Completing Form BIRS22 for intellectual property income in Hong Kong

Form BIRS22 Intellectual Property Income Hong Kong

Form BIRS22 is the supplementary return for claiming the profits tax concession on qualifying intellectual property income under the Inland Revenue Ordinance (Cap. 112). This form accompanies the profits tax return (BIR51 or BIR52) and must be filed with the Inland Revenue Department to apply the reduced tax rate to eligible IP income derived from qualifying assets.

BIRS22 Form Guide

Download the current guide from the IRD website before preparing your submission. The department updates its instructions to reflect legislative changes. It details qualifying IP assets, the method for calculating eligible income, and the required supporting documents.

For each IP asset, the form requires its nature, acquisition or development date, and the jurisdiction of its original creation. When a single asset generates both qualifying and non-qualifying IP, the guide explains how to allocate the income accordingly.

IP Income Tax Concession

Hong Kong’s IP income tax concession offers a reduced profits tax rate on qualifying income from eligible patents, copyrights, registered designs, and plant variety rights. The concession excludes income from marketing-related IP like trademarks or trade names. Only income from IP assets developed through the taxpayer’s own research and development activities qualifies.

To qualify, the taxpayer must own the IP asset and have conducted the R&D activities that created it. If the IP was acquired from a third party, the concession may still apply if the taxpayer undertook substantial R&D to enhance or further develop the asset. The Inland Revenue Department assesses each claim on its facts, and the taxpayer bears the burden of proving eligibility.

The concession applies to the year of assessment in which the IP income is derived. Taxpayers must elect to claim the concession by filing Form BIRS22 with that year’s profits tax return. This election is irrevocable.

Hong Kong Intellectual Property Form

Form BIRS22 is the specific Hong Kong form for claiming this concession. It is structured into five parts:

• Part A: Taxpayer identification and assessment year
• Part B: Details of qualifying intellectual property assets
• Part C: Computation of eligible IP income
• Part D: Allocation of income between qualifying and non-qualifying IP
• Part E: Declaration and signature

Taxpayers must provide a certified true copy of any relevant IP registration certificates or other ownership evidence. For unregistered IP, submit documentation proving creation and ownership, such as development records, assignment agreements, or licensing contracts.

Form BIRS22 Instructions

The Inland Revenue Department’s instructions for Form BIRS22 specify these key requirements:

Eligible income comprises royalties, licensing fees, and other income from the use or exploitation of qualifying IP assets. It excludes income from the sale of the IP asset itself, unless the sale is part of a licensing arrangement.

Qualifying IP assets are patents, copyrights, registered designs, and plant variety rights protected under Hong Kong law or the laws of a jurisdiction with a double taxation agreement with Hong Kong. The IP must have been developed through R&D activities carried out by the taxpayer, alone or with others.

Tax computation must follow IRD guidelines. Calculate total IP income, then apply the appropriate allocation method to determine the qualifying portion. If filing electronically through the Business Tax Portal, the tax computation must be submitted in iXBRL format.

Supporting documents must include a breakdown of the IP income, details of the R&D activities undertaken, and evidence of IP ownership. The IRD may request more information during its assessment.

Assessment Year and Filing

State the assessment year clearly on Form BIRS22. File the form with the profits tax return for that same year. Taxpayers with multiple IP assets may need a separate Form BIRS22 for each, or may consolidate the information on a single form if the IRD has approved that approach.

The Inland Revenue Department reviews each claim and may issue an assessment reflecting the reduced rate on qualifying IP income. Retain all supporting documentation for at least seven years after the end of the relevant assessment year.

Electronic Filing and IXBRL

From the year of assessment 2025-26, relevant entities of in-scope multinational enterprise groups must file their profits tax returns electronically through the Business Tax Portal. When Form BIRS22 is required, the electronic filing must include the form data and the supporting tax computation in iXBRL format. The IRD intends to extend mandatory electronic filing to all taxpayers by 2030.

Taxpayers not required to file electronically may submit Form BIRS22 on paper. The form must be signed by the taxpayer or an authorised representative and accompanied by the required supporting documents.

Common Issues and Compliance

The Inland Revenue Department frequently queries claims where IP income appears disproportionate to the R&D expenditure incurred. Ensure your tax computation clearly demonstrates the nexus between the R&D activities and the IP income. If the IP was acquired from a connected party, the IRD may apply transfer pricing rules to verify correct income attribution.

Failure to file Form BIRS22 with the profits tax return will result in the loss of the concession for that assessment year. Taxpayers who find an omission after filing must contact the IRD promptly to request permission for a late submission. The department may accept late submissions in limited circumstances, but there is no statutory right to file late.