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Section 70A Claim and Objection, Holdover of Provisional Profits Tax

Tax Objection

If you wish to object against / dispute the assessment demanding final tax, you must lodge a notice of objection in writing stating precisely the grounds of the objection within the prescribed time limit. You may complete the relevant parts of the Form IR831 for objection, sign it and return it to the Inland Revenue Department.

The notice of objection must be received by the Inland Revenue Department within one month after the date of issue of the notice of assessment. If you have elected for personal assessment, the subsequent issue of a notice of assessment will not extend the time limit for objection to assessments of property tax, profits tax or salaries tax already issued.

Late objections will only be considered if the Commissioner of Inland Revenue (Commissioner) is satisfied that owing to absence from Hong Kong, sickness or other reasonable causes, you have been prevented from lodging the objection within the specified time. You should provide the reasons preventing you from lodging an objection within the specified time in your notice of objection or Form IR831.

Estimated Assessment demanding final tax

If it is objection against an estimated assessment issued because of the failure to lodge a return, a properly completed tax return together with the accounts, where applicable, must also be submitted with the notice of objection.

Section 70A claim

After the IRD issues a tax assessment, the taxpayer who disagrees with the assessment can lodge a written notice objection stating precisely the grounds within one month after the date of issue of such assessment. If the taxpayer fails to lodge the objection within this one-month period, the tax assessment will become final and conclusive. However, Section 70A allows the taxpayer to revise such assessment even after the one-month period if there is an error in the tax return or assessment. Examples of error include wrong figure, omission of income or expense and arithmetical error, etc.

The time limit for the objection under Section 70A is the later of (a) within 6 years after the end of the year of assessment in which the correction is needed; or (b) within 6 months after the date on which the relevant notice of assessment was issued.

After receiving the objection, the IRD will review the case and decide whether to accept or reject. If the IRD rejects the taxpayer’s Section 70A claim and issues a notice of refusal, the taxpayer is still allowed to lodge an objection against the notice of refusal.

Holdover of Provisional Profits Tax

It a taxpayer is not satisfied with the demand for payment of provisional tax, the taxpayer can apply for holdover of a part or the whole of the provisional tax.

The taxpayer can apply for the holdover under the following grounds:

· Assessable profits are, or are likely to be, less than 90%, of the assessable profits for the preceding year or of the estimated amount.

· Amount of loss brought forward for set off that year of assessment has been omitted or is incorrect.

· Taxpayer have ceased, or will before the end of the year of assessment cease business, and therefore the assessable profits for that year of assessment are, or are likely to be, less than the assessable profits for the preceding year or of the estimated amount.

· Taxpayer has objected the profits tax assessment for the preceding year.

Our Services

We offer a comprehensive range of services to assist our clients with regard to lodgment of objection and application for holdover of provisional profits tax to the IRD. We will assist in the process to ensure appropriate grounds and supporting documents are submitted to the IRD in order to have a favorable result.

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