Sole proprietor tax return in Hong Kong: BIR60 and profits tax

Running a business in your own name is the simplest structure in Hong Kong, and its tax return is simpler too: it is the same individual return an employee files. What catches sole proprietors out is the detail around it, such as which part of the form, when the IRD sends a partnership return instead, what to attach, and what the 3-month deadline means. Here is the whole picture, with every rate and date taken from the Inland Revenue Department (IRD) and linked to the page it came from.

BIR60 or BIR52: which return you get

Profits tax is charged on any person carrying on a trade, profession or business in Hong Kong, including an individual, on profits arising in or derived from Hong Kong [1]. A sole proprietor is not a separate taxpayer from the person who owns it, so the IRD does not issue a separate profits tax return to the business. Where a business is 100% owned by you, you report it in Part 5 of your Tax Return, Individuals (BIR60) [2], the same form on which you report salaries and rental income from solely owned property and elect personal assessment [4].

The IRD states exactly when a BIR52 is used instead, and it turns on ownership during the basis period, not on size [2] [3]:

• Sole proprietorship throughout the basis period: report the profits or loss of all your sole proprietorship businesses in Part 5 of your BIR60.
• Partnership, or a partnership changed to or from a sole proprietorship during the basis period: report the business in the Profits Tax Return, Persons Other Than Corporations (BIR52).

When you admit a partner, the IRD issues a BIR52 in the partnership's name for the year of change and the years after. When all your partners retire, the IRD stops issuing the BIR52 from the year after the year of change. Either way, the profits for the whole year of change go on the BIR52, not in Part 5 of your BIR60, and the IRD treats the business as continuing rather than ceased [2]. A company you own shares in is a separate taxpayer with its own return; our profits tax return guide covers it.

Two-tiered rates for unincorporated businesses

Unincorporated businesses pay a lower rate than corporations. Under the two-tiered rates, for the year of assessment 2018/19 onwards, an unincorporated business pays 7.5% on assessable profits up to $2,000,000 and 15% on any part above that; the normal rate for unincorporated businesses is 15% [1]. Corporations pay 8.25% and 16.5% [1].

You declare in Part 5 whether the business is chargeable at the two-tiered rates. If the business has connected entities and none of the others elects the two-tiered rates, you also complete Section 6 of the Appendix [2]. If you run two businesses, or a business and a company, decide which one takes the lower tier before either return goes in.

Profits tax is charged on assessable profits, not on the net profit in your accounts. To get from one to the other you add back items such as capital payments and accounting depreciation and deduct the depreciation allowances the Inland Revenue Ordinance permits; the IRD's pro forma computation IR957A(e) sets out the common adjustments [7]. If you run more than one business, prepare a separate computation for each [2].

What to attach, and what to keep

Whether you attach accounts depends on gross income, business by business [2]:

• Gross income not exceeding $2,000,000: you are not required to attach financial statements. You must still prepare the accounts, complete the return from them and keep them, because the IRD may ask to see them later.
• Gross income over $2,000,000: you submit a set of certified accounts, the balance sheet and the trading and profit and loss accounts, with a tax computation and supporting schedules showing how the assessable profits or adjusted loss were arrived at.

Every business owner must keep business records and prepare annual accounts, however small the income, and keep them for at least 7 years [7]. Failing to keep sufficient records may result in a court fine of up to $100,000 and estimated assessments being raised on the business [7]. If you leave Part 5 blank, the IRD may estimate the profits and assess you on that estimate, and in computing penalties it takes the ultimately assessed profits as the amount undercharged [2].

Deadlines: paper and electronic

A BIR60 is normally due within 1 month of issue, but if you solely owned any unincorporated business during the year of assessment you have 3 months from the date of issue, and filing the 2025/26 return electronically gave an automatic extension of 1 month [4]. For 2025/26 the IRD issued the returns on 4 May 2026; sole proprietors had until 4 August 2026 on paper and 4 September 2026 through the eTAX Individual Tax Portal [5] [6]. If a tax representative acts for you, the Block Extension Scheme may give you more time; beyond that, further extensions are granted only in exceptional circumstances, on written application [4].

A paper return must be the original the IRD issued; photocopies, faxes and downloaded copies are not accepted [4]. If you do not already receive a BIR60 every year, the IRD normally issues one about 18 months after the business starts [7]. If you have assessable profits before then and no return, you must write to the Commissioner and ask for one; for 2025/26 that notification had to reach the IRD by 31 July 2026 [7]. If you cease the business, tell the IRD in writing within 1 month [2].

The IRD's move to mandatory electronic filing of profits tax returns does not reach you: its plan covers corporations and unincorporated businesses excluding sole-proprietorship businesses [10]. Our profits tax e-filing guide explains who it does cover.

Personal assessment

Personal assessment is not a tax but a relief. A sole proprietor is assessed to profits tax at the standard rate; by electing personal assessment, you combine your income and pay at the progressive rates that apply to salaries tax, and you can claim personal allowances and deductions such as home loan interest, approved charitable donations and business losses for the year [8]. It can help when the business makes a loss you can set against salary in the same year; because the progressive scale rises above the standard rate, it may not help a larger income [8].

You may elect if you are 18 or over and ordinarily resident in Hong Kong or a temporary resident. The election is made in writing, usually in the tax return itself, and for 2025/26 it must be made by 31 March 2028 or within 2 months after the notice of assessment, whichever is later [8].

Business registration

Any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for gain must be registered, whether it trades from a shop or online [9]. A sole proprietor must apply within one month from the date the business commences, and the IRD will not accept an application for a business that has not yet started [9]. Your business registration number goes in Part 5 of the BIR60 [7], and a change of ownership, such as admitting a partner, should be notified to the Business Registration Office [2].

Filing a sole proprietor tax return, step by step

1. Register the business. Who: you, as the sole proprietor. By when: within one month from the date the business commences; the IRD does not accept registration of a business that has yet to commence [9].
2. Keep records from the first day and prepare annual accounts. Who: you, or a bookkeeper you employ; the law does not require a professional accountant for a sole proprietorship [7]. By when: all year, and the records are kept for at least 7 years [7].
3. Compute the assessable profits. Who: you or your accountant, starting from the net profit per accounts; the IRD's pro forma computation IR957A(e) lists the usual adjustments [7]. By when: before you complete Part 5; use a separate computation for each business [2].
4. Watch for the BIR60, or tell the IRD you are chargeable. Who: if you do not receive a BIR60 every year, the IRD normally issues one about 18 months after a business commences [7]; if you have assessable profits and no return, you write to the Commissioner. By when: for 2025/26, notification had to reach the IRD by 31 July 2026 [7].
5. Complete Part 5 of the BIR60, and Part 7 if you elect personal assessment. Who: you; the BIR60 is completed and signed by the individual taxpayer, and also by your spouse if you are married and elect joint or personal assessment [4]. By when: fill every box in Part 5, entering 0 where it applies, even for a dormant or loss-making business [2]. A business that was a partnership, or changed to or from one during the basis period, goes on a BIR52 instead [3].
6. File the return. Who: you, on paper by post or in person, using the original return the IRD issued, or electronically through the Individual Tax Portal [4] [6]. By when: within 3 months from the date of issue, plus 1 month if filed electronically [4]; for 2025/26 that was 4 August 2026 on paper and 4 September 2026 electronically [6].

How Suma handles this

Suma is accounting software, not a tax filer. It keeps the records the BIR60 and its accounts are built from, so Part 5 starts from closed books rather than a shoebox:

• Double-entry books with 4-digit account codes, where every edit is a void and a re-create, so the history behind each figure stays visible.
• A bank feed through Finverse that brings business bank lines into the books as they happen.
• Receipts and documents vaulted against the books, so each entry can be traced to its source document.
• A year-end pack exported to our partner CPA firm, with more than 40 years in practice, under a hash the server computes, so the firm can show the pack it worked from is the pack that was sent.
• A filed year locked against edits, so the figures behind a return cannot drift after it is filed.
• Auditor questions answered on your request desk, line by line, with the receipt attached.

Frequently asked questions

How is a sole proprietor taxed in Hong Kong?

Through profits tax on the business's assessable profits, reported in Part 5 of the owner's own Tax Return, Individuals (BIR60) [2]. An unincorporated business pays 7.5% on the first $2,000,000 of assessable profits and 15% on the rest under the two-tiered rates [1]. The owner may instead elect personal assessment, which taxes total income at the progressive salaries tax rates with personal allowances [8].

Where do I report business profits on the BIR60?

In Part 5. Tick Yes to show you have a sole proprietorship, then give gross income, turnover, gross profit, net profit per accounts and assessable profits for each business, and state whether it is chargeable at the two-tiered rates [2]. Fill every box even for a dormant or loss-making business, entering 0 where it applies; a blank Part 5 can lead to an estimated assessment [2].

What is the profits tax rate for an unincorporated business in Hong Kong?

Under the two-tiered rates, for 2018/19 onwards, an unincorporated business pays 7.5% on assessable profits up to $2,000,000 and 15% on any part above that; its normal rate is 15% [1]. A business with connected entities that elects the two-tiered rates also completes Section 6 of the Appendix to the BIR60 [2]. Corporations pay 8.25% and 16.5% [1].

When does a sole proprietor get a BIR52 instead of a BIR60?

When the business is not solely owned by you for the full year. A partnership reports on the BIR52, and so does a business that changed from a sole proprietorship to a partnership, or back, during the basis period; the profits for the whole year of change go on the BIR52 issued in the partnership's name [2] [3]. A business you own 100% throughout stays in Part 5 of your BIR60.

When is the sole proprietor tax return due?

Within 3 months from the date the BIR60 is issued, with an automatic further 1 month if you file electronically [4]. For 2025/26 the returns were issued on 4 May 2026, so sole proprietors filing on paper had until 4 August 2026 and those filing through the Individual Tax Portal until 4 September 2026 [6]. Filing late can bring a penalty or prosecution, and an estimated assessment [5].

General information current as of 16 October 2026. This is not tax, legal or accounting advice. Dates are those the IRD published for the 2025/26 return; confirm the current position with the IRD or a licensed practitioner.