Handling a Tax Demand Note in Hong Kong

Handling a Tax Demand Note in Hong Kong

Contact Us


A tax demand note is a tax assessment notice issued by the Inland Revenue Department (IRD) to any person who is chargeable to tax under the Inland Revenue Ordinance (IRO). A taxpayer should give careful consideration to the IRD’s tax demand note on receipt.

Failure to settle the tax demand note can have a grave outcome. Taxpayers are advised to look at the given information below carefully. However, this does not refers to IRD tax enquiry and it is better to seek professional advice if there is any.

The Basis for the Assessment of a Tax Demand Note

The IRD usually issues tax assessments to the taxpayer after they have submitted their tax returns. But in the absence of the taxpayer submitting the tax return, the IRD may issue an estimated assessment in the absence of the tax return filed if the Assessor considers that the tax payer is chargeable with tax under the IRO.

Furthermore, the Assessor also has the power to make an additional assessment within the year of assessment or within six years after the expiration of the year of assessment if the Assessor opined that there has been an under assessment from the proper amount or no assessment at all.

Accordingly, the tax assessment basis (whether it is a tax assessment issued per return, estimated tax assessment or an additional tax assessment) have different outcomes to a taxpayer e.g. the requirements to lodge an objection (see below), and/or furnish any outstanding tax return.

Payment Details on a Tax Demand Note

The tax demand notes will have details like the total payable amount and the amount due for the first and second installments, if applicable. Besides the final tax of the current year of assessment, the tax for that year will also include the provisional tax for the following year of assessment.

Failing to pay tax will be fined with an initial surcharge between 2% and 5% of the amount not paid. The tax and the initial surcharge has to be paid within 6 months. Otherwise, a surcharge up to 10% of the total amount due will be applied.

Time Limit for Lodging an Objection

Any person who is aggrieved by a tax assessment may file a written objection to the grounds of this objection or general reasons against tax assessment within one month from the date of the tax assessment. Late appeal can only be accepted as long as the Commissioner of Inland Revenue is satisfied that it is due to an absence from Hong Kong, sickness or other reasonable cause. If there is no valid objection lodged, the tax assessment will become final.

In this case, even if the correct tax amount is established and found to be excessively paid, there will not be any revised tax assessment issued and the overpaid tax will not be returned. Therefore, when one is sent a tax demand note, he or she must verify its correctness and decide whether a tax objection should be raised.

Furthermore, an objection must be lodged together with the outstanding tax return in the event of a contingent assessment. Hence, the objection lodged in any other form will not be considered by the IRD.

Deadline for Applying Holdover of Provisional Tax

Taxpayers meeting the criteria where the assesable income/profit is lower than 90% of the assessment from previous year, can either write personally or through a qualified tax representative for holding over some or all of the provisional tax. Deadline for the holdover of provisional tax application will be stated in the tax demand note.

How FastLane Group can Help?

FastLane Group possesses the ability satisfying the tax demand notes from the Inland Revenue Department. We help the client to understand assessment letters, use the negotiation opportunity, and to meet the deadline for the objection/holdover application. Our team of tax professionals will ensure that client complies, and minimization of penalties and tax obligations is achieved successfully. Contact us now.