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  • Country: Hong Kong
  • Services: Tax - Accounting

In Hong Kong, it is mandatory for companies to annually submit reports, tax documentation, and declarations to the government. This requirement applies to all businesses operating in Hong Kong. This is not an easy task as you may encounter difficulties in fulfilling these obligations for the following reasons:

  • Your company might lack a comprehensive understanding of all the necessary reports mandated by the government. This could be attributed to a shortage of personnel and time to delve into Hong Kong's commercial law and tax regulations.
  • Your company might not have accountants well-versed in Hong Kong accounting standards, or you may face resource constraints in meticulously tracking all transactions to generate requisite reports.

In this article, we will provide you with comprehensive information on the various reports that Hong Kong companies must file to the government on an annual basis.

1. Annual filing for Hong Kong companies to the Hong Kong Company Registry

Type of report Detail Submission deadline
Minute of Annual Greeting Meeting (AGM)

Hong Kong companies must hold shareholder meetings at the end of every financial year, instead of the calendar year.

A one-member company (for example a company consisting of only 1 DIRECTOR) does not need to hold shareholder meetings.

Every year, Hong Kong companies are required to submit AGM and AR to update the Hong Kong government with their company information. The Hong Kong company must submit the AGM and AR to the Hong Kong CR within 42 days after the anniversary of the incorporation date in that year.
Annual Return (AR)

The annual return report will be presented on the NAR1 form, which will then be sent to the Hong Kong Business Administration. This report includes:

  • Detailed company information;
  • Business registered adress
  • Information of directors, shareholder and company secretary
Business Registration Certificate The validity of a business registration certificate in Hong Kong can vary from one to three years.

The Business Registration Office will send a Business Registration renewal demand note in the middle of the month before the month the Business Registration Certificate needs to be renewed.

If the renewal date of the Business Registration Certificate is in May, the Business Registration Office will issue the request in mid-April.

If such notice is not delivered, businesses should notify the Commissioner in writing within 1 month from the expiration date of the company's current Business Registration Certificate.

A directors’ report for a financial year The director's report must be prepared based on the checklist of the Company Ordinance. ( You can refer to the standard report from the Hong Kong government All Hong Kong companies are not required to file director's reports. Instead, this report must be approved by the Board of Directors and presented to shareholders within 21 days before the annual general shareholder meetings.
Significant Controllers Register All Hong Kong companies must compile and maintain a list of board members or directors for review by the Hong Kong Regulatory Authority upon request. This list of Directors should be archived at the company's Hong Kong location so that it can be submitted upon request.
Employer's Returns

This is an annual report on the salary and all other benefits received by a Hong Kong company employee. All income of Hong Kong company employees, regardless of where they have worked (in Hong Kong or overseas) must be reported in BIR56A and IR56B forms.

The Hong Kong company must maintain and retain employee payroll records for at least 7 years; and at the same time report payments to employees through BIR56A, IR56B, IR56E, IR56F, and IR56G forms.

In addition, the Hong Kong government also encourages businesses to submit reports online.

The Inland Revenue Department of Hong Kong will issue BIR56A and IR56B application forms to Hong Kong companies on the first working day of April annually.

The Hong Kong company must complete and file the BIR56A and IR56B application forms within 1 month from the issue date.

 

2. Annual filing for Hong Kong companies to the Hong Kong Inland Revenue Department (IRD)

Type of report Detail Submission deadline
Report of annual profit tax returns

The report of annual profit tax returns includes three forms for different subjects as follows:

  • Hong Kong company and individual: BIR52;
  • Foreign company and individual: BIR54.

The report of annual profit tax returns must be submitted together with the following audited financial statements in the second collum

  • Statement of financial position
  • Statement of profits and loss and comprehensive income
  • Statement of change and equity
  • Statement of cash flows

From the above reports, the Hong Kong government can evaluate the company's profits or find out the adjusted losses, which are used to calculate the profit tax of that Hong Kong company in the same year.

Important note:

  • Hong Kong applies 2 tax system
  • Hong Kong companies earning income from operations outside of Hong Kong are not subject to profit tax in Hong Kong.
  • Every year, Hong Kong companies also benefit from tax incentives, tax exemptions, and reductions from the Hong Kong government. The rate of exemptions and incentives will vary each year and are regulated by the Hong Kong tax authorities.

The report of annual profit tax returns and relevant reports must be submitted within 1 month from the reception date of the notice sent by the Inland Revenue Department.

This notice is usually issued periodically on April 1 annually.

However, depending on the operation schedule of the business, the reception time of submitting the report of annual profit tax returns from the Inland Revenue Department will be different, to be more specific:

  • Newly incorporated business: These businesses will receive their first report of annual profit tax returns 18 months from the date of starting the business or incorporation date.
  • Long-time operated business: A report of annual profit tax returns will be issued on the first working day of April every year.

Especially, in order to support Hong Kong companies without much operation or temporarily being inactive.

However, unless otherwise notified or instructed by the Hong Kong tax department, Hong Kong companies should still submit a report of annual profit tax returns.

 Audited financial statements 

In accordance with Hong Kong governmental regulations, all Hong Kong companies are required to prepare financial statements. These reports must be audited by outsourced independent audit agencies to verify the entire transaction cash flow of the business. To assist businesses in preparing financial statements, the Hong Kong government encourages businesses to conduct a search for legally qualified audit agencies providing such audit services.

The package of audited financial statements must include

  • Statement of financial position
  • Statement of profits and loss and comprehensive income
  • Statement of change and equity
  • Statement of cash flows

 

The deadline for submitting financial reports will be determined at the end of the fiscal year. In Hong Kong, the fiscal year runs from April 1st to March 31st. A Hong Kong corporation, on the other hand, can select a fiscal year as long as the first fiscal year does not exceed 18 months. In most cases, a Hong Kong firm will choose the fiscal year ending December 31.

  • For newly formed businesses: the deadline for filing financial reports for the first year is 18 months from the date of formation.
  • For businesses with the second fiscal year onwards:
    • If their fiscal year ends on December 31st this year, the deadline for submission of annual financial reports is August 15th next year.
    • If their fiscal year ends on March 31st this year, the deadline for submission of annual financial reports is November 15th this year.
  • Please keep in mind that the submitted report must be audited.
Tax exemption application for income earned outside Hong Kong territory (Claim offshore form)

Hong Kong applies the territoriality principle of taxation. Only profits earned within Hong Kong are taxed. Profits from overseas are not subject to Hong Kong profit taxation. Therefore, businesses can reduce the payable tax from the government by preparing a tax exemption application for income earned outside Hong Kong.

To successfully apply for tax exemption, businesses must prepare the following documents:

  • Annual financial statements (audited by independent auditors)
  • Claim offshore form
  • Relevant financial documents or offshore transaction documents:
    • Invoices, voucher;
    • Contracts, statement;
    • Receipts, letters, etc.
  • For first-time application: 18 months after the company submits the profit tax declaration report.
  • For subsequent application Every 12 months after the business's first application is issued.

3. How can we help your Hong Kong company fully comply with Hong Kong authority requirements?

Global Link Asia Consulting, as your trusted one-stop corporate service provider helping hundreds of business owners start their businesses overseas and manage their companies with success, can assit you in

4. FAQs about annual filing for Hong Kong companies

All Hong Kong companies must submit annual financial and accounting reports to the IRD. Accounting and audit reports are a part of the annual compliance obligations, regardless of the place of business operation.

As mentioned above, a Hong Kong company can apply for tax exemption:

  • For first-time application: 18 months after submission of your first report of profit tax returns as an incorporated corporation.
  • For subsequent applications: Every 12 months after the business's first application is issued.

This procedure can take several months as the IRD will raise questions with the company during the application screening procedure.

Because Capital Gains Tax, Value Added Tax (VAT), Goods And Services Tax (GST), and Withholding Tax are exempted in Hong Kong, so a Hong Kong company only has to pay corporate income tax to the government.

You do not need to be in Hong Kong to set up a company in Hong Kong, especially with the help of Global Link Asia Consulting. Contact us now for a quick consultation!

To make it simple for you, there are 2 main steps to register your company in Hong kong

  • Finding and approving a company name: The first step in the company registration procedure is that the proposed name of the company must be approved by submitting an application to the Business Registry.
  • Registering your company with the Company Registry: Successful application is usually processed within 5 to 7 working days and the Company Registry will issue a Certificate of Incorporation. The Certificate of Incorporation must be obtained at the Companies Registry by the company representative.

We offer a comprehensive range of accounting and tax services for US companies. Our services include:

  • Tax Consulting .
  • Monthly/Annual Tax Accounting services in accordance with HKFRS.
  • QuickBooks Consulting and Licensing.
  • Profits Tax Return Preparation.
  • Offshore claim form Preparation.
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