated from R&D activities during the basis period, please download supplementary form (S3) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

If you wish to claim deduction for expenditure incurred on energy efficient building installation under the Hong Kong Energy Efficiency Registration Scheme for Buildings administered by the Electrical and Mechanical Services Department under section 16I of the IRO, please download supplementary form (S4) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

If you were carrying on the business as a ship-owner, please download supplementary form (S5) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

"Professional reinsurer", "authorized captive insurer", "specified insurer" and "licensed insurance broker company" are defined in section 14AB of the IRO. If you were carrying on the business as a professional reinsurer, an authorized captive insurer, a specified insurer, or a licensed insurance broker company, you are required to provide a computation of the assessable profits chargeable at concessionary rate, and download the relevant supplementary form (S6/S7/S13/S14) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

A corporation is a qualifying corporate treasury centre if any of the conditions in section 14D(2) of the IRO is satisfied. If you were carrying on the business as a qualifying corporate treasury centre, you are required to provide details of interest income and interest expenses in relation to your intra-group financing business, a computation of the assessable profits chargeable at concessionary rate, and download supplementary form (S8) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

A corporation is a qualifying aircraft lessor or a qualifying aircraft leasing manager if the conditions in section 14H(2)/14J(2) of the IRO are satisfied. If you were carrying on the business as a qualifying aircraft lessor or a qualifying aircraft leasing manager, you are required to provide a computation of the assessable profits derived from qualifying aircraft leasing activity or qualifying aircraft leasing management activity, and download supplementary form (S9/S10) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

A corporation is a qualifying ship lessor or a qualifying ship leasing manager if the conditions in section 14P(2)/14T(2) of the IRO are satisfied. If you were carrying on the business as a qualifying ship lessor or a qualifying ship leasing manager, you are required to provide a computation of the assessable profits derived from qualifying ship leasing activity or qualifying ship leasing management activity, and download supplementary form (S11/S12) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

If you wish to claim tax concession in respect of eligible carried interest as provided in Schedule 16D to the IRO, please download supplementary form (S15) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

A corporation is a qualifying ship agent, a qualifying ship manager or a qualifying ship broker if the conditions in section 14ZD(4)/14ZM(4)/14ZV(4) of the IRO are satisfied. If you were carrying on the business as a qualifying ship agent, a qualifying ship manager, or a qualifying ship broker, you are required to provide a computation of the assessable profits derived from qualifying ship agency activity, qualifying ship management activity or qualifying ship broking activity, and download supplementary form (S16/S17/S18) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

If you are a constituent entity of a multinational enterprise group, and during the basis period, any of the following specified foreign-sourced income: (i) accrued to you; or (ii) was received or deemed to have been received by you in Hong Kong, on or after the date specified below:

1 January 2023 - interest, dividends, disposal gains in relation to sale of an equity interest in an entity ("equity interest disposal gain"), or income from an intellectual property; or

1 January 2024 - disposal gains in relation to intellectual property or non-intellectual property, other than equity interest disposal gain;

If you are an eligible family-owned investment holding vehicle managed by an eligible single family office in Hong Kong, please download supplementary form (S20) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission. "Family-owned investment holding vehicle" and "eligible single family office" are defined in Schedule 16E to the IRO.

If you have derived onshore gains on disposal of equity interests and wish to elect for the Tax Certainty Enhancement Scheme provided in Schedule 17K to the IRO, please download supplementary form (S21) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

If you wish to claim profits tax concessions for profits sourced in Hong Kong from eligible intellectual property income, please download supplementary form (S22) from the Department's web site (www.ird.gov.hk/e_pfr) for electronic completion and submission.

The amount of net offshore profits should be stated. If the amount is nil or a negative figure, "0" should be inserted.

For net interest income derived from deposits placed in Hong Kong with an authorized institution (e.g. a bank or a deposit-taking company) exempted from payment of Profits Tax under the Exemption from Profits Tax (Interest Income) Order.

For any interest, profits or gains from qualifying debt instruments as defined in section 14A(4) of the IRO, issued on or after 1 April 2018 and you are not an associate of the respective issuer. If a loss is incurred, "0" should be inserted in this item.
You are required to provide separate lists of qualifying debt instruments held by you showing in respect of each debt instrument the issue number, date of issue, date of maturity, your relationship with the issuer, the amount of interest, profits or gains arising therefrom, the stock code in Stock Exchange of Hong Kong (if applicable) and the credit ratings from the credit rating agencies recognized by the Hong Kong Monetary Authority as at the end of the basis period.

For the amount of exempted profits from transactions in assets of a class specified in Schedule 16C to the IRO and incidental transactions derived by a fund falling within the meaning given by section 20AM of the IRO and satisfying the exemption conditions in section 20AN of the IRO. If a loss is incurred, "0" should be inserted in this item. In case of an open-ended fund company with sub-funds, the aggregate amount of exempted profits of each sub-fund should be stated in this item and you are required to provide a computation of such amount.

For the amount of exempted profits from transactions in securities in section 20AO(2)(a) to (e) of the IRO derived by a special purpose entity owned by a fund that is exempt under section 20AN of the IRO. If a loss is incurred, "0" should be inserted in this item.

For the amount of exempted profits from transactions specified in section 16(3) of Schedule 16E to the IRO derived by a family-owned special purpose entity whose beneficial interest is held, whether directly or indirectly, by a family-owned investment holding vehicle that is chargeable at concessionary tax rate. If a loss is incurred, "0" should be inserted in this item.

In ascertaining the chargeable profits there shall be deducted specified capital expenditure on the provision of any prescribed fixed assets as specified in section 16G(6) of the IRO. For convenience, they are classified as "computer hardware and software" and "prescribed manufacturing machinery or plant".

For specified capital expenditure on the provision of any environmental protection machinery claimed for deduction under section 16I(2) of the IRO.

For specified capital expenditure on the construction of any environmental protection installation claimed for deduction under section 16I(3) (applicable for any year of assessment prior to 2018/19 and the next succeeding 4 years), 16I(3A) (applicable for the year of assessment 2018/19 only); or 16I(3B) (applicable for the year of assessment 2018/19 and subsequent years) of the IRO.

For specified capital expenditure on the provision of any environment-friendly vehicles claimed for deduction under section 16I(2) of the IRO.

For capital expenditure on the purchase of patent rights or rights to know-how claimed for deduction under sections 16E and 16EC of the IRO. The expenditure includes legal expenses and valuation fees incurred for the purchase.

For specified capital expenditure on the purchase of specified intellectual property rights (including performer's economic right, protected layout-design (topography) right and protected plant variety right for the year of assessment 2018/19 and subsequent years) claimed for deduction under sections 16EA and 16EC of the IRO.

For deduction claimed for interest on money borrowed from non-Hong Kong associated corporations, which satisfy the conditions specified in section 16(2)(g) of the IRO (applicable to year of assessment 2016/17 and subsequent years).

For deduction claimed for costs of reinstating any premises under a lease to their original condition at the end of the term of the lease or on an early termination of the lease (including any amount paid or payable by a lessee of the lease to the lessor of the lease in order to discharge the lessee's obligation for reinstatement) if certain conditions are met.

Please extract from your detailed Statement of Financial Position/Balance Sheet, Statement of Comprehensive Income/Profit and Loss Account the financial data to fill in this Part. Financial data of an identical or a similar nature in the financial statements should be added up and grouped under the appropriate item.

Gross income means ALL TYPES OF INCOME including but not limited to sales and other ordinary business income, proceeds from the sale of capital assets and other non-taxable income, whether or not derived from the principal business activity.

Turnover refers to the revenue arising from your principal business activities. Items of revenue and gains that arise incidentally or are exceptional in nature should be excluded.

Opening inventories refer to the TOTAL of all kinds of opening inventories, including raw materials, work-in-progress and finished goods.

Purchases refer to the TOTAL of purchases of all kinds of inventories, irrespective of whether direct costs, direct expenses or overheads have been included.

Closing inventories refer to the TOTAL of all kinds of closing inventories, including raw materials, work-in-progress and finished goods.

Gross profit / Gross loss generally refers to the difference between turnover and cost of sales. If you are not engaged in the trading of goods or commodities and no such figure exists in the financial statements, insert "0" in both items.

Dividend income refers to the total amount of dividend received / receivable from shares held by you and reported in the financial statements.

Interest income includes bank interest, inter-company interest income, loan interest income, and any item of a similar nature.

Interest expense includes bank interest, hire-purchase interest, inter-company interest, mortgage loan interest, trust receipt interest, and any item of a similar nature.

Employee and director remuneration include salaries, wages, bonuses, cash allowance, commission, etc. paid to employees, directors' fees and any item of a similar nature. Remuneration of staff working overseas or in the Mainland should also be included.

Share-based payments refer to the amount of share-based payments charged to the Statement of Comprehensive Income/Profit and Loss Account in accordance with the Hong Kong Financial Reporting Standard 2 issued by the Hong Kong Institute of Certified Public Accountants.

Commission payments refer to payments to agents, sales representatives, etc. for their services, whether paid or accrued.

Intellectual property payments refer to:-
(a) royalty payments to the owner (whether a non-resident person or not) for the use of intellectual property (such as cinematograph or television film or tape, sound recording, patent, design, trade mark, copyright material, *layout-design (topography) of an integrated circuit, *performer's right, *plant variety right, secret process or formula, and computer software), whether paid or accrued; and
(b) *payments to a performer or an organizer for the assignment of, or agreement to assign, a performer's right in relation to a performance given by the performer in Hong Kong on or after 29 June 2018, whether paid or accrued.
(*only applicable for sums paid or accrued on or after 29 June 2018)

Management and consultancy fee payments refer to payments for management / administrative or professional services, whether paid or accrued. Building management fees should not be included.

Contractor and subcontractor charges refer to charges paid / payable to third parties in respect of works / services contracted out.

Net profit / Net loss per account refers to net profits / net loss BEFORE tax shown in the Statement of Comprehensive Income/Profit and Loss Account.

Issued share capital means all share capital issued, whether fully paid or partly paid. If you are a branch of a foreign company and do not have such an item in your financial statements, you should insert "0" in the item.

Total value of assets refers to the total value of your assets shown in the Statement of Financial Position / Balance Sheet.

The return must be signed by either the taxpayer or the engaged service provider. If it is signed by the service provider, the service provider must obtain a confirmation from the taxpayer stating that the information contained in the tax return, any required supplementary forms and the Supporting Documents is correct and complete to the best of the taxpayer's knowledge and belief. Please download a "Confirmation for Engagement of Service Provider to Furnish Return" (IR1476) from the Department's web site for completion and submission together with the tax return.