Filing Form BIRS12 for qualifying ship leasing managers in Hong Kong

Form BIRS12 Qualifying Ship Leasing Manager Hong Kong

Form BIRS12 is the prescribed form for a qualifying ship leasing manager to elect for the profits tax concession under the Inland Revenue Ordinance (Cap. 112). This concession allows eligible ship leasing managers to pay tax at a reduced rate on qualifying profits from ship leasing management services provided to qualifying ship lessors. File the form with the Inland Revenue Department (IRD) as part of the annual profits tax return for the relevant assessment year.

BIRS12 Form Guide

The IRD issues Form BIRS12 to compute and report eligible income for the tax concession. The form requires particulars of your qualifying ship leasing management activities, including details of the managed ship leasing arrangements, the eligible income derived, and the tax computation showing the reduced rate applied. Supporting documents must accompany the form. These include your financial statements and a certified true copy of the ship leasing management agreements.

Ship Leasing Manager Tax Concession

The ship leasing manager tax concession promotes Hong Kong as a hub for ship leasing management services. Under section 23B of the Inland Revenue Ordinance (Cap. 112), a qualifying ship leasing manager may elect to have its qualifying profits taxed at a concessionary rate of 8.25% (half the standard profits tax rate) instead of the standard 16.5% rate. This concession applies to eligible income from providing ship leasing management services to a qualifying ship lessor. Make the election by completing and filing Form BIRS12 with the IRD for each assessment year you claim the concession.

Hong Kong Form BIRS12

Form BIRS12 is a supplementary form that accompanies the profits tax return (BIR51 for corporations). The IRD issues the form to taxpayers who have previously elected for the concession or who have notified the department of their intention to claim it. The form captures the following information:

• Name and business registration number of the qualifying ship leasing manager
• Details of the qualifying ship lessor for whom management services are provided
• Description of the ship leasing management services rendered
• Computation of eligible income and the concessionary tax payable
• Declaration that the taxpayer meets the qualifying conditions

The taxpayer or its authorised representative must sign the form and submit it with the profits tax return.

Qualifying Ship Leasing Manager Requirements

To qualify for the concession, a ship leasing manager must meet the conditions in section 23B of the Inland Revenue Ordinance (Cap. 112). The key requirements are:

• The taxpayer must be a corporation carrying on a business in Hong Kong as a ship leasing manager.
• The taxpayer must provide ship leasing management services to a qualifying ship lessor (as defined in section 23B).
• The ship leasing management services must be provided in respect of a qualifying ship (as defined in section 23B).
• The taxpayer must elect in writing (by filing Form BIRS12) for the concession for the relevant assessment year.
• The taxpayer must maintain proper records and accounts to support the claim.

The IRD may request additional information or documentation to verify these requirements. A taxpayer that fails to satisfy the conditions may be denied the concession and taxed at the standard rate.

Filing Form BIRS12

File Form BIRS12 with the IRD through the Business Tax Portal or by paper submission. The IRD encourages electronic filing. Submit the form together with the profits tax return (BIR51) for the relevant assessment year. The filing deadline is the same as the deadline for the profits tax return, which is generally one month from the date of issue for corporations.

When filing electronically, attach the financial statements and tax computation in iXBRL format. The IRD has stated an intention to move towards full electronic filing by 2030. Taxpayers who file by paper must submit the original form and supporting documents to the IRD.

Supporting Documents

The following documents must accompany Form BIRS12:

• Certified true copy of the ship leasing management agreement(s) between the qualifying ship leasing manager and the qualifying ship lessor
• Financial statements of the qualifying ship leasing manager for the relevant assessment year
• Tax computation showing the eligible income and the concessionary tax payable
• Any other documents requested by the IRD to verify the claim

The IRD may request additional information or clarification after the form is filed. Retain all records and documents for at least seven years after the end of the assessment year to which the claim relates.

Assessment and Payment

After the IRD processes Form BIRS12 and the profits tax return, it will issue a notice of assessment showing the tax payable at the concessionary rate. Pay the assessed tax within the time specified in the notice. If the IRD determines that the taxpayer does not meet the qualifying conditions, it will issue an assessment at the standard profits tax rate. The taxpayer may object to the assessment within the time limit prescribed by the Inland Revenue Ordinance (Cap. 112).