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What if a taxpayer is unable to pay the tax due to difficulties?

Released Date: Nov 19,2021 Article Source: HUANZE

After receiving the tax notice, if the Hong Kong company is unable to pay the tax on time due to financial difficulties, it can contact the Tax Arrears Section to apply for payment in installments.

Hong Kong companyAfter receiving the notice of tax payment, if financial difficulties occur and cannot pay the tax on time, you can contact the tax collection team to apply for payment of tax in installments. However, a 5% surcharge will be imposed on any tax unpaid on the due date and a 10% surcharge will be imposed on the total amount (including tax and 5% surcharge) still unpaid after six months from the due date.

Before the application is approved, the taxpayer may pay in advance according to his proposed instalments. Application for payment by instalments will not be approved except in exceptional circumstances. Even if the payment by instalments arrangement is approved, the Tax Authority will still initiate an action for tax arrears in court. The arrears will have to pay court costs and interest on the judgment debt. The interest shall be calculated from the commencement date of the action until the judgment debt is paid in full.

In making the application, the taxpayer is required to submit the following information :

(one)All recent 3 Photocopies of monthly bank passbooks, monthly statements, credit particulars approved by the bank or financial institution (if applicable);

(two)A statement of income and expenditure and supporting documents to show the most recent3Monthly financial position;

(three)The most recent business carried on3Monthly management accounts (including profit and loss statement and balance sheet), cash flow position and forecast statement;

(four)Specific tax installment proposals;

(five)Daytime contact number.

The Inland Revenue Department may take recovery action against overdue taxes, which may cause inconvenience to the taxpayer. Therefore, taxpayers should make their application for payment by instalments well in advance of the due date.

What if a taxpayer is unable to pay the tax due to difficulties ?

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