Dormant company in Hong Kong: How to pause your business legally

You’ve set up a company in Hong Kong, but now the business is on pause.

Maybe your launch plans are delayed. Maybe you're pivoting. Or maybe you just need time to regroup.

So, what do you do with your company while you're not trading?

Shutting it down feels too permanent. Keeping it fully active? Too expensive and unnecessary.

Here’s the good news:

Hong Kong allows you to officially put your company “on hold” through dormant status, a legal way to pause operations while remaining compliant and protecting your company name.

In this guide, you’ll learn:

• What a dormant company is (and why it’s different from “inactive”)
• Who qualifies and how to apply for dormant status the right way
• How much does it cost to keep your dormant company compliant
• What to do if you forgot to declare dormancy, or want to reactivate later

Let’s get into it, starting with what a dormant company means in the eyes of Hong Kong law.

1. What is a dormant company in Hong Kong?

Under the Companies Ordinance (Cap. 622), section 5,  a Hong Kong company can be classified as "dormant" if it has had no accounting transactions during a financial year and has filed a special resolution to the Companies Registry. 

This applies only to private companies limited by shares.

Being dormant does not mean the company is inactive informally. 

It's a formal status granted by the Registry. It allows companies to take a break from trading while still legally existing.

2. What is the difference between a dormant and inactive company in Hong Kong?

At first glance, “dormant” and “inactive” might sound like the same thing.

But in Hong Kong’s legal and tax systems, they mean very different things — and choosing the wrong label can lead to penalties.

Here’s the key distinction:

A dormant company is officially declared as not doing business, and it gets special treatment.

Once you file the right notice with the Companies Registry, a dormant company is exempt from preparing audited financial statements and filing annual returns (as long as it stays dormant).

An inactive company, on the other hand, hasn’t made this declaration.

Even if it hasn’t done any business, it’s still legally required to file audited accounts, tax returns, and annual returns, just like an active company.

If you plan to keep your company on hold for a while, applying for dormant status can save you time, money, and trouble.

3. Make your Hong Kong company Dormant or Close it?

The decision to pause or dissolve your Hong Kong company isn’t just about saving money.

It affects your compliance workload, future business options, and your legal footprint in Hong Kong.

Use this guide to choose the best path forward — and keep your business compliant while minimizing costs.

3.1. When do you need to make your Hong Kong company dormant?

Dormant companies are useful for:

1. Startups delaying a product launch
2. Founders pausing business during downturns
3. Foreign companies retaining a Hong Kong entity for future entry
4. Entrepreneurs protecting a company name or trademark

3.2. 5 critical factors to determine to declare dormancy 

3.3. Business Intent

Your future plans are the foundation of this decision.

Ask yourself:

• Will you use this company again?
• Is this just a temporary pause or a permanent exit?
• Does the company own valuable brand assets or IP?
• Going dormant keeps your company legally alive — ideal for strategic pauses or brand protection.

Closing the company is best when the business has no future use, and you're ready to cut ties.

3.4. Compliance requirements

Even a non-operating company must meet legal obligations.

• A dormant company, once approved, is exempt from audits and annual filings.
• An inactive but not dormant company? Still fully liable for audits and tax returns.

Closing the company clears you from all future filings, once deregistration is complete and approved by both the Companies Registry and IRD.

3.5. Cost efficiency

Let’s break down the cost reality.

Dormant status minimizes annual expenses:

• No audit
• No tax filing (subject to IRD approval)
• Just basic renewal fees

Closing the company eliminates all future costs,  but comes with short-term deregistration admin and final filings.

3.6. Flexibility

Dormant status offers optionality. You can reactivate operations anytime without needing to re-incorporate again.

Closure, on the other hand, is irreversible. If you return, you’ll need to register a brand-new company.

3.7. Time to execute

• Going dormant is relatively fast,  just submit the required notice and wait for approval.
• Deregistering takes longer: you’ll need to handle audits, close bank accounts, settle liabilities, and get clearances.

Choose based on your urgency, internal capacity, and how quickly you want to wrap things up.

4. How to declare company dormancy in Hong Kong

If you decide to put your Hong Kong company on pause instead of shutting it down, you can follow our step-by-step guide to make the process smooth and compliant.

4.1. Step 1: Make sure your company qualifies

Before applying for dormant status, your company must meet a key condition:

It hasn’t entered into any accounting transactions since becoming dormant (other than statutory filings and maintenance fees).

It must be a private limited company incorporated in Hong Kong (Other company structure is not allowed)

What counts as a transaction?

1. Receiving or paying money (including bank interest)
2. Issuing invoices or paying vendors
3. Signing contracts

What transactions are allowed?

1. Paying the annual Business Registration Fee
2. Filing confirmation statements
3. Keeping a registered office

4.2. Step 2: Pass a board resolution

Once your company passes the eligibility criteria, you’ll need to formally declare the dormancy through a board resolution.

Schedule a board meeting or prepare a written resolution

Include language confirming the company intends to become dormant under the Hong Kong Companies Ordinance (Cap. 622)

Record the effective date

If you are unsure how to raft the resolution, you can use the free template A1 or A2 from the Companies Registry via this link.

Sepcimen A1

Specimen A2

If a company passed a special resolution (please see the two specimens, i.e. A1 or A2 for reference) declaring that the company will become dormant, the company is a dormant company as from:

• the date of delivery of the special resolution to the Registrar of Companies; OR
• any later date that is specified in the special resolution.

4.3. Step 3: File the last form NAR1 or Annual Return (If any)

Under Section 663 of the Hong Kong Companies Ordinance, if your company becomes officially dormant, you’re normally exempt from filing the annual return (Form NAR1) every year.

However, in the year you declare your company dormant, you may still need to file the annual return if you miss the 42-day window after your company’s incorporation anniversary.

For example, 

• Company name: ABC Ventures Limited
• Incorporation date: 1 January 2024
• Annual return due: Within 42 days after 1 January = By 12 February 2024
• Dormancy declaration Date: 20 March 2025

Because ABC Ventures became dormant after 12 February, it still must file the annual return for 2024

From 2025 onward, if it remains dormant and doesn’t have any accounting transactions, it won’t need to file annual returns.

4.4. Step 4: Maintain dormant status

Even dormant companies must meet minimal annual obligations:

✅ Renew Business Registration Certificate
✅ Maintain a valid registered address
✅ Keep at least one director and one company secretary on file

✅ File profit tax returns to the IRS to prove there are no accounting transactions.

We suggest you set annual reminders with tools like Google Calendar, Notion, or Trello to stay compliant with zero stress. Or have your secretary remind you to meet the requirements.

5. Do Dormant companies need to prepare audited financial statements?

According to Section 447 of the Companies Ordinance (Cap. 622), once a private company passes and files a special resolution to become dormant, it is exempt from preparing audited financial statements.

In this case, the Inland Revenue Department (IRD) accepts Profits Tax Returns submitted by dormant companies without the audited financials. 

This means:

• Dormant companies must still prepare unaudited financial statements and profit tax returns. 
• They need to file a Profits Tax Return to the IRRS, but without an audit

6. What happens if I receive passive payment from Google, Facebook with my dormant Hong Kong company?

If your Hong Kong company is registered as dormant, it enjoys certain compliance exemptions.

But the moment you receive revenue from platforms like Facebook, Google, Apple, or any advertising service, your dormant status is no longer valid.

If the company receives any income — even just one payment from Facebook Ads, Google Ads, or Apple — it automatically loses its dormant status.

For example:

1. You run ads for a client and get paid via Facebook.
2. You earn ad revenue on YouTube or the App Store.
3. You accept affiliate income into a personal or company account.

In all cases, this triggers accounting activity, which means the company must now:

• Responsible for bookkeeping and preparing financial statements
• Conduct an annual audit
• File Profit Tax Return (BIR51) with the IRD

7. Consequences of not following the regulations for dormant companies in Hong Kong

Failing to update your compliance status or not filing tax returns can lead to serious penalties.

There are scenarios where you think it is normal to do so, since it may not violate Hong Kong regulations

• “I didn’t use the company bank account.”
• “The money went to my personal PayPal.”
• “It was just a small payment.”

 None of those matters. If the contract or service is under your company name, it’s taxable company income.

The penalties are harsh; you can face a fine of  nearly HKD $1 million, and receive more than 12 months in prison

Here is the true story of how a Hong Kong dormant company was used for tax evasion and led its owners to jail time.

You can read more of this story on the IRD press release "Fine and jail sentence for printing company, its director and manager for tax evasion"

A printing company in Hong Kong — along with its director and manager (a married couple, aged 64 and 69) — was investigated by the Inland Revenue Department (IRD).
They were found guilty of:

• Using a dormant company to receive client payments
• Falsifying sales records and debit notes
• Deliberately understating income across four tax years

The consequences?

1. The company was fined HKD 200,000, plus a further fine of nearly HKD 1 million, equal to 50% of the tax they tried to evade.
2. The director was sentenced to 24 months in prison and fined the same amount.
3. The manager received 12 months in prison.

In total, they had underreported over HKD 12 million in sales and evaded nearly HKD 2 million in taxes.

Even if you receive income in a personal account or through a dormant company, the IRD will treat it as company revenue if it’s tied to services or contracts under your company name.

If you don’t report it, you’re not saving money. You’re risking prison time.

8. How to reactivate a dormant company in Hong Kong?

Reactivating a dormant company is fully allowed under the Companies Ordinance. But you must follow the proper process to stay compliant.

This step-by-step guide walks you through the exact actions you need to take.

8.1. Step 1: Pass a Special Resolution

To officially reactivate your company, the board must pass a special resolution stating the intention to enter into accounting transactions.

This signals that the company is coming out of dormancy.

Here’s how:

1. Draft a resolution using one of the standard templates (see Specimen B1 or B2 on the Companies Registry website)
2. Get it signed and approved by shareholders or board members
3. Keep a dated record for your company file

8.2. Step 2: File the Resolution with the Companies Registry

Once the resolution is passed, you need to deliver it to the Registrar of Companies for official registration.

• Submit within 15 days after passing the resolution
• Use the Companies Registry’s e-Registry Portal for fast submission

8.3. Step 3: Inform the Inland Revenue Department (IRD)

To reactivate your tax file, notify the IRD that your company is resuming business, you must nclude the following in your notification letter:

1. Company name and CR number
2. Date of reactivation
3. Business activity you will engage in
4. Copy of the special resolution

You can send this by post or upload it via the eTAX portal.

8.4. Step 4: Resume accounting and Audit procedures

Once reactivated, your company is again subject to standard compliance:

• Prepare proper accounting records
• Appoint an auditor if needed
• Maintain books for at least 7 years

You can use cloud accounting software like QuickBooks or Xero to set up a clean restart of your financial system.

8.5. Step 5: File Tax Returns and Annual Return

Your company must now:

1. Respond to the next Profits Tax Return (PTR) from the IRD
2. File audited financial statements annually
3. Submit the Annual Return (Form NAR1) within 42 days of your company’s incorporation anniversary

9. How can we help you maintain your dormant company in Hong Kong 

Business doesn’t always move in a straight line — and neither should your strategy.

If your Hong Kong company isn’t actively trading, it doesn’t mean you need to shut down or burn cash to stay compliant.

The smart move? Leverage dormant status to keep your entity legally intact, reduce costs, and protect your long-term vision.

Our experts at Global Link Asia Consulting help you

• Draft and submit your dormant company resolution
• Notify the CR ANIRD and handle filings
• Stay 100% compliant with minimal effort
• Reactivate when the time is right

Contact Global Link Asia Consulting today to protect your business, save costs, and stay compliant in Hong Kong.

10. How can we help you maintain your dormant company in Hong Kong 

Business doesn’t always move in a straight line, and neither should your strategy.

If your Hong Kong company isn’t actively trading, it doesn’t mean you need to shut down or burn cash to stay compliant.

The smart move? Leverage dormant status to keep your entity legally intact, reduce costs, and protect your long-term vision.

Our experts at Global Link Asia Consulting help you

1. Draft and submit your dormant company resolution
2. Notify the CR ANIRD and handle filings
3. Stay 100% compliant with minimal effort
4. Reactivate when the time is right

Contact Global Link Asia Consulting today to protect your business, save costs, and stay compliant in Hong Kong.

In addition, we offer an all-in-one package service you can trust:

• Open a company in Hong Kong legally, fast with our one-stop support
• Get a reliable, experienced company secretary with our corporate secretarial service
• Support in opening your business bank accounts;
• Get an affordable, professional registered office address for your business;
• Support to open, authenticate, and manage Stripe and PayPal Business in Singapore, Hong Kong, and the U.S;
• Handle all your tax accounting needs, timely annual filings, auditing, and more.

Whether you’re a solopreneur, startup, or scaling business, we’ll make sure your Hong Kong setup is fully compliant, optimized, and affordable.

11. FAQs about declaring company dormancy

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