Notification of chargeability
- Scope of Charge to Tax
- Requirement Under the Inland Revenue Ordinance to Notify Chargeability
- How To Ascertain Whether You Are Liable To Tax
- How to Notify Chargeability
- Penal Actions for Non-compliance
- Completion and Submission of Tax Return when Received
Scope of Charge to Tax
The Hong Kong tax system is based on the territorial concept. If you derive employment income (Salaries Tax), rental income (Property Tax) or business profits (Profits Tax) from Hong Kong, you may be liable to tax here whether you are a Hong Kong resident or not.
Please click Salaries Tax, Property Tax and Profits Tax for information on the scope of charge under the respective heads of charge.
If you are liable to tax in Hong Kong, you have to inform the Inland Revenue Department ("IRD"). Section 51(2) of the Inland Revenue Ordinance provides that a person chargeable to tax for any year of assessment shall inform the Commissioner in writing that he is so chargeable not later than 4 months after the end of the basis period for that year of assessment unless he has already been required to furnish a Tax Return.
Basis period for any year of assessment is the period on the income/profits of which tax for that year will be computed. For Salaries Tax and Property Tax, the basis period is from 1 April each year to 31 March of the following year. Please refer to the page of Profits Tax for information on the basis period in different situations.
Therefore if you are liable to tax and have not received a tax return, you have to write to the IRD for a tax return within 4 months after the end of the basis period for the year of assessment concerned (i.e. on or before 31 July for Salaries Tax and Property Tax).
There are special requirements for the following categories of taxpayers:
Individual who is about to leave Hong Kong
An individual chargeable to Salaries Tax who is about to migrate to other countries, to study or to work overseas, is required to notify the IRD in writing at least 1 month before the expected date of departure. The Commissioner may accept a shorter notice if it is considered reasonable.
Please also see:-
- Taxpayer who is about to leave Hong Kong
- You or your employee is going to leave Hong Kong (What are you required to do under the tax law?)
Non-resident entertainers and sportsmen
A non-resident entertainer or sportsman is chargeable to tax in the name of the person in Hong Kong ("the Hong Kong Payer") who pays or credits the sums to that entertainer or sportsman or his agent. The Hong Kong payer should complete Form IR623 immediately when the non-resident entertainer or sportsman arrives in Hong Kong.
Please also see: -
If a non-resident individual has income or profit chargeable to tax in Hong Kong, the individual has to inform the Inland Revenue Department. Section 51(2) of the Inland Revenue Ordinance provides that a person chargeable to tax for any year of assessment shall inform the Commissioner in writing that he is so chargeable not later than 4 months after the end of the basis period for that year of assessment unless he has already been required to furnish a Tax Return. Non-resident individuals who have remuneration for services rendered in Hong Kong may notify their chargeability by using the Form IR623R. A payer may submit Form IR623P to report sums payable to non-resident individuals who are engaged to provide services or exercise profession in Hong Kong, not in the capacity as employees.
Please also see: -
Property Tax is charged on the net assessable value of the let property. The net assessable value is the consideration payable to the owner less the rates paid by the owner and less an allowance of 20% for repairs and outgoings.
Please also see:
- Profits Tax
- A Guide to Profits Tax for Unincorporated Business (1)
- A Guide to Profits Tax for Unincorporated Business (2)
- A Guide to Profits Tax for Unincorporated Business (3)
Personal Assessment is a tax relief and it may help to reduce your tax liability. Where Personal Assessment is applicable, an individual is liable to tax if the aggregate of the individual's and, if appropriate, the spouse's income/profits from employment, property letting and business exceeds the individual's/the couple's total allowances and allowable deductions .
Please also see:
- First-time Taxpayer
- Taxpayer previously assessed as not liable to tax (Review Case)
- If you had been assessed as not liable to tax in the past, the IRD may not issue returns to you annually. However, you are still required to notify the IRD in writing when you have become liable to tax within 4 months after the end of the basis period for the year of assessment concerned, giving your identity card number, file number, postal address and daytime contact telephone number. You may use the following notification form: IR6167 for Salaries Tax, IR6168 for Profits Tax, or IR6129 for Property Tax.
- Issue of Advice Letters to review tax liabilities:
To simplify the reviewing process for certain cases, the IRD issues tax returns by first sending Advice Letters (IRC6106) together with information leaflets (IR1397) to individuals. If the recipient satisfies any one of the conditions stated in the Advice Letter for the year of assessment specified in the Letter, he is required to complete the lower portion ("Request for Tax Return - Individuals") and return the Letter to the IRD. A Tax Return - Individuals (BIR60) for the specified year will then be sent for his completion. Otherwise, no reply to the Letter is required. The information leaflet enclosed provides general tax information relating to taxpayers' obligation to notify chargeability for easy reference, Taxpayers may also make use of the notification form at the end of the leaflet to inform chargeability for other years.
- Taxpayer who has received a tax return and has a new source of income
The IRD will issue Tax Return - Individuals (BIR60) to individual taxpayers known to be liable to tax each year. The return is for an individual to report his employment income, rental income from solely owned property and profits from sole proprietorship business and to elect for Personal Assessment. Thus if you have received a tax return, you may declare your new source of income/profits from employment, solely owned property or sole proprietorship business in the appropriate part of the tax return.
For further information on how to complete a tax return, you may refer to Completion and Filing of Tax Return - Individuals.
- Joint-owner or co-owner of property
When a jointly owned or co-owned property is let out, the owners must inform the IRD in writing that the property has been let out notwithstanding the tax positions of the individual owners. One notification only is required for each property. The owners may use the Form IR6129 for notification.
A separate property tax return (BIR57 or BIR58) in respect of that particular property will be issued by the IRD.
- Notes to property owners
If you are a property owner and have let out your property, please note that the stamping of tenancy agreement or completion of questionnaire from the Rating and Valuation Department does not constitute a notification of chargeability. You are still required to give a written notice to the IRD and may use the Form IR6129 for notification purpose.
- Newly registered business
- Continuing business
- Business not required to submit return annually
It is important to note that if a business commences or recommences to earn assessable profits (before the set-off of any loss brought forward), the business must inform the IRD in writing within 4 months after the end of the basis period (the accounting period) for that year of assessment.
Penal Actions for Non-compliance
A person who fails to comply with the requirement to notify chargeability might be prosecuted under section 80(2) or subject to Additional Tax under section 82A of the Ordinance. For details, please refer to Penalty Policy.
When you have received a tax return, you are required to complete and file the return within the time limit stipulated in the return even if you may not be liable to tax for that year. Failure to do so may be subject to estimated assessments/penal actions.