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Do I have to pay both profit tax and salaries tax as a sole proprietor?

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  1. #1

    Join Date
    Jan 2016
    Posts
    2

    Do I have to pay both profit tax and salaries tax as a sole proprietor?

    Hi there
    I have a one man sole proprietorship and am wondering if I need to pay both salaries tax and profit tax? I received a notice from the IRD with a bill for both which equalled well over the normal rates for my income.
    I would really appreciate some advice
    Thanks


  2. #2

    Join Date
    Jul 2019
    Location
    Kwai Chung
    Posts
    10

    Hi Headway,

    No, because you will report both individual tax + profit tax of your business under the same tax reporting form - BIR60 (below with the demo)
    https://www.ird.gov.hk/eng/pdf/ind_ctre_demo.pdf

    You can see in part 5 (page 2 bottom) is for the profit tax reporting part.
    Upon completion of the form together with the required supporting to IRD (https://www.ird.gov.hk/eng/pdf/ir957ae.pdf), IRD will combine the calculation and give you a final tax result of how much you should pay.

    Hope this answer suits you well.

    shri and traineeinvestor like this.

  3. #3

    Join Date
    Jan 2016
    Posts
    2

    Thanks so much for the advice CatcherBiz! You've been more helpful in a few minutes than the IRD have been in months


  4. #4

    Join Date
    Jul 2019
    Location
    Kwai Chung
    Posts
    10

    Great that it helps.

    Yes, the resources in IRD website are not centralized, and therefore, often difficult to find the relevant materials. If you need any further assistance, always feel free to check with me or simply send me a private message .

    shri, Fiona in HKG and Mrs. Jones like this.

  5. #5

    Join Date
    May 2006
    Posts
    5,659

    That depends on how you structure your company, but for a sole proprietorship it's common to pay yourself in dividends in which case you do not declare it as a salary. Please note, dividends paid out to yourself cannot be deducted from assessable profits.