Hong Kong accounting and auditing may seem like just another element of regular tax and accounting for Hong Kong companies, but in fact the regular accounting and tax filing, as well as CPA's report may have far-reaching consequences. This means that it is in fact a very important yearly task for Hong Kong businesses to undertake.
Time to Submit the First Audit Report to Inland Revenue Department (IRD)
If you have formed a Hong Kong company, you will receive your first Profits Tax Return in around 18 months after the date of incorporation. You will need to prepare your accounting records and submit your first audit report together with the completed tax return to the IRD within a three month submission period. Thereafter, you will receive your Profits Tax Return once a year, which means you have to prepare your accounting records and audit report every year.
Note: It's your responsibility to make audit report to IRD, which could affect:
Your ability to get a loan from banks;
Trust from vendors and clients;
Your relationship with the government, inviting closer scrutiny at all times;
The legitimacy in which your company is viewed;
Whether your claims for 0% tax for offshore revenue will be accepted.
What To Do If the Business Has Not Yet Commenced or Does Not Generate Income
If your business has not yet commenced so far, you can report as ‘not yet commenced’ to the IRD by absence of an audit report. Once your company starts to run business and earn profits, you will have to submit back the first and subsequent years’ financial statements to the IRD and your company will be liable to profits tax.
If your business is operating but does not have any operational transactions or generate any income, you still need to file your Profits Tax Return with an audit report prepared. You can appoint a tax representative to help you in this part to make sure your tax return is being completed properly and submitted to the IRD on time.
Note: If you do not file your tax return on time, you may be required to pay a penalty, or even prosecuted. A further possible consequence is that you may be required to pay more tax. This is because without your furnishing the relevant details, the Assessor will issue an estimated assessment and demand for tax without granting your allowance entitlements and deductions in respect of contributions to Mandatory Provident Funds, approved charitable donations, expenses of self-education and home loan interest etc.
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to email@example.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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