We have recently noticed an increase in penal actions taken by the IRD for late notification of assessable profits and this newsletter aims to remind our clients of their tax obligations and the consequences of late notification. As the IRD becomes more aggressive in imposing penal action, it is important to understand and comply with the IRD’s requirements for notification of your company’s chargeability and filing of the Profit Tax return in time to avoid any unpleasant action being taken by the IRD.
It is the practice of the IRD not to issue Profits Tax return to every corporation on an annual basis. However, it is important to note that even if you do not receive a Profits Tax return, you are still required to:
Penalty Policy for Assessing Additional Tax under Section 82A
Offences which do not involve any wilful intent to evade tax, and improper transfer pricing and profit attribution, are generally dealt with administratively by the imposition of monetary penalties in the form of additional tax under section 82A of the IRO.
For failure to notify chargeability to tax or failure to submit tax return in time, the penalty may be up to 3 times the amount of tax that would have been undercharged. The general relevant factors to be considered include the length of delay, the amount of tax involved, the reasons given for committing the offence, the attitude of and the remedial steps taken by the taxpayer.
For assistance, please contact Ms. Amie Cheung at firstname.lastname@example.org