Completing Form BIRS10 for qualifying aircraft leasing managers in Hong Kong

Form BIRS10 for a Qualifying Aircraft Leasing Manager in Hong Kong

Form BIRS10 is the statutory form for a qualifying aircraft leasing manager to claim the profits tax concession under the Inland Revenue Ordinance (Cap. 112). A qualifying aircraft leasing manager uses it to report eligible income and claim the reduced tax rate on qualifying profits, filing the form with the Inland Revenue Department (IRD) as part of the annual profits tax return. This filing is the mechanism through which the IRD verifies eligibility and computes the tax benefit. The concession positions Hong Kong as a competitive jurisdiction for aircraft leasing and management.

Who Qualifies as a Qualifying Aircraft Leasing Manager

A qualifying aircraft leasing manager is a corporation carrying on business in Hong Kong to manage aircraft leasing arrangements for a qualifying aircraft lessor. It performs the core management functions: negotiating lease terms, managing lease payments, and overseeing the aircraft during the lease period. The Inland Revenue Ordinance sets the requirements. The manager must be a corporation resident in Hong Kong, or a non-resident with a permanent establishment here. It must perform the management of qualifying aircraft leasing activities in Hong Kong and hold a valid air operator's certificate or be connected to a lessor that holds one. It must also maintain records demonstrating management functions are performed in Hong Kong. The IRD examines substance and operational capacity. A mere contractual designation as manager without actual Hong Kong activity will not satisfy the test.

Aircraft Leasing Manager Tax Concession

The concession provides a reduced profits tax rate on qualifying income from managing aircraft leasing activities. The rate is 8.25% on qualifying profits, half the standard 16.5% corporate rate. Eligible income includes fees for managing aircraft leasing arrangements, commissions or consideration for arranging leases, and income from ancillary services directly related to the management activity. The concession does not apply to non-qualifying income, such as from unrelated advisory services or managing non-aircraft assets. The manager must segregate qualifying and non-qualifying income in its tax computation.

Hong Kong Tax Form BIRS10 Filing Requirements

File Form BIRS10 with the annual profits tax return (BIR51) for the relevant year of assessment. The form is on the IRD website and can be submitted through the Business Tax Portal for electronic filing. The filing process requires completing the profits tax return (BIR51) and attaching Form BIRS10 as a supplementary schedule. You must provide a tax computation apportioning income between qualifying and non-qualifying activities and include financial statements for the period. Submit certified true copies of supporting documents, like the management agreement. Electronic filers must tag financial statements and the tax computation in iXBRL format. The Business Tax Portal accepts the form and attachments in this format.

Qualifying Aircraft Leasing Manager Requirements in Detail

To maintain status, the corporation must satisfy ongoing conditions. The IRD may request evidence each year. Key requirements include a substantive presence in Hong Kong: a registered office, employees performing management functions, and records of decision-making. Managed activities must involve qualifying aircraft lessors as defined in the Inland Revenue Ordinance. A qualifying aircraft lessor leases aircraft or engines to third-party operators and meets conditions on place of operation and ownership. The manager cannot be the lessor itself. The manager concession is separate from the lessor concession, claimed on Form BIRS9. Keep records for at least seven years after the end of the relevant year of assessment. Failure to meet these conditions may result in the IRD denying the concession and assessing the income at the standard 16.5% rate.

Completing Form BIRS10

Form BIRS10 requires particulars about the business and managed leasing arrangements. The form asks for the manager's name and business registration number and the year of assessment for the claim. Provide details of each managed aircraft leasing arrangement, including lessor name, aircraft type, and lease period. State total gross income from qualifying activities and total expenses directly attributable to those activities. Calculate the net qualifying profits for the concessionary rate. The manager must also declare it meets the qualifying conditions and that the information is accurate. A director or authorised representative must sign the form.

BIRS10 Form Guide for First-Time Filers

First-time filers should confirm eligibility by reviewing the Inland Revenue Ordinance and any IRD guidance notes. Prepare a tax computation clearly separating qualifying and non-qualifying income and expenses. Gather supporting documents: the management agreement, evidence of the lessor's qualifying status, and records showing management functions are performed in Hong Kong. Complete Form BIRS10 using the IRD's prescribed format. File the form with the profits tax return through the Business Tax Portal or by paper if electronic filing is not yet required. The IRD may issue a notice of assessment after review. If more information is needed, it will write to the manager requesting clarification or documents.

Assessment Year and Tax Computation

The concession applies from the year of assessment the manager first meets the qualifying conditions. The manager must file Form BIRS10 for each year it claims the concession. There is no automatic renewal; the claim is annual. The tax computation must show total assessable profits and the portion that is qualifying aircraft leasing management income. It must show the concessionary rate applied to that portion and remaining profits taxed at the standard rate. The IRD may audit the computation and request supporting evidence. Managers should retain all records for the statutory period.

Electronic Filing and IXBRL

From the year of assessment 2025-26, relevant entities of in-scope multinational enterprise groups must file profits tax returns electronically. Other entities may file voluntarily. Electronic filers must tag financial statements and tax computations in iXBRL format. Form BIRS10 is part of the electronic filing package. The Business Tax Portal provides templates and guidance for correct tagging. Paper filers must ensure the form is legible and all attachments are included. The IRD intends to achieve full electronic filing by 2030. Managers should prepare to transition to electronic filing even if not currently required.