Taxes, accounting, and bookkeeping are basic but essential aspects of running a successful business across the globe. Hong Kong is no exception. Maintaining your books and regularly updating your records will not only save you from the authorities and laws but also provide critical insights and useful information to facilitate the managerial decision-making process.
Under the provisions of the Hong Kong Companies Ordinance, every Hong Kong incorporated and registered business is required to maintain proper records and books of accounts and comply with the statutory audit requirements on an annual basis.
The taxing and accounting framework adopted by Hong Kong, the Financial Reporting Standards framework (HKFRS), is based on the International Financial Reporting Standards (IFRS).
Taxes in Hong Kong
Hong Kong has a relatively taxpayer-friendly environment for businesses. This atmosphere invites international-based companies to the economic hub. The low rates and easy laws make it especially appealing from a commercial viewpoint, turning Hong Kong into an attractive business destination.
All Hong Kong-based corporations have to pay their taxes and file their returns and profits with the Inland Revenue Department (IRD). The IRD will then issue the first PTR a year after the firm is officially incorporated. Following the PTR, the company must then submit completed profit tax returns to the IRD within three months. The PTR must cover the first 18 months of incorporation.
The Hong-Kong registered organization must include:
- Accounting books along with receipts and payments
- Documents verifying the entries in the accounting books– this includes receipts, bank statements, vouchers, and other relevant papers.
- A balance sheet of business income and expenditure highlighting the assets and liabilities.
Referring to the Hong Kong Companies Ordinance, all registered companies must maintain accounting records to comply with the statutory requirements. The auditing of a Hong Kong incorporated company’s annual financial statement must be done by a certified public accountant.
The statement is presented during the Annual General Meeting to the company shareholders and is submitted to the Inland Revenue Department.
Besides meeting compliance, account books are required in order to:
- Assist with financial planning
- Reduce audit and compliance costs
- Represent company’s competence before investors, partners, and suppliers
- Help with timely submission of accurate tax returns
Although the rules and procedures are quite similar to other countries, handling your company’s taxes and accounts while juggling your actual business tasks can prove stressful. Understanding the laws and regulations, the local know-how, and dealing with the language barrier can be difficult, especially for a new foreign corporation starting up in Hong Kong.
Thankfully, corporate services including taxes and accounting services can be outsourced to a trustworthy and reliable company like Fiducia. With our team of experts, we can manage all your Hong Kong accounting requirements. These include Finance and Accounting, Payroll Services, Tax Representative Services, and even Project Work. Click here to find out more.