Profit TAX

The relationship between the company's annual status and tax return submission

• Companies with activities: All operating Hong Kong companies are required to submit tax returns and audited financial statements every year starting from April 2023.※(Note1)
• If there is no activity: the Hong Kong company must register a dormant company at the Registrar's Office, and a special resolution must be submitted to the Companies Registry's Office to complete.※(Note2)
• Apply for Zero declaration: After receiving the tax form, if you want to claim zero declaration, you should submit the profit tax form and the accountant's non-operating audit report.※(Note3)

(Note 1) Accounting and tax declaration process for a limited company

Generally, all enterprises need to do is to make accounts and declare taxes. According to Hong Kong's tax system, profits tax is only levied on the profits generated by operating in Hong Kong. Except for property leasing, any form of business operating in Hong Kong is required to declare profits tax.

For a limited company, the tax bureau will generally issue a tax return about 18 months after the company is established. The company must audit its finances and fill out a separate tax return to submit to the tax bureau.

Tax declaration process:

1. 18th month of incorporation, first receipt of tax return from the Inland Revenue Department
2. Organize accounts, audit, fill in the tax return, submit the audit report and the completed tax return to the tax bureau within the specified time, and complete the tax return
3. The tax bureau assesses tax based on the audit documents provided by the company
4. The Inland Revenue Department completes the tax assessment and issues a tax payment notice stating the amount of tax payable
5. The enterprise pays tax according to the fee of the notice
6. Obtain receipts and complete tax returns

Audit process:

1. Organize business transaction records, documents and bank statements
2. Issue accounting statements in compliance with the Hong Kong accounting system
3. Appoint an auditor to conduct an audit
4. The auditor completes the audit and issues an auditor's report

In order to make the auditing work smoother, it is also very important for enterprises to prepare the materials required for auditing in advance. Relevant information includes audited financial statements of subsidiaries, copies of profits tax returns from the Inland Revenue Department, all financial statements, all sales/service agreements, employment contracts, lease agreements, all purchase invoices, receipts for all expenditures, bank statements, all Sales invoices and corresponding receipts, copies of any special permits, copies of incorporation documents, etc. After receiving the tax return for the first time, auditing and tax declaration needs to be done every year. Enterprises should also process the tax return as soon as possible after receiving the tax return, and file and pay taxes within the required time limit to avoid late fines or legal liabilities. As long as the enterprise develops the habit of retaining and sorting out relevant information in its daily operations, auditing and tax declaration is a step-by-step procedure. For more enquiry, please WhatsApp +852 91228720.