Question 1: any rumors about tax of partnership and sole proprietorship?
Answer 1: sure. Like: for insurance brokers' sole proprietor, only expenses equal to one third of insurance commission income will be deductible in tax computation. No blank-and-white issued by IRD about this so is rumor but may be practicable.
Question 2: any tricky thing on tax of partnership and sole proprietorship?
Answer 2: sure. Like DIPN 24 is for deductions being claimed by an unincorporated business for payments, often described as management fees, which are made to a company or a trust (service company) controlled by the proprietor or partners of the business. It set criteria / requirements on:
- details of documentations be necessary in this kind of transaction;
- only "Qualifying services" is allowed in this kind of transaction;
- To establish deductibility, it must provide the Department with a detailed statement which lists the qualifying services obtained from the service company.
- In relation to the question of what is an appropriate mark-up, provided that the overall claim does not exceed the expenditure actually incurred, a margin not exceeding 12.5% of the cost element will generally be accepted as being commercially realistic.
DIPN 24's link: https://www.ird.gov.hk/eng/pdf/e_dipn24.pdf
Question 3: any concession for partnership and sole proprietorship?
Answer 3: Sure. Like:
- A concession therefore exists for those taxpayers engaged in retail trades, professions and businesses which are normally conducted in cash. They are not required to keep the specified details records of all goods sold. If the concession applies to you, you must nevertheless keep full records of your purchases and full details, recorded on a day by day basis, of all sums of money received and expended by your business. (Page 4 of A Guide to Keeping Business Records) Ref:
- A Guide to Keeping Business Records [English version] / [Chinese version]
Question 4: can non-HK resident / non-HKID holder apply sole proprietor business registration certificate?
Answer 4: can, but need a HK local agent (Form IRBR 177) and probably need to answer IRD query as following as sample: