I've been doing an audit of a client,Hong Kong companyIf the company makes a profit this year, it needs to pay profits tax in Hong Kong. However, the company has the loss formed in previous years, which is used to make up for no profits tax in that year, but it needs to pay the pre-tax in the next year. The customer does not quite understand that, how can there be pre-tax in that year?

For example2022yearsHong Kong companyThe financial statement profit before tax isHKD83Ten thousand, losses incurred in previous yearsHKD100Wan, can be used to make up22Annual profit. Balance of loss allowance after making upHKD17Wan, so22Companies do not need to pay profits tax. But the company needs to22yearsHKD83Minus uncovered losses on a 10,000 basisHKD17After ten thousand, there isHKD66The profit of ten thousand shall be paid in advance on the basis of this profit23Annual profits tax, times8.25%Tax rate, prepaid taxHKD5.44Ten thousand.

SoHong Kong companyIf the company makes a profit in the current year, it not only needs to pay the profit tax in the current year, but also needs to pay tax in advance based on the Hong Kong Tax Bureau's assumption that the company will have the same profit level in the next year based on the profit in the current year. If the loss is covered, the current year's profit is less than half of the amount that can be covered, the current year's tax and tax advance will not be involved. Because the loss was fully covered.

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