[Provisional Tax] How do I apply to defer provisional tax? Who is eligible?

Upon receiving a tax bill, taxpayers are required to pay the tax for the current year, as well as provisional tax for the following year. But what is provisional tax? Why is provisional tax payable? If you are short of cash, can you apply to defer payment? How much can provisional tax be reduced by if payment is deferred? This time, 10Life will explain in detail how provisional tax is calculated, and share a step-by-step guide to applying for a deferral of provisional tax payment.

Provisional tax, also known as advance tax, is a tax assessed by the Inland Revenue Department of Hong Kong under the Inland Revenue Ordinance. The Department estimates the tax payable for the following year based on a taxpayer’s income for the previous year, and collects provisional tax in advance. In the following tax year, the provisional tax already paid will be used to offset the tax due. In other words, if too much tax has been paid, it can be used to offset the provisional tax for the next year. Provisional tax applies to salaries tax, profits tax and property tax, and is an annual tax obligation for every taxpayer. Unless there are valid reasons and the relevant conditions are met, an application for deferred payment may be made.

Please note that if this is your first tax return, you will need to pay the tax for two tax years in one lump sum, including the tax for the current year and the provisional tax for the following year. As there is no previous provisional tax deduction, first-time taxpayers may easily overlook part of the tax burden and end up with an insufficient budget. It is therefore important to plan your finances in advance. Find out now how much tax you need to pay this year and make proper financial plans for peace of mind.

As mentioned above, provisional tax is calculated based on an estimate of the income and deductions for the previous tax year, and is paid in advance to the authorities to help taxpayers spread their tax burden and avoid the pressure of paying a large tax bill in one go.

Formula for provisional tax: Previous year’s income – deductions claimed in the previous year – allowances claimed in the previous year

For example, if the salaries tax payable for the previous year was HK$20,000, then the provisional tax for the 2024/25 year would also be HK$20,000. However, because the Government has introduced tax concession measures in recent years (such as a 100% tax reduction, subject to a cap of HK$10,000), the Inland Revenue Department will generally not deduct these concessions in advance when calculating provisional tax, as the tax concession measures for the following year can only be confirmed after the Budget is passed. As a result, the amount of provisional tax may sometimes be higher than the actual tax payable, which is normal.

For self-employed persons or business operators, provisional profits tax is calculated based on the assessable profits for the previous year, after deducting any losses that can be set off.

Upon receiving the tax bill, everyone should check it carefully and make sure the tax amount has been prepared. If funds are temporarily tight, you may consider applying for a deferment of tax payment.

If you would like to know the payment period for provisional tax, you may wish to refer to the tax payment date marked in red on the tax bill. Generally speaking:

• January to March: pay the tax due for the relevant assessment year, covering the estimated income tax for the period from April to December last year.
• April to June: pay provisional tax for the next assessment year, covering the estimated income tax for the period from January to March.

In general, provisional tax is not refunded, as it is collected in advance by the Inland Revenue Department based on an estimate. However, if actual income is lower than expected — for example, if a higher bonus last year resulted in a larger provisional tax payment, but there is no bonus this year — the taxpayer may apply to have the provisional tax amount adjusted, or may receive a tax refund upon annual assessment. In addition, if the taxpayer stops working, becomes unemployed or retires in the following year, resulting in a reduction in assessable income, there may be a chance of a tax reduction in the following year.

Provisional tax must be paid on time. Even if your income has decreased, you still need to apply within the prescribed period for a deferment of provisional tax or to pay by instalments. Otherwise, the Inland Revenue Department will levy a penalty of 5% of the total tax amount; if payment is delayed by more than six months, an additional surcharge of 10% will be imposed. If tax arrears continue for six months or more, the Inland Revenue Department may take more serious action, such as initiating court proceedings, seizing assets, or even imposing a travel ban. If you are short of cash, it is advisable to apply for a deferment of provisional tax as early as possible to avoid unnecessary legal risks.

Under what circumstances can an application be made to defer payment of provisional tax?

Working people who wish to apply for a deferral of provisional tax in respect of salaries tax must meet the following conditions:

• The taxpayer is entitled to allowances not included in the provisional tax, such as child allowance for a newborn child or dependent parent allowance where the parents qualify.
• The assessable income for the relevant year of assessment is less than 90% of the previous year’s income or the estimated income for the provisional tax year.
• That year has seen increased deductions, such as self-education expenses, retirement scheme contributions, home loan interest, or voluntary medical insurance premiums.
• The taxpayer’s income has decreased due to unemployment, retirement or other reasons.
• An objection has been lodged against the salaries tax assessment for the previous year.

For self-employed persons or taxpayers carrying on a business, the following conditions must be met:

• The assessable profits for the relevant year of assessment are less than, or are likely to be less than, 90% of those for the previous year, or less than 90% of the estimated profits for the provisional tax year, and supporting documents must be submitted (including signed accounts for at least 8 months).
• Loss relief has been omitted or the amount is incorrect.
• The assessable profits have decreased due to cessation of business.
• Choosing personal assessment may reduce the tax payable.
• An objection has been lodged against the previous year’s profits tax assessment.

How do I apply?

The application process for deferring provisional tax is straightforward. Taxpayers may submit it in writing or through the “eTAX” system.

In writing

If submitting in writing, taxpayers may download Form IR1121 from the Inland Revenue Department website, fill in basic information such as the bill number, payment date and reasons for the application, and then submit it to:

• By post: Inland Revenue Centre, 5 Concorde Road, Kai Tak, Kowloon, Hong Kong, addressed to the Commissioner of Inland Revenue.
• By fax: 2519 6896.

Through “eTAX”

If the taxpayer already has an eTAX account, the application can be submitted directly through the eTAX system, and a confirmation notification will be received immediately. If not, please see how to open an eTAX account.

Is there a deadline for application?

If you wish to apply for a deferral of provisional tax, it must be done within the prescribed time. The deadline is the 28th day before the payment due date or within 14 days after the issue date of the tax bill, whichever is later. You may also refer to the deadline stated on the tax bill. If the tax is payable in two instalments, even if the first instalment has already been paid, you may still apply to defer part or all of the second instalment, subject to the provisions of the Inland Revenue Ordinance.

How much provisional tax can be deferred?

Many people think that applying for a deferral of provisional tax means they can obtain a full exemption. However, this is not the case. The amount deferred is calculated according to the proportion by which income has decreased. In other words, if a taxpayer’s income falls by 10%, the deferred provisional tax will also be reduced by 10% accordingly. This is a reasonable adjustment made by the Inland Revenue Department based on the actual circumstances, rather than a complete waiver of the provisional tax.

What are the consequences of making a false declaration in a deferral application?

Making a false statement to apply for a deferral of provisional tax constitutes tax evasion and is a serious criminal offence. The Inland Revenue Ordinance expressly provides that taxpayers may apply to the Commissioner of Inland Revenue for a deferral of provisional tax on specified grounds, but they must provide true and accurate information. If false information is wilfully provided, upon conviction the offender may be liable to imprisonment for up to 3 years and a fine of $50,000, as well as an additional penalty equal to three times the amount of tax undercharged. There have been numerous cases in the past, so do not break the law. If you wish to apply for a deferral of provisional tax, you must report honestly and remember to pay your tax properly. To learn about tax payment methods, please read “[Tax payment methods 2026] Late tax payment can be more or less costly — find out 9 tax payment methods and payment reminders”.

Not eligible to apply for a hold on provisional tax payments but still want to save tax? You may wish to consider Qualified Deferred Annuity Plan (QDAP), which can provide up to HK$60,000 in tax deductions each year. Together with tax-deductible Mandatory Provident Fund voluntary contributions (TVC) and Voluntary Health Insurance Scheme (VHIS), you may obtain deductions of up to HK$68,000 or more. However, when choosing a tax-deductible annuity, you should first understand your purpose of purchase — whether it is for savings, retirement planning, or hedging longevity risk — and select an appropriate contribution amount, income period and annuity income according to your lifestyle and financial situation. If you would like to know more about tips for choosing a tax-deductible annuity and points to note, please feel free to call or WhatsApp 37051599 to enquire with a 10Life insurance adviser.

Further reading:

Further reading: 
【2026 Complete Guide to Tax-deductible Annuities】Analysis of annuity tax deduction products (10-year annuity period) — see how annuities help you save tax and which company offers higher returns!
【Tax-saving essential】How soon can a tax-deductible annuity break even? How can you maximise your tax deduction?
【Tax 2026】How much tax do you pay on an annual salary of HK$1 million? What tax-saving methods are available?
【First-time tax filing guide】How do you complete your tax return? See the step-by-step guide and beginner-friendly overview 
【Tax statement】When is it usually received? What should you do if you never receive it? Can a lost tax statement be reissued? 

Last updated on: 3 January 2026

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.