In [Tax Demand Note] Breaking down the 4 key dates and essentials on the Salaries Tax demand note, we shared the key dates and important points to note on the Salaries Tax assessment notice. This time, we will go a step further to explain what “provisional tax” is and show you how to submit an application to defer provisional tax via Form IR1121 and the eTAX Individual Tax Portal (ITP).
Further reading: [Incorrect Tax Return] How to correct underreported tax on a tax return? | [Objecting to an Assessment] Can you appeal if the tax is calculated incorrectly?
What is Provisional Tax?
Provisional tax is a system under which tax for the following year is collected in advance based on the taxpayer’s income in the previous year. Under the law, Salaries Tax, Property Tax, and Profits Tax all require payment of provisional tax for the next year. The calculation method and the actual amount of provisional tax are set out in detail in the notice of assessment. Therefore, after receiving a Salaries Tax, Property Tax, or Profits Tax demand note, taxpayers should verify the provisional tax amount as soon as possible.
Further reading:
How Provisional Tax (Advance Tax) Is Calculated
Provisional tax is calculated based on the taxpayer’s income in the previous year, with tax for the following year collected in advance.
For Salaries Tax, provisional tax is calculated based on the tax payable for the previous year.
Assume your Salaries Tax payable for the 2025/26 year of assessment is $10,000. In principle, your provisional tax for the 2026/27 year of assessment would also be $10,000. When you receive your Salaries Tax demand note, the Inland Revenue Department will set out the provisional tax and total tax payable in the Notice of Assessment and Demand for Payment for 2025/26 and Provisional Tax for 2026/27.
However, differences in tax rates and tax relief measures in each fiscal year will also affect the provisional tax amount. For example, in the 2025/26 fiscal year, due to a tax reduction of $3,000, the provisional tax for 2026/27 and the tax payable for 2025/26 will differ by $3,000.
Can I choose not to pay provisional tax?
No. Paying provisional tax is a tax obligation for companies and taxpayers. However, you may apply to defer provisional tax if you meet the relevant conditions.
Sections 63E (Deferral of Provisional Salaries Tax), 63J (Deferral of Provisional Profits Tax), and 63O (Deferral of Provisional Property Tax) of the Inland Revenue Ordinance (Cap. 112) provide that where the statutory conditions are met, companies and taxpayers may apply within the prescribed time limit to defer provisional tax online via eTAXIndividual Tax Portal, or by submitting Form IR1121 to the Inland Revenue Department.
Reasons and Required Documents for Applying to Defer Provisional Tax
Under section 63E of the Inland Revenue Ordinance, as provisional tax is based on this year’s income or profits, if income decreases or expenses (deductions and allowances) increase, resulting in a reduction of 10% or more in the assessable net income or net profits, and relevant supporting documents are provided, the conditions for applying to defer provisional tax are met. Details are as follows:
Reasons for Applying to Defer Provisional Salaries Tax
Under section 63E of the Inland Revenue Ordinance, the conditions for deferring Salaries Tax mainly relate to changes in an individual’s income and circumstances, including: income reduced compared with last year, unemployment or retirement, increased allowances, increased deductions, or an objection/appeal against the previous year’s assessment is in progress.
Income threshold: The estimated assessable income is less than, or may be less than, 90% of the assessable income for the preceding year.
Supporting documents: Applicants should provide relevant documents based on the reason, such as proof of unemployment, a termination letter, or a salary reduction notice issued by the employer.
Eligibility for Applying to Defer Provisional Profits Tax
Under section 63J of the Inland Revenue Ordinance, the conditions for deferring Profits Tax include reduced profits, cessation of business, omission of loss brought forward, election for Personal Assessment, or an objection/appeal against the previous year’s assessment is in progress.
Income threshold: The estimated assessable profits are less than, or may be less than, 90% of the assessable profits for the preceding year.
Supporting requirement: If the reason for deferral is reduced profits, the taxpayer must submit with the application a signed draft set of accounts covering not less than 8 months.
Eligibility for Applying to Defer Provisional Property Tax
Under section 63O of the Inland Revenue Ordinance, the conditions for deferring Property Tax include reduced rental income compared with last year, the property has been sold, election for Personal Assessment, or an objection/appeal against the previous year’s assessment is in progress.
Income threshold: The estimated assessable net value is less than, or may be less than, 90% of the assessable net value for the preceding year.
Supporting documents: Supporting documents may include a copy of a new tenancy agreement showing reduced rent, or a property sale and purchase agreement.
Correct Interpretation of Reduced Income, Profits, or Rent for Provisional Tax Deferral
We have received many enquiries about reasons for applying to defer provisional tax, most of which stem from misunderstanding the correct interpretation of reduced income, profits, or rent. Many people misinterpret the percentage required by the Inland Revenue Department, believing that income must be 90% lower than in previous years to qualify. Below is the IRD’s original wording with a detailed explanation:
“Your assessable income for the year of assessment for which provisional tax is charged is less than, or may be less than, 90% of your assessable income for the preceding year, or is less than, or may be less than, 90% of the estimated income for the year of assessment for which provisional tax is charged.”
Source: GovHK – Deferral of Provisional Tax
In our experience, the public often mistakenly believes that income must drop by 90% to apply for deferral of provisional tax. The correct understanding is that income/profits are 10% lower than in previous years; or that profits/income are 90% of last year’s level, which already meets the condition for reduced income or profits when applying to defer provisional tax.
Example: Applying to Defer Provisional Salaries Tax
Last year’s total annual salary was $600,000. This year, due to redundancy and unemployment from June, there was only income for April and May totaling $100,000, which meets the conditions for applying to defer provisional tax.
Example: Applying to Defer Provisional Property Tax
Last year’s rental income was $240,000. This year’s rental income is $180,000. Rental income has decreased by 25%, which meets the conditions for applying to defer provisional tax.
Deadline for Applying to Defer Provisional Tax
An application to defer provisional tax must be made at least 28 days before the due date for payment of provisional tax, or within 14 days after the date of issue of the demand for payment of provisional tax, whichever is later.
Source: GovHK: Deferral of Provisional Tax
The deadline for applying to object to provisional tax is 28 days before the tax payment due date. For example, if the final payment date is January 13, 2026, the deadline for applying to defer provisional tax is December 16, 2025.
To confirm the deadline for deferring provisional tax, please refer to the right-hand side of the first page of the notice of assessment under “Your Rights”, where the deadline for applying to defer payment of provisional tax is clearly stated.
Important: Unless there are special reasons, the Inland Revenue Department will not accept applications to defer provisional tax submitted after the deadline.
In addition, even if a taxpayer has already paid the first instalment of tax, if financial difficulties or income changes arise afterwards, they are still entitled—subject to the above time limits and statutory conditions—to apply to defer or extend the payment of the second instalment.
Online Application Process for Deferring Provisional Tax
6 Key Steps to Apply Online to Defer Provisional Tax
Step 1: Log in to the eTAX Individual Tax Portal
Log in to https://itp.etax.ird.gov.hk/fe/pw/reg/itp/itpwelcome, enter your Taxpayer Identification Number and password, then select Individual Tax. ITP guide: How to apply for and log in to the eTAX Individual Tax Portal (ITP).
Step 2: Defer Provisional Tax
Select “Defer Provisional Tax”.
Step 3: Read the guidance
Read the guidance, then click “Continue”.
Step 4: Select the year of assessment
Select the year of assessment, then click “Apply to Defer Provisional Tax”.
Step 5: Reason for application
Tick the reason(s) for application and provide details of the reason for deferral (e.g., commission income), and attach supporting documents (if any). Then click “Continue” at the bottom right.
Step 6: Submit
Confirm the information is correct, then click “Submit” at the bottom right to complete the online application to defer provisional tax.
4 Key Steps to Apply to Defer Provisional Tax Using Form IR1121
Step 1: Prepare the required documents
Provide supporting documents based on the reason for application. For example, if the reason is unemployment, provide a termination letter or proof of resignation.
Step 2: Complete Form IR1121
Fill in your personal and contact details, tax payment date, file number, and demand note number. Taxpayers may tick more than one reason, but they must be within the same type of tax return (i.e., you cannot apply for deferral of Salaries Tax and Property Tax on the same form). After completion, fax the form together with supporting documents to 2519 6896 or mail it to P.O. Box 28487, Kowloon Central Post Office, Hong Kong.
Step 3: Provide additional information
The Inland Revenue Department may request additional supporting documents to substantiate the reason for deferral.
Step 4: Completion
The Inland Revenue Department will reply by letter with the application result. If the application is successful, a revised notice of assessment and tax demand note, or a tax refund cheque (if any), will be enclosed.
How to Complete Form IR1121 (Deferral of Provisional Tax)
Fill in the information
Select the reason(s) for applying to defer provisional tax
Attach supporting documents
Sign the form
The applicant must sign the form. If claiming a spouse’s allowance, the spouse must also sign.
Further reading: [Joint Assessment] What are the benefits of joint assessment for couples? A guide to completing tax returns for married persons
Done
Fax the form with supporting documents to 2519 6896 or mail it to the Inland Revenue Department of Hong Kong to complete the IR1121 deferral application.
Download IR1121Application Form for Deferral of Provisional Tax
*Friendly reminder: Ticking more than one reason is only allowed within the same type of tax return. That is, when applying to defer provisional Salaries Tax, you may tick multiple reasons, but you cannot apply on the same form to defer Property Tax or Profits Tax.
Will provisional tax be refunded?
It may be. For example, if a taxpayer’s assessable income for the year of assessment drops significantly such that the tax payable for that year plus the provisional tax for the following year is less than the provisional tax already paid, the Inland Revenue Department will refund the overpaid provisional tax.
Using the above figure as an example, provisional tax paid for 2024/25 is $12,123, but the tax payable for 2024/25 ($4,941) plus provisional tax for 2025/26 ($6,441) totals $11,382. Therefore, $741 can be refunded.
Frequently Asked Questions
If the reason for applying to defer provisional tax is unemployment, what information is required?
Proof of resignation or a termination letter is required.
How long does it take to apply online to defer provisional tax?
It can be completed within 30 minutes.
If the first instalment has been paid, can I apply to defer the second instalment?
Yes, but you must comply with the application deadlines and reasons prescribed under the Inland Revenue Ordinance.
Can joint assessment be used as a reason for applying to defer provisional tax?
Yes, but both spouses must agree to elect for joint assessment.
Conclusion
Provisional tax is a highly stringent component of Hong Kong’s tax system. To manage provisional tax successfully, you must grasp the following two core elements:
- Strictly observe the “provisional tax deferral deadline”: You must submit the application “28 days before the due date for payment of provisional tax” or “within 14 days after the date of issue of the tax demand note” (whichever is later).
- The success rate depends on “supporting evidence”: The Inland Revenue Department will only process deferral applications based on the statutory grounds set out in the Inland Revenue Ordinance. You must provide sufficient supporting documents to prove that the assessable income for the next year of assessment will decrease significantly (e.g., unemployment or a pay cut).
Further reading:
Sources
1. Inland Revenue Ordinance (Cap. 112)
https://www.elegislation.gov.hk/hk/cap112!zh-Hant-HK?xpid=ID_1438402584214_001
2. Inland Revenue Ordinance (Cap. 112) 63E. Deferral of Provisional Salaries Tax
https://www.elegislation.gov.hk/hk/cap112!zh-Hant-HK@2024-07-05T00:00:00?SEARCH_WITHIN_CAP_TXT=%E6%9A%AB%E7%B9%B3%E7%89%A9%E6%A5%AD%E7%A8%85%E7%9A%84%E7%B7%A9%E7%B9%B3&xpid=ID_1438402584277_001
3. Inland Revenue Ordinance (Cap. 112) 63J Deferral of Provisional Profits Tax
https://www.elegislation.gov.hk/hk/cap112!zh-Hant-HK@2024-07-05T00:00:00?SEARCH_WITHIN_CAP_TXT=%E6%9A%AB%E7%B9%B3%E5%88%A9%E5%BE%97%E7%A8%85%E7%9A%84%E7%B7%A9%E7%B9%B3&xpid=ID_1438402584370_002
4. Inland Revenue Ordinance (Cap. 112) 63O. Deferral of Provisional Property Tax
https://www.elegislation.gov.hk/hk/cap112!zh-Hant-HK@2024-07-05T00:00:00?SEARCH_WITHIN_CAP_TXT=%E6%9A%AB%E7%B9%B3%E5%88%A9%E5%BE%97%E7%A8%85%E7%9A%84%E7%B7%A9%E7%B9%B3&xpid=ID_1438402584480_001
