Our experienced practicing Hong Kong CPAs are committed to assisting clients in satisfying the statutory requirements under relevant legal frameworks. We help you deal efficiently with challenges arising from the evaluation of financial information and potential risks in operation faced by your shareholders and stakeholders, with a view to crafting success for your business. With a deep reservoir of knowledge and experience in different industries, our professional CPAs keep a watchful eye on industry risks and other factors affecting the financial report for you, giving you a comprehensive picture of your business.
According to Companies Ordinance, a company is required to perform the audit and present the audit report to its AGM annually regardless of amount of the profit or inactive status of the company.
Companies Ordinance does NOT restrict the year-ended date of a company. In other words, the directors are free to determine the year-ended date. Normally, most of the companies in Hong Kong choose either 31March or 31 December as their year-ended date.
In consideration of whether a company is carrying on a business in Hong Kong, the IRD would apply "Six Badges of Trade" as follows:
i) Profit-seeking motive at the time of acquisition
ii) Subject matter of the commodity disposed
iii) Length of ownership
iv) Frequency of similar transaction
v) Supplementary work done on the property
vi) Circumstances leading to the disposal
If one of the following conditions is satisfied, the company is not subject to Hong Kong profits tax
i) the company does NOT carry on a trade, a profession or a business in Hong Kong
ii) there is NO profits arising in or derived from such a trade, a profession or a business
iii) the profits are NOT arising in or derived from Hong Kong
The IRD determines whether the company's profits arise in or are derived from Hong Kong by looking at where the operations of the company takes place in order to generate the profit. If the operation of company takes place in Hong Kong, then the relevant profit would be subject to Hong Kong profits tax and vice versa.
The Hong Kong tax system is based on the territorial concept. According to section 14 of Inland Revenue Ordinance (IRO), profits tax shall be charged for each year of assessment at the standard rate on every person carrying on a trade, profession, or business in Hong Kong in respect of his assessable profits arising in or derived from Hong Kong.
A Hong Kong company is liable for profits tax if certain conditions are fulfilled as stated in Inland Revenue Ordinance (Chapter 112).
Generally, profits tax return and any required supplementary forms should be filed within 1 month from the date of issue. The compliance date of submission is specified on page 1 of the profits tax return.In case of newly incorporated company, the IRD usually allows the tax payer to spend more time preparing the profits tax return and any required supplementary forms, which should be filed within 3 months from the date of issue.Block Extension Scheme may be applied to certain companies whose conditions fit the requirement stated by the IRD. For details, please consult your Relationship Manager.
Our cloud accounting solutions powered by Xero and other add-on give you peace of mind knowing your books and records are managed professionally, with accurate and timely financial information provided to offer insights into the unpredictable market for timely responses.
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