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Accounting and Auditing in Hong Kong

Accounting & Auditing in Hong Kong

Bookkeeping and Accounting services

  • Prepare Company’s financial statements
  • Statement of Financial Position, Income Statement, General Ledger and Cash Flow
  • All accounting information is processed with professional accounting software
  • Clear and well-organized accounts information
  • Effective financial management
  • Accounting fee is calculated based on the number of transactions

Hong Kong Accounting Fee

Amount(Transactions) Fee
Below 30 US$ 370
30 to 59 US$ 420
60 to 99 US$ 480
100 to 119 US$ 510
120 to 199 US$ 630
200 to 249 US$ 830
250 to 349 US$ 1,120
350 to 449 US$ 1,510
450 and Above To be confirmed

Auditing Services

Statutory Audit

  • Perform annual audits complying with Hong Kong Financial Reporting Standards (HKFRSs) or International Financial Reporting Standards (IFRSs)
  • Professional services Firm that stands ahead of its competitors in anticipating future developments
  • Be assured of a top Hong Kong CPA firm undertaking the audit
  • Timely & effectively to make a business decision
  • Highlight potential issues along with solutions
  • Have a peace of mind to remain in 'good standing' with local government and banks
  • Audited accounts are more precise and legitimate
  • Enhance the recognition of the company’s account
  • Auditing fee is calculated based on revenue of your Hong Kong company

Hong Kong Auditing fee

Auditing fee is calculated based on the revenue of your Hong Kong company in a reporting period

Turnover (Million HKD) US$ Estimated Equivalent (*) Fee
Below 0.5 M Below 64,500 US$ 939
0.5 M to 0.74 M 64,500 to 95,999 US$ 1,070
0.75 M to 0.99 M 96,000 to 127,999 US$ 1,280
1 M to  1.49 M 128,000 to 191,999 US$ 1,650
1.5 M to 1.99 M 192,000 to 255,999 US$ 1,810
2 M to 2.99 M 256,000 to 383,999 US$ 2,050
3 M to 3.99 M 384,000 to 511,999 US$ 2,420
4 M to 4.99 M 512,000 to 640,999 US$ 3,450

FAQs FAQs

1. What types of tax return I need to file in HK?

There are mainly 3 types af tax returns, you need to file to the IRD: Employer’s Return, Profit Tax Return and Individual Tax return. 

Each entrepreneur is obligated to file these 3 tax returns each year since the first return is received.

2. When do I submit my first audit report to IRD?
If you have formed a HK company, you’ll receive your first Profit Tax Return (PTR) in 18 months after the date of incorporation. Thus you’ll need to well prepare your accounting records and submit your first audit report together with the completed tax return to the IRD.
3. What expenses could be deductible from Assessible Profits?
Generally, all outgoings and expenses, to the extent to which they have been incurred by the taxpayer in the production of chargeable profits, are allowed as deductions.
4. Do I need to file tax return to the HK Govt for my offshore business?

For those companies registered in offshore jurisdictions but having profit derived from HK, they are still liable to HK Profit Tax. It means these businesses need to file the Profit Tax Return to the IRD

Read more: Hong Kong offshore tax exemption

5. Do I need to audit the accounts if my Hong Kong company is inactive or the turnover is small?
The requirement to audit the accounts of the company is set down by the Companies Ordinance. The Ordinance does not provide any conditions under which no audit is required.
6. Which Types of Tax Returns I Need to File for Hong Kong company?
Generally, the Inland Revenue Department (IRD) will issue 3 types of tax returns to each entrepreneur every year since the very first return issued: Employer’s Return, Profits Tax Return and Individual Tax Return.

The IRD will issue Employer’s Return and Profits Tax Return on the first working day of April every year, and issue Individual Tax Return on the first working day of May every year. It is required for you to complete your tax filing within 1 month from the date of issue; otherwise, you may face penalties or even prosecution. 

Read more: 

7. What is the tax rate of profits tax?
8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000 from 2018/19 onward.
8. How to manage the Profit Tax Return if it is received in the taxing period before the business of the limited company commence?
The Profit Tax Return shall also be submitted to the IRD even if the limited company has not commenced its business.
9. Do I need to do accounting for my offshore company in Hong Kong?

The Government of Hong Kong requires all companies incorporated in Hong Kong must keep financial records of all transactions including profits, revenues, expenses should be documented.

18 months from the date of incorporation, all companies in Hong Kong are required to file their first tax report which consists of accounting and auditing reports. Furthermore, all Hong Kong companies, including Limited Liability, the annual financial statements must be audited by external independent auditors who hold the Certified Public Accountants (CPA) license.

One IBC offers our Accounting & Auditing services to all of our clients who are operating their companies in Hong Kong. Our offered services include:

  1. Coordination and advice for setting up bespoke accounting systems.
  2. Bookkeeping and annual accounts preparation.
  3. Periodic management accounts and reports.
  4. Budget and cash flow preparation and forecasts.
  5. Compliance with Hong Kong Inland Revenue Department (IRD), Securities and Futures Commission (SFC) reporting requirements if any.

For more information, please send us an inquiry via email: [email protected]

Read more:

10. Why Does My Offshore Business Need to File Tax Returns to the HK Government?

The reason is that if your business has profits derived from HK, even if your company is registered in offshore jurisdictions, your profits are still liable to HK Profits Tax and you need to file the Profits Tax Return compulsorily.

However, if your company (whether it is registered in HK or offshore jurisdictions) does not involve a trade, profession or business in HK that has profits arising in or derived from HK, i.e. your company is operating and generating all profits wholly outside HK, it is possible that your company can be claimed as an ‘offshore business’ for tax exemption. To prove your profits are not liable to HK Profits Tax, it is suggested to select righ experienced agent at the initial stage

Read more: 

11. How to submit the Profit Tax Return for a limited company in Hong Kong?

The accounts of a limited company shall be audited by a Certified Public Accountant before submitting to the Inland Revenue Department (IRD) together with an auditor's report and Profit Tax Return.

12. What are tax exemptions for offshore companies in Hong Kong?

Generally, offshore companies are free from tax liabilities, all foreign-sourced incomes are tax exempted for companies incorporated in Hong Kong. To be qualified for Hong Kong offshore tax exemption, companies need to be assessed by the Inland Revenue Department (IRD) of Hong Kong.

According to IRD, the following are excluded from the assessable profits:

  • dividends received from a corporation which is subject to Hong Kong Profits Tax;
  • amounts already included in the assessable profits of other persons chargeable to Profits Tax;
  • interest on Tax Reserve Certificates;
  • interest on, and any profit made in respect of a bond issued under the Loans Ordinance or the Government Bonds, or an Exchange Fund debt instrument or a Hong Kong dollar-denominated multilateral agency debt instrument;
  • interest income and trading profits derived from long term debt instruments;
  • interest, profits or gains from qualifying debt instruments (issued on or after 1 April 2018) exempted from payment of Profits Tax; and
  • amounts received or accrued of a specified investment scheme by or to one person

If you still want to know more information about tax exemptions for Hong Kong offshore companies, you can contact our consulting team via email: [email protected]

Read more: 

13. What happens if I fail to file my tax return or provide false information to the Inland Revenue Department of Hong Kong?

Any person who fails to file tax returns for Profits Tax or provide false information to the Inland Revenue Department is guilty of an offence and liable to prosecution result in penalties or even imprisonment. In addition, section 61 of the Inland Revenue Ordinance addresses any transaction which reduces or would reduce the amount of tax payable by any person where the Assessor is of the opinion that the transaction is artificial or fictitious or that any disposition is not actually in effect. When it applies the Assessor may disregard any such transaction or disposition and the person concerned shall be assessed accordingly.

Read more

14. In which case will Hong Kong company be exempt from Profits Tax?
If the corporate profits do not derived from Hong Kong, and the company has not set up an office in Hong Kong nor hired any Hong Kong employees, its earned profits will be exempt from Profits Tax. But the Company should apply for the offshore claim exemption position from IRD.
15. What will be the consequence of not submitting a Profit Tax Return Hong Kong?

A beginning penalty of few thousand dollars or above may be applied if a Profit Tax Return hong Kong is not submitted before the due date.

A further fine may also be applied by a district court from the Inland Revenue Department.

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