Form BIRS5 Ship-owner Profits Tax Computation
Guide to completing Form BIRS5 for the computation of profits tax for ship-owners in Hong Kong.
BIRS5 at a glance
- Official title
- Ship-owner
- Issued by
- Inland Revenue Department
We link the issuing authority's own index rather than hosting a copy, because the form is revised there and an out-of-date copy is worse than none.
Form BIRS5 Ship-Owner Profits Tax Computation
The Form BIRS5 ship-owner profits tax computation reports profits tax liability under Hong Kong's special tax regime for shipping income. Ship-owners file this supplementary schedule with the standard Profits Tax Return (BIR51) when claiming tax concessions for eligible shipping income. The Inland Revenue Department (IRD) uses Form BIRS5 to verify the taxpayer has correctly applied the relevant provisions of the Inland Revenue Ordinance (Cap. 112) for shipping profits.
BIRS5 Ship-Owner Tax Hong Kong
Hong Kong ship-owners receive a concessional tax treatment distinct from the standard profits tax regime. The IRD assesses eligible shipping income at a reduced effective rate, and Form BIRS5 is the mechanism for demonstrating compliance with the qualifying conditions. The form requires the ship-owner to declare the nature of their shipping operations and vessel types, and to define the geographical scope. Only income from the international carriage of passengers, mail, livestock, or goods by sea qualifies. Coastal or domestic shipping within Hong Kong waters does not.
Form BIRS5 Shipping Profits Guide
Form BIRS5 follows a logical sequence for computing taxable shipping profits. The first section captures gross shipping income, broken down by voyage or charter type. Taxpayers must distinguish between time charters, voyage charters, and bareboat charters, as each may be treated differently. The second section lists allowable deductions directly attributable to shipping operations, including crew wages, port charges, fuel costs, insurance premiums, and vessel maintenance expenses. The form also allows for the apportionment of general overheads where the ship-owner earns non-shipping income. The net shipping profit or loss is then carried forward to the main profits tax computation on the BIR51.
Inland Revenue Ship-Owner Form
The IRD requires Form BIRS5 to be completed with supporting schedules showing how each figure was derived. A ship-owner operating multiple vessels, for example, must provide a separate schedule for each vessel showing voyage income and expenses. The form also asks for details of any shipping income exempt from Hong Kong profits tax under a double taxation agreement. A corporation's form must be signed by a director or the company secretary. An individual or partnership's form must be signed by the proprietor or a partner. Submit the completed form through the Business Tax Portal or by paper filing, depending on your filing method.
Shipping Profits Tax Computation
The tax computation on Form BIRS5 applies the specific tax rate for shipping income. Under section 23B of the Inland Revenue Ordinance, a ship-owner's assessable profits from eligible shipping income are deemed to be a fixed percentage of the gross income, not the actual net profit. This deemed profit rate is 8.25% for corporations and 7.5% for individuals or partnerships. Taxpayers calculate the deemed assessable profit by applying the relevant percentage to the gross eligible shipping income. Actual allowable deductions are not subtracted from gross income; the deemed profit replaces the actual profit for tax purposes. This is a key distinction from a standard BIR51 computation, where actual income minus actual deductions determines the assessable profit.
The form also includes a section for non-eligible shipping income, taxed at the standard profits tax rate (16.5% for corporations, 15% for individuals). Taxpayers must separate their income streams and apply the correct rate to each. Where a ship-owner has both eligible and non-eligible shipping income, the form provides for the apportionment of common expenses between the two categories.
Filing Requirements and Deadlines
File Form BIRS5 as part of the annual Profits Tax Return. The IRD issues the BIR51, and the BIRS5 must be attached as a supplementary schedule. The filing deadline is the same as for the BIR51: generally one month from the date of issue, though the IRD may grant extensions on application. Ship-owners filing electronically through the Business Tax Portal must tag the financial statements and tax computation in iXBRL format, including the BIRS5 data. The IRD intends to move towards full electronic filing by 2030.
Record-Keeping Obligations
Ship-owners using Form BIRS5 must maintain adequate records to support declared figures. This includes voyage accounts, charter party agreements, crew payroll records, port disbursement vouchers, and insurance policies. The IRD may request these records during a tax audit or field inspection. Keep records for at least seven years after the end of the relevant year of assessment. Failure to maintain proper records can result in penalties and the disallowance of the shipping tax concession.
Distinction from Standard BIR51 Computation
The standard BIR51 computation requires reporting actual income and actual allowable deductions to arrive at assessable profit. Form BIRS5 replaces this with a deemed profit calculation for eligible shipping income. A ship-owner with high operating costs relative to gross income may pay more tax under the deemed profit method, while one with low operating costs may pay less. The ship-owner cannot elect to use the actual profit method for eligible shipping income; the deemed profit method is mandatory. The standard BIR51 computation applies to non-eligible shipping income.
Contacting the Inland Revenue Department
Ship-owners with questions about completing Form BIRS5 should contact the IRD's office. The IRD publishes guidance notes on its website, and taxpayers may also seek professional advice from a tax adviser or accountant familiar with Hong Kong shipping tax. The IRD's forms index is available at https://www.ird.gov.hk/eng/paf/bus.htm, and the Business Tax Portal is at https://www.ird.gov.hk/eng/tax/bus_epf.htm.
How to fill out Form BIRS5
Page one of the official form. Every field named below appears on it in the same order.
Section 1: Identity of the Ship-owner
Box 1: Name of Ship-owner
Enter the full legal name of the individual or company that owns the ship. If a company, use the exact name as it appears on the Certificate of Incorporation.
Box 2: Business Registration Number
Copy the eight-digit number from the Business Registration Certificate issued by the Inland Revenue Department. Do not include the branch code if present.
Box 3: Correspondence Address
Provide the postal address for all official correspondence. For a company, this is usually the registered office address. Include the building, street, district, and Hong Kong.
Box 4: Telephone Number / Fax Number
Enter the contact telephone number and, if available, the fax number for the ship-owner.
Section 2: Particulars of Ship
Box 5: Name of Ship
Write the registered name of the vessel exactly as it appears on the Hong Kong Shipping Register certificate.
Box 6: Official Number / Port of Registry
Enter the official number assigned by the Marine Department, and the port where the ship is registered (e.g., "Hong Kong").
Box 7: Gross Tonnage
Copy the gross tonnage figure from the ship’s Certificate of Survey or the Hong Kong Shipping Register.
Box 8: Type of Ship
Specify the vessel type (e.g., cargo ship, tanker, passenger vessel, fishing vessel). Do not use abbreviations.
Section 3: Period of Voyage or Time Charter
Box 9: Voyage Number / Charter Period
State the voyage number or the exact start and end dates of the time charter. If a voyage, confirm the voyage number from the charter party agreement.
Box 10: Port of Departure / Port of Destination
Enter the port where the voyage began and the final port of discharge. For time charters, write "Various" if multiple destinations.
Section 4: Gross Income and Estimated Tax
Box 11: Gross Income from the Voyage/Charter
State the total gross freight, hire, or charter fees earned during the period in Box 9. Do not deduct any expenses. The amount must be in Hong Kong dollars.
Box 12: Estimated Tax Payable
Calculate 16.5% (corporate rate) or 15% (individual rate) of the gross income in Box 11. Enter the result. This is the provisional tax due with the form.
Section 5: Declaration and Signature
Box 13: Signature of Ship-owner or Authorised Person
The form must be signed by the ship-owner (if an individual) or by a director, company secretary, or other person authorised in writing by the company. The signer must print their name and state their capacity (e.g., "Director").
Box 14: Date
Enter the date of signing. This must be on or before the last day of the month following the month in which the voyage ended or the charter period concluded.
Important Notes
- No continuation sheet is provided; all income must be aggregated in Box 11.
- If the ship-owner is a corporation, ensure the Business Registration Number matches the company’s BR certificate, not the Incorporation Certificate number.
- The signature in Box 13 must be original - photocopied or stamped signatures are not accepted.
Download the current form - always file the version on the issuing authority's site, not a copy.
Sources
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