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How to calculate profit tax in Hong Kong company audit accounting?

Released Date: Jun 27,2021 Article Source: HUANZE

In the process of accounting and auditing of Hong Kong companies, everyone should be most concerned about whether to pay tax this year, how much to pay and how to calculate? How is the sharing tax calculated?

Accounting and accounting in Hong KongHong Kong corporate auditWhat we are most concerned about is whether we need to pay tax this year, how much and how to calculate it? How is the sharing tax calculated?

In the audit of a company in Hong Kong, the Inland Revenue Department authorizes each auditor firm to calculate profits tax in the audit report. The Inland Revenue Department will issue a tax notice based on the tax calculated in the audit report. It is very important to make clear the tax calculation in the audit report of the company in Hong Kong.

In the calculation of profits tax, the Hong Kong auditor shall, on the basis of the total profits in the accounting, multiply the amount of taxable income confirmed after tax adjustment by the corresponding rate of profits tax to calculate the amount of profits tax payable.

Take, for example, the average corporate profit derived entirely from Hong Kong:2020/2021The total profit realized for the year of assessment is300Ten thousand Hong Kong dollars, the bank interest income for the year was1Ten thousand Hong Kong dollars, investment fund to achieve investment income19Hk $10,000, then2020/2021How much profit tax is payable in the year of assessment?

In Hong Kong, the interest income obtained from the funds deposited in the bank does not need to be subject to profits tax, and capital gains are not within the scope of profits tax, so tax adjustment should be made. The taxable income amount of profits tax should be adjusted=300-1-19=280For HK $10,000, a two-tier tax rate (not exceeding$2,000,000Assessable profit of - 8.25%; And assessable profit in excess of$2,000,000Part of - 16.5%). So280Ten thousand Hong Kong dollars need to be calculated in sections.

The amount of profits tax payable=200*8.25%+80*16.5%=16.5+13.2=29.710,000 Hong Kong dollars.
According to the Hong Kong Inland Revenue Department:2020/21Annual profits tax100%For each case10,000The upper limit is yuan.

So the final amount of profits tax payable=29.7-1=28.7Hk $10,000

Only by fully understanding the tax calculation of the audit report can we know how much tax the enterprise needs to pay in that year and arrange funds reasonably.

How to calculate profit tax in Hong Kong company audit accounting?

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