Accounting and audit in Hong Kong

Accounting and tax

Your obligations as a business in Hong Kong

• Every business in Hong Kong, incorporated or not, must keep proper accounting records, and keep them for at least 7 years.

A company director who fails to take all reasonable steps to secure compliance can be fined up to HK$300,000, with up to 12 months in prison if the failure is willful.

• Every Hong Kong company must appoint an auditor, a practicing Hong Kong certified public accountant (CPA), to audit its financial statements each year. The audited financial statements are then filed with the profits tax return to the Inland Revenue Department (IRD).

Without audited financial statements, a company cannot file a complete profits tax return.

• The IRD issues a profits tax return (PTR) to each company, usually in April. It is normally due within one month; the first return, issued about 18 months after incorporation, allows three months. Companies that use a tax representative can get later deadlines under the IRD block extension scheme. The return is filed with the audited financial statements, the tax computation and, where relevant, a claim that the profits are sourced offshore.

Late or missing returns can lead to a fine of up to HK$10,000, an estimated assessment by the IRD, and additional tax of up to three times the tax undercharged.

If an earlier return showed a profit, the IRD can estimate the tax due on the basis of that earlier profit.

• The IRD can also send requests for information under tax information exchange agreements (TIEAs) or double taxation agreements (DTAs), usually with a one-month deadline. Ask your auditor or a tax adviser with international experience to help with the reply straight away. This only works if your accounting records and audits are up to date.
• These rules also apply to a company that has no bank account or has not started trading. A company with no accounting transactions can pass a special resolution to become dormant, which exempts it from some filing and audit requirements while it stays dormant.

A company that fails to comply can be fined HK$10,000 at a court hearing, and the court can order it to comply within a set period, with daily fines.

Other obligations

Other ongoing obligations include appointing a company secretary, keeping a significant controllers register with a designated representative, keeping a registered office in Hong Kong, filing an annual return with the Companies Registry, and renewing the business registration certificate (BRC) before it expires.

Depending on your activity, other rules may apply, for example on the sale of products or on the collection, use and storage of personal data.

Our service

Plizz keeps your books every month, prepares the annual accounts and the audit schedules, and deals with the auditor and the IRD, so you can focus on running the business.

Audit

A statutory audit that runs on time, with no surprises.

The audit report must be signed by a practicing Hong Kong CPA. We prepare audit-ready accounts and supporting schedules, coordinate with the auditor and answer their questions, so the audited financial statements are ready in time for the profits tax return.

Pricing

Hong Kong fees depend on your transaction volume and the scope of the audit. Get a quote and we confirm a fixed fee within 1 business day.