2) Annual Filing Requirements and Deadlines for Registrar
1)Basic Ongoing Compliance Requirements
1.1 What is the statutory information required for a private limited company in Hong Kong?
Answer: A private limited company in Hong Kong must:
- Maintain a local registered address (P.O.Box not allowed)
- Maintain a local resident company secretary (individual or body corporate)
- Maintain at least one director (person or body corporate; local or foreigner; above 18 years of age)
- Maintain at least one shareholder (person or body corporate; local or foreigner; above 18 years of age)
- Maintain an appointed auditor unless it is a company deemed as “dormant” under the Companies Ordinance (i.e. a company that has no relevant accounting transactions during a financial year).
1.2 How long does the Hong Kong company formation procedure take?
Answer: In most cases, after all documents had been submitted, it takes about 4-7 working days to incorporate a company in Hong Kong. However, if you are located overseas, it may take longer owing to the logistics of signing and couriering the relevant company formation documents.
1.3 What shall I do if there is any change to the statutory information submitted?
Answer: If there’s any change to the company statutory information, a private company must
- Notify the Companies Registry of any changes in the company’s registered particulars including registered address, particulars of shareholders, directors, company secretary, changes in share capital, etc. as follows:
- Notification of change of address of registered office – within 14 days after the date of change
- Notification of change of secretary and director (Appointment/Cessation) – within 14 days from the date of appointment or ceasing to act
- Notification of change of particulars of secretary and director – within 14 days from the date of change of particulars
- Notification of Change of Company Name – within 15 days after the passing of the special resolution to change the company name
- Notification of increase of share capital of a company, along with the appropriate capital fee (i.e. HKD 1.00 for every or part of HKD 1,000 of share capital increase, subject to a maximum of HKD 30,000 per case) – within 15 days after the increase takes effect
- Notification of the passing of a special resolution or certain other resolutions – within 15 days after the passing of resolution
- Notification of any relocation of the company s statutory books from the company s registered office – within 14 days after the change of place Notification of Alteration in the Charter, Statues etc. of a Non-Hong Kong Company
- Notification of any allotment or issue of new shares – within one month after the allotment or issue
1.4 Is there any ongoing compliance requirement for a limited company in Hong Kong?
Answer: Yes. A Hong Kong limited company is required to :
- Renew business registration one month before expiry on an annual basis or once every three years, depending on whether your Certificate is valid for one year or three years. The Business Registration Certificate must be displayed at all times at the principal place of business for the company.
- Hold an Annual General Meeting (AGM) within 18 months from the date of incorporation; subsequent AGMs must be held every calendar year, with the interval between each AGM not exceeding 15 months. The directors must table the company’s financial accounts (i.e Profit and Loss Account and Balance Sheet) in compliance with Hong Kong’s Financial Reporting Standards (FRS) framework. A directors report must be prepared in conjunction with the annual accounts.
- Comply with annual accounts filing deadlines and requirements of Hong Kong’s Companies Registry and Tax Authority. More details on this please refer to FAQ below.
- Maintain the following records and documents at all times: Incorporation Certificate, Business Registration Certificate, Memorandum and Articles of Association, minutes of all meetings of directors and members, updated financial records, company seal, share certificates, registers (including members register, directors register and share register).
- Maintain necessary business licences, as applicable.
- Maintain accurate and detailed accounting records. More details please refer to FAQ below.
1.5 What is the accounting standard used in Hong Kong ?
Answer: Since 1st January 2005, Hong Kong has adapted a Financial Reporting Standards (FRS) framework that has been modelled on International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB).
1.6 What’s the regulatory requirement in relation to account records under Hong Kong Company Ordinance?
Answer: The Company Ordinance required a limited company to Maintain accurate and detailed accounting records to enable the assessable profits of the business to be readily ascertained.
All records must be retained for seven years from the transaction date. Failure to do so will attract a penalty. If the accounting records are kept outside Hong Kong, the returns must be kept in Hong Kong. A company’s business records must include:
- The books of accounts recording receipts and payments, or income and expenditure
- The underlying documentation necessary to verify the entries in the books of account; such as vouchers, bank statements, invoices, receipts and other relevant papers
- A record of the assets and liabilities of the business
- A daily record of all money received and expended by the business together with supporting details of the receipts or payments
2) Annual Filing Requirements and Deadlines
2.1 Am I subjected to annual filing requirements with the Company Registry?
Answer: Both local and foreign companies (an incorporated subsidiary or registered branch) in Hong Kong are subject to annual filing requirements with the Companies Registry.
2.2 What is the annual filing requirement under the Companies Ordinance?
Answer: A private limited company incorporated in Hong Kong under the Companies Ordinance is required to file an Annual Return signed by a director, company secretary, manager or authorized representative with the Companies Registry. However, a private company which is deemed to be a dormant company (i.e. a company that has no relevant accounting transactions during a financial year) under the Companies Ordinance is exempt from filing annual returns.
An Annual Return is a return, in a specified form, containing the particulars of the company such as the address of the registered office, shareholders, directors, secretary, etc. There is no requirement to file the financial accounts of the company with the Company Registrar.
The Annual Return must be filed once in every calendar year (except in the year of its incorporation) within 42 days of the anniversary of the company’s incorporation date. Even if the information contained in the last return has not changed since, you still need to file an annual return certifying that there has been no change since the date of the last return.
Late filing attracts a higher registration fee and the company and its officers are liable to prosecution and fines.
3.1 Am I subjected to annual filing requirements with the Company Registry?
Answer: Both local and foreign companies (an incorporated subsidiary or registered branch) in Hong Kong are subject to annual filing requirements with the Inland Revenue Department (IRD).
3.2 What is the annual filing requirement under the Hong Kong Company Law?
Answer: As per Hong Kong company law, every company formed in Hong Kong, must file a Tax Teturn (in Hong Kong it’s called Profits Tax Return) along with its audited accounts on an annual basis with the Inland Revenue Department of Hong Kong. The following companies do not need to submit audited accounts along with their returns:
- Small corporations: Defined as those corporations whose total gross income does not exceed HKD 500,000 for the basis period
- Dormant companies: Defined as having “no relevant accounting transactions” during a financial year
- Companies incorporated in a jurisdiction whose laws do not require accounts to be audited
- Hong Kong branch of a foreign company, subject to certain conditions
IRD issues Tax Return filing notifications to companies on the 1st of April every year. For the newly incorporated companies, the notification is generally sent on the 18th month of the incorporation date. Companies must file their Tax Return within one month from the date of notification. Companies can request for an extention, if needed. You may incur a payment of penalty or even prosecution, if you fail to submit your tax return by the due date.
When filing the Tax Return, the following supporitng documents must also be attached:
- A certified copy of the company’s balance sheet, auditor’s report and Profit & Loss Account relating to the basis period
- A tax computation indicating how the amount of assessable of profits (or adjusted losses) has been arrived at
- The prescribed ‘Supplementary Form’ which contains most particulars like tax data and financial data etc.
3.3 What is the tax jurisdiction?
Answer: Taxes in Hong Kong are levied on the “territorial principle”. In other words, taxes are only levied on income “derived from or arising in” Hong Kong and not on income sourced outside Hong Kong. In simple terms, this means that a person who carries on a business in Hong Kong but derives profits from another place is not required to pay tax in Hong Kong on those profits. No tax is levied on profits arising abroad, even if they are remitted to Hong Kong.
3.4 How many types of corporate taxes are there in Hong Kong?
Current Tax Rates in Hong Kong
Tax Rates for Companies
|Tax rate for corporations||16.5%|
|Tax rate on capital gains||0%|
|Tax rate on shareholder dividends||0%|
|Tax rate on foreign-sourced income||0%|
Other Tax Rates
|Stamp Duty||HKD 3 to HKD 100 ( Fixed duties)0.1% to 4.25% ( ad valorem duties)|
3.5 What is the tax year in Hong Kong?
Answer: The tax year in Hong Kong is 1 April – 31 March. Profits earned during an accounting year ending within the tax year will be deemed to be the profits for that tax year.
3.6 What is the tax treatment of business losses incurred by a Hong Kong company?
Answer: Losses made in an accounting year can be carried forward and set off against future profits of that trade. A corporation carrying on more than one trade may have losses in one trade offset against profits of the other trade. To qualify for deduction, losses should have arisen during the course of carrying on a business in Hong Kong. Losses can be carried forward indefinitely until they are fully utilized, subject to certain conditions such as no substantial change in shareholders.
4.1 How often shall the company pay its staff?
Answer: The norm of pay frequency in Hong Kong is monthly paid
4.2 What are the mandatory benefits of staff in HK?
Answer: Mandatory employee benefits include mandatory provident fund, statutory holidays, annual leave, maternity leave, sick leave, severance payments and long-service payments. Medical and dental benefits, housing allowance, year-end or Chinese Lunar New Year bonus are the OPTIONAL items in the salary package.
4.3 What is mandatory provided fund ( MPF)?
Answer: Employers are required to make the arrangement for both full-time and part-time employees aged between 18 and 65 and employed for 60 days or more to join a registered MPF Scheme. Should the employee change jobs, the contributions can be transferred to the new employer’s retirement program.
Mandatory contributions are calculated on the basis of 5% of an employee’s relevant income, with the employer matching the employee’s contribution. Employers and employees can opt to make extra, voluntary contributions in addition to the mandatory contributions.
It is the employer’s obligation to provide each employee with a monthly pay-record showing the employee’s relevant income and the amount of contribution.
4.4 What is the salary tax rate in HK and how often shall the employer report the staff information to Inland Revenue Department ?
Answer: The end of taxation year is 31st March each year. The employee is responsible for his/her personal salaries tax. However, employers have the obligations to report the following employment information to the Inland Revenue Department
Tax Rates for Individuals
|Income (in HKD currency)||Tax rate|
|1 – 40,000 HKD||2%|
|40,001 – 80,000 HKD||7%|
|80,001 – 120,000 HKD||12%|
|Above 120,000 HKD||17%|
|Tax rate on capital gains||0%|
|Tax rate on income earned overseas||0%|
|Tax rate on dividends from a Hong Kong company||0%|
It is the responsibility of the directors of the company to ensure that the initial and ongoing compliance requirements are met with. Non-compliance can lead to fines or even prosecution. It is prudent to engage the services of a professional firm to ensure ongoing compliance with statutory rules and regulations of the Hong Kong Companies Ordinance.