Did you know that over 90% of Hong Kong’s tax returns are now filed electronically? As the Inland Revenue Department (IRD) accelerates its digital transformation, understanding how to navigate the eTAX system with digital signatures has become essential for every taxpayer. Whether you’re an individual, small business owner, or corporate entity, mastering Hong Kong’s digital tax ecosystem can save you time, reduce errors, and ensure compliance. This comprehensive guide breaks down everything you need to know about digital signatures in Hong Kong’s eTAX system for 2024-2025.

The Legal Foundation: Electronic Transactions Ordinance (Cap. 553)

Hong Kong’s digital signature framework rests on the robust foundation of the Electronic Transactions Ordinance (Cap. 553), enacted in January 2000 and regularly updated to keep pace with technological advancements. This legislation establishes a comprehensive legal framework that accords electronic records and electronic signatures the same legal status as their paper-based counterparts.

What Makes Digital Signatures Legally Valid?

Under Section 2 of the ETO, an electronic signature is defined as “any letters, characters, numbers or other symbols in digital form attached to or logically associated with an electronic record, and executed or adopted for the purpose of authenticating or approving the electronic record.” More specifically, a digital signature is generated through cryptographic transformation, ensuring that anyone with the initial electronic record and the signer’s public key can verify:

• Whether the transformation was generated using the private key corresponding to the signer’s public key
• Whether the initial electronic record has been altered since the transformation was generated

Your Authentication Options: iAM Smart, Digital Certificates, and More

Hong Kong offers multiple authentication pathways for eTAX services, each designed to meet different user needs and security requirements. Understanding these options helps you choose the right method for your specific situation.

iAM Smart and iAM Smart+: Hong Kong’s Digital Identity System

The IRD has fully embraced Hong Kong’s government-wide digital identity platform, iAM Smart, as the primary authentication method for eTAX services. This system represents a significant advancement in secure, convenient tax administration.

Recognized Digital Certificate Authorities

Hong Kong maintains a voluntary certification authority recognition scheme under the ETO. Currently, only two recognized certification authorities operate in Hong Kong for government transactions:

Two-Factor Authentication: Your Tax Data’s Security Shield

Recognizing the sensitive nature of tax information and the growing sophistication of cyber threats, the IRD has implemented mandatory two-factor authentication (2FA) as a cornerstone of eTAX security. This isn’t just a recommendation—it’s a requirement for protecting your financial data.

How 2FA Works in eTAX

Two-factor authentication strengthens security by requiring users to provide a combination of two different types of authentication factors. The process typically involves:

1. First Factor (Knowledge): Login ID and password
2. Second Factor (Possession or Inherence): One-time password (OTP) via SMS, security token, digital certificate, or biometric authentication

Security Best Practices You Should Follow

• Never share credentials: Treat your eTAX login credentials with the same level of care as online banking credentials
• Use strong passwords: Create unique passwords that combine letters, numbers, and symbols
• Regular updates: Periodically update passwords and security settings
• Secure mobile devices: Ensure devices used for iAM Smart authentication have device locks and up-to-date security patches
• Beware of phishing: Only access eTAX through official IRD channels (www.ird.gov.hk)

Digital Signing Across Different Tax Return Types

The IRD has designed its digital signing capabilities to accommodate various taxpayer categories and return types. Here’s how digital signatures work for different scenarios:

Individual Tax Returns (BIR60)

The IRD actively encourages individual taxpayers to file their tax returns through eTAX using iAM Smart to login and digitally sign their submissions. This functionality is available exclusively to holders of iAM Smart accounts with the digital signing function enabled.

Individuals can sign their tax returns using any of the following methods:

• ITP Password
• MyGovHK Password
• Recognized digital certificate (e-Cert or ID-Cert)
• iAM Smart+ account with digital signing function

Profits Tax Returns for Corporations and Businesses

Corporate and business Profits Tax returns can be signed and submitted electronically through the eTAX Submission Service by various authorized persons, including:

• Proprietors of sole proprietorships
• Partners in partnerships
• Directors or authorized officers of corporations
• Authorized representatives as defined in relevant legislation
• Tax representatives or service providers acting on behalf of the taxpayer

Mobile App and Biometric Authentication: Tax Filing on the Go

The eTAX mobile application, available for both iOS and Android devices, extends the digital signing capabilities to smartphones and tablets. This mobile platform has become increasingly popular among taxpayers who value the convenience of managing tax affairs on-the-go.

Technical Requirements: XML and iXBRL Formats

Beyond authentication and signing, taxpayers must also comply with specific technical requirements for data submission to ensure proper processing by the IRD’s systems.

Mandatory File Formats for Profits Tax Returns

• Supplementary Forms: Must be submitted in XML (eXtensible Markup Language) format
• Financial Statements (HKFRS compliant): Must be in inline eXtensible Business Reporting Language (iXBRL) format conforming to the IRD Taxonomy Package
• Tax Computations: Must be in iXBRL format in accordance with the IRD Taxonomy Package

Record Retention: The Seven-Year Rule You Must Follow

Digital signatures and electronic filing do not exempt taxpayers from their record-keeping obligations. Understanding retention requirements is crucial for compliance and protection in case of audits or disputes.

Section 51C of the Inland Revenue Ordinance

Section 51C of the Inland Revenue Ordinance (IRO) stipulates that every person carrying on a business in Hong Kong must keep records of income and expenditure for not less than seven years. This requirement applies equally to electronic and paper records.

The seven-year retention period begins from the later of:

• The day the records or documents are created, or
• The date when the relevant transaction is completed

Step-by-Step: Setting Up Your Digital Signing Capability

For iAM Smart+ Users

1. Download the app: Get iAM Smart from the App Store or Google Play
2. Register: Use your Hong Kong Identity Card for registration
3. Complete verification: May require in-person verification or video verification
4. Upgrade to iAM Smart+: Enable the digital signing function
5. Link accounts: Connect your iAM Smart+ account to your eTAX Individual Tax Portal
6. Start using: You can now use iAM Smart+ to login and digitally sign tax returns

For Digital Certificate Users

1. Apply for certificate: Apply for e-Cert (Hongkong Post) or ID-Cert (Digi-Sign) online
2. Complete verification: Follow the identity verification process required by the certification authority
3. Receive and install: Get your digital certificate and install it on your computer or approved device
4. Access eTAX: Go to the eTAX portal and select the digital certificate login option
5. Select certificate: Your browser will prompt you to select your installed certificate
6. Complete authentication: Finish any additional authentication steps as required

Benefits of Digital Signatures for Hong Kong Taxpayers

Digital signatures have transformed Hong Kong’s tax administration, creating a more efficient, secure, and accessible system for all taxpayers. As the IRD continues to enhance its digital services, embracing these technologies positions you for greater efficiency, reduced errors, and enhanced compliance. Whether through the convenience of mobile biometric authentication, the established trust of digital certificates, or the government-wide integration of iAM Smart+, multiple pathways exist for you to engage confidently with Hong Kong’s digital tax ecosystem. Start your digital tax journey today and experience the benefits of streamlined, secure tax filing.