{"id":3077,"date":"2025-11-11T19:07:41","date_gmt":"2025-11-11T11:07:41","guid":{"rendered":"https:\/\/www.mnnbus.com\/?p=3077"},"modified":"2026-03-17T16:41:38","modified_gmt":"2026-03-17T08:41:38","slug":"what-is-provisional-tax-and-learn-about-how-to-apply-for-holding-over-of-the-provisional-tax","status":"publish","type":"post","link":"https:\/\/www.mnnbus.com\/en\/blog\/what-is-provisional-tax-and-learn-about-how-to-apply-for-holding-over-of-the-provisional-tax\/","title":{"rendered":"What is Provisional Tax? What can I do if I want to hold over my provisional tax? What should I be aware of?"},"content":{"rendered":"
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What is \"Provisional Tax\"?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\"Provisional Tax\" is a pre-payment measure in Hong Kong's tax system that applies to individuals and corporations when they are assessed for Salaries Tax, Profits Tax or Property Tax. Simply put, taxpayers are required to make advance payment of tax for the following year of assessment based on the amount of tax payable for the previous year of assessment or an estimate of the amount of tax payable for the following year of assessment.<\/p>

The purpose of this system is to enable the Government to collect tax more steadily and at the same time allow taxpayers to shoulder the tax burden in installments instead of paying it off in one lump sum at the end of the year.<\/p>

In addition, when the actual amount of tax payable is approved, the provisional tax paid in advance will be taken as a credit in the final tax assessment; a refund will be obtained if more tax has been paid in advance, or a refund will be required if less tax has been paid.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Calculation and payment of provisional tax<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Generally speaking, the Inland Revenue Department (IRD) will estimate the amount of provisional tax to be paid for the following year based on the amount of tax (e.g. salaries tax, profits tax, property tax) paid in the previous year of assessment.<\/p>

The payment is usually made in two installments: the first installment is about 75% of the estimated amount and the second installment is about 25%.<\/p>

For example, if your taxable amount for the previous year of assessment was HK$$50,000, your provisional tax for the next year may be HK$$50,000, with the first installment of about HK$$37,500 payable in January and the subsequent installment of about HK$$12,500 payable in April.<\/p>

Upon completion of the final tax assessment, if the actual tax assessed is HK$45,000, the prepaid excess of HK$5,000 will be refunded; on the contrary, if the actual tax assessed is HK$55,000, the prepaid excess of HK$5,000 will be refunded.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Why might you consider applying to hold over your provisional tax? What can I do?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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If you anticipate a significant decrease in income or profits for the next year of assessment, or the cessation of a business, or any other significant change affecting your tax liability, you may apply to the Inland Revenue Department (IRD) to hold over the payment of provisional tax.<\/p>

Application requirements include:<\/p>