The beginning figure is: Net Profit / Loss per accounts. Then, to this figure,
add:
depreciation,
remuneration to business owners (for unincorporated business),
domestic or private expenses (for unincorporated business),
non-deductible contribution to retirement scheme (for unincorporated business),
expenses or losses of a capital nature,
less:
gain on disposal of fixed assets,
dividends income ,
non-assessable profits (e.g. those do not have a Hong Kong source),
cost of computer hardware and software,
cost of patents ... etc.,
cost of manufacturing plant or machinery,
depreciation allowance of plant and machinery ,
Industrial Building Allowance ,
Commercial Building Allowance ,
tax loss brought forward ,
and the balance (if positive) is Assessable Profit.
Tax payable = Assessable Profit * Tax rate
(Tax rate for corporation: 17.5%; for sole-proprietor and partnership business: 16%)
If the balance is negative, it is called tax loss which is to be carried forward to set-off the next year's assessable profits.
