IS YOUR PROFESSIONAL COMPANY SECRETARY A QUALIFIED ONE?

According to Section 154 of Hong Kong Company Ordinance, every company must appoint a Company Secretary. Along with this article, you can see the importance of a company secretary for every Limited Companies in Hong Kong. In fact, many of the Limited Companies do not know if they have hired a QUALIFIED professional company secretary to help handle documents and work with Company registry on their behalf.  

Owing to the change of name of “The Institute of Chartered Secretaries and Administrators” to “The Chartered Governance Institute”. To clarify, the Company Registry have an updated information related PROFESSIONAL COMPANY SECRETARY listed in details.

Who is Qualified Professional Company Secretary? 

A professional company secretary practicing in Hong Kong means a member of Hong Kong Institute of Chartered Secretaries (HKICS) and The Chartered Governance Institute (CGI). Company secretary must be holding the professional designations of FCG* / FCIS*, FCS* or ACG* / ACIS*, ACS*. 

Nevertheless, since 2018, all company secretaries services providers are required to have a Trust or Company Service Providers License ( TCSP).  

What does a Company Secretary do?

Generally, a company secretary will provide below services:

  • Communication with the Company Registry on Company’s behalf
  • Draw up & keep Statutory Records related to Company Structure
  • Prepare & submit application for Business Registration Certificate
  • Put together & Submit Share allotment documents
  • Arrange Minutes and Resolutions for Directors & Shareholders
  • Filing with the Company Registry

Besides, Company Secretary is responsible for:

  • Obtaining prior approval from the Registrar of Companies (“the Registrar”) to become the TCSP licensee’s ultimate owner, partner or director
  • Reporting changes in particulars to the Registrar
  • Reporting cessation of business to the Registrar
  • Complying with other ongoing obligations of a TCSP licensee, including the statutory requirements relating to customer due diligence and record-keeping.

How does a company secretary charge their fees?

There is a company secretarial service fee applied, together with a client due diligence and on-going monitoring checking fee per year.  Here at Centre O, this yearly cost covers unlimited changes of the company structure, changes of directors and shareholders or related members information.  Unless the company is changing persons or company within, there will be a client due diligence and on-going monitoring fee chargeable to the new director, shareholder or entity.

For further information, please contact us. 

You may want to read: COMPANY SECRETARIAL SERVICES FOR A HONG KONG LIMITED BUSINESS

CHINA INVOICING SYSTEM WITH ELECTRONIC FAPIAO

What is Fapiao?

Other than invoice, fapiao is a legal receipt that serves as proof of purchase for goods and services. Nevertheless, it is an essential component of China’s tax law, and compliance for businesses. 

Development of Digitalized Fapiao 

July 2019

The State Administration of Taxation announced the preparation of Digitalised platform

October 2019

Launched online platform naming E-VAT 

November 2019

The State Council proposed the E-VAT will be launched by the end of 2020, while the Tax department is promoting and providing training classes and seminars on how to register, access and use the platform for business operations. 

March 2020

Confirmation that both paper and E-VAT have the same legal status for tax filing. While using the E-VAT system will allow companies to avoid needing to send the original hardcopy to their clients and running to the local tax office, while they only need to keep digital copy of the document.

July 2020

The State Council announced the E-VAT will be widely use throughout China from end of 2020.

At the same time, Shanghai Tax Bureau took Shanghai, Jiangsu, Zhejiang, Ningbo and Anhui district as a pilot region to roll out the public use of the E-VAT platform.

September 2020

Ningbo piloted the first E-VAT platform in selected area

Benefits of Electronic Fapiao to Enterprises 

Enterprises do not need to go to the local tax office in person for fapiao related processes. For example, application for paper fapiao or validating VAT fapiao. Besides, entrepreneurs can also save financial resources by not purchasing special printing and scanning machines. In terms of accounting, enterprises can save time and lessen the workload by using a paperless invoicing system. 

In conclusion, the advantages of E-Fapiao, we can summarised as below:

  1. Better Record Keeping & Controlling
  2. Centralized Information Platform
  3. Application logistic & Processing Advancement
  4. Technology Advancement & Connecting to ERP system

For further information, please contact us. 

You may want to read: CHINA TAXATION VS HONG KONG TAXATION FOR FOREIGN INVESTORS

HONG KONG ENTREPRENEURS’ TAX REPORTING DURING PANDEMIC

The Organisation for Economic Co-Operation and Development (OECD) published an analysis entitled “OECD” Secretariat Analysis of Tax Treaty and the Impact of the COVID-19 Crisis”. (OECD Analysis). The OECD Analysis provides guidance on cross-border tax issues arising from the COVID-19 pandemic. The analysis mentioned the lead to creation of PERMANENT ESTABLISHMENT or change in the tax residence status. Due to the government implementation of various quarantine measures and travel restriction. 

FAQ about Tax Treaty implementation during Pandemic

Question 1

During the pandemic, my employees are working from home. Can I define HOME OFFICE as a PERMANENT ESTABLISHMENT in the tax treaty?

Answer:

No, it is not a PERMANENT ESTABLISHMENT in the tax treaty. Working from home is an Exceptional and Temporary Change of the location where employees exercise their employment because of the Pandemic. 

Question 2:

During the pandemic, an employee has to work from home temporarily. In fact, the employee is working for an overseas enterprise with an official employment contract. The home office located in Hong Kong, China. And the employee is exercising the employment such as concluding contracts with trading partners. Is it a PERMANENT ESTABLISHMENT in the tax treaty? 

Answer:

No, it is not a PERMANENT ESTABLISHMENT. Employees working temporarily from home and concluding contracts in their home jurisdictions on behalf of their foreign employers for short period of time. Rather than as the normal routine because of government directives are unlikely to be regarded as Habitually concludes contracts on behalf of the enterprise”. Therefore, it should not create Permanent Establish for the enterprises.

Question 3:

For construction sites that have been temporarily suspended due to the pandemic. Not due to a shortage of material or labour. The construction project is overrun. When calculating the duration of the project. Can I deduct the suspension days from the total project day for a PERMANENT ESTABLISHMENT in the tax treaty?

Answer:

The construction sites suspended due to the pandemic and caused project overrun. The number of days of the overrun can deduct from the number of project completion day. So, it is not a PERMANENT ESTABLISHMENT.

However, the period of temporary interruption of activities on a construction site. Due to shortage of labour or material. In that scenario, the suspension needs to include in a PERMANENT ESTABLISHMENT. 

Question 4:

During the pandemic, there is a change in location of decision making from top management. Does it affect the place of effective management and make change of the resident status?

Answer:

Temporary relocation or inability to travel of chief executive officers or other top management officers of an entity. This should not trigger a change in the tax residency of the entity under a tax treaty or create the issue of dual residency. 

Question 5:

During the pandemic, it caused changes in the places of residence of some people. It may appear that they constitute resident individuals under the respective tax laws of the parties to the tax treaty. How to solve this dual resident personal status problem? 

Answer:

A temporary dislocation of an individual by reason of the pandemic will unlikely the individual’s tax residency when the tie-breaker rules for dual residency in tax treaty are applied.

 

For further information, please contact us. 

You may want to read: INLAND REVENUE DEPARTMENT – TAX AUDIT & INVESTIGATION

MANAGING YOUR INVENTORY AND ACCOUNTING WORK

Measuring inventory accurately is essential to a success business operation. Without keeping an accurate record, you risk upsetting your customers as well as increasing the cost of carrying more products then your customers need. Ultimately, you will suffer from losing profit. On the other hand, when the goods records are well kept with true accuracy, it contributes to visibility, allowing managers to understand data trends and forecast future demand.

Maintain Ideal Stock Level

Accurate and update inventory records can inform you when you need to order new items. When under-stocked, you may not have enough products to send to customers. Meanwhile, if you overstock, your warehouse might be overcrowded, leading to disorganisation. In some cases, overstocking perishable items can lead to waste. Failure to properly track your stock could eliminate any earnings your business would have made from this business transaction. Analysing inventory records over a length of time can help you track trends to predict what items typically sell faster than others.

Improve Customer Satisfaction

Lack of accuracy inventory record, it can create chaos. The chaos may create a snowball effect on client orders. Customers expect a certain level of service when they place an order. If you fail to meet clients’ expectations or do not have enough inventory to deliver. This is not only upsetting customer, but have a negative effect on the relationship. Probably this may cause customers to pull future orders. In addition, unsatisfied customers may spread negative message with their peers. Therefore, if you have an accuracy stock record, you can keep high customer satisfaction.

Improve Employee Satisfaction

keeping an accurate inventory record may allow your staff to devote more time to other areas. Working with inaccurate records can be time-consuming, but accurate records means your staff can work on improving certain aspects of the status-quo inventory process to improve productivity and efficiency in new ways.

Inaccurate Accounting Reporting

Businesses do not update their Balance Sheets and Profit and Loss reports may fall behind in reporting their financial operations. Having a outdated inventory information, it results in incorrect stock cost values and inaccurate profit reporting.

How to Prevent Inaccurate Inventory in your Accounting Reporting?

To ensure your business’ inventory is accurate and up-to-date. You might need to adapt a tracking practice. For example, you can simply use a excel file with 3 separate pages to book: Purchase record, Opening record and Sales record. Then you need to record every transaction manually. And deduct the number of sales from opening balance + purchase. Then you will get the accurate inventory balance.

If the calculation is still confusing you. Please engage us for your accounting work, we’ll guide you through the whole process.

For further information, please contact us.

You may want to read: CHECKLIST FOR ACCOUNTING AND AUDITING IN HONG KONG

疫情期间香港企业家税收申报

经济合作及发展组织（OECD）发布了《OECD0的秘书处分析报告：税收协定与新冠病毒肺炎疫情产生的影响》，简称OECD报告。报告分析了新冠肺炎全球流行可能引发的跨境税收问题。分析提到由于政府实施了各种检疫措施和出行限制导致常设机构设立改变税收居民身份。
关于疫情期间实施税收协定的常见问题
问题1：
在疫情期间，我的员工在家办公，家庭办公能定义为税收协定中的常设机构吗？

回答：
家庭办公不能定义为常设机构。由于突发的新冠疫情，员工的工作地点临时发生改变，员工居家办公不在税收辖区办公，不应视作常设机构。
问题2：
在疫情期间，员工不得不在在家工作。但实际上该雇员与海外公司签署了正式雇佣合同，公司总部在中国香港。这名员工也有履行他的工作职责，例如与贸易伙伴签订合同之类的工作。者可以看作是常设机构吗？

回答：
不，这不能视作常设机构，因政府指令，雇员在本国临时工作，在本国管辖范围内代表外国雇主签订短期合同，而不是正常的例行公事，不太可能被视为经常行使权力以企业的名义签订合同。因此不应为企业常设机构。

问题3：
因疫情而暂时停工的建筑工地。不是因为缺乏材料或劳力导致建设项目超支。当计算工程日期时，我是否可以从税收协定中的常设机构的总项目日中扣除暂停天数？

回答：
施工现场因疫情而暂停，造成项目超支，超出天数可以从工程竣工天数中扣除，因此，这不是常设机构。
但是，在计算工程时间持续时间，由于缺少劳动力或是材料导致的暂停，这种暂停可以构成常设机构的。
问题4：
在疫情期间，高层管理人员的决策地点发生了变化，是否会影响有效管理场所，改变居民身份吗？

回答：
实体的首席执行官或其他高层管理人员临时搬迁或无法旅行。根据税收协定，这不应导致改变管理机构所在地或造成双重税收居民身份问题。
问题5：
在疫情期间，一部分人的居住地址发生变化。根据税收协定缔约方各自的税法，他们似乎在两个地方构成税收居民身份。如何解决这个双重居民的个人身份问题？

回答：
如果能够适用税收协定中解决双重税收居民身份的“加比规则”，即使个人受疫情影响暂时在异地居住，其税收居民身份也不会发生变化。
如想了解更多信息，请与我们联系。
您可能想要了解： 税务局 – 税务审计与调查

Hong Kong Economic and Trade Office in Guangdong (GDETO)

Investors hesitated mostly when starting a business in China, including lots of companies that are setup Hong Kong . In general, they don’t have enough and all rounded information about the policies and regulations about businesses in China. In the past few years, Hong Kong Government is setting up the Hong Kong Economic and Trade Office in Guangdong (GDETO) in China. On the whole, acting as a bridge setting up businesses, connecting China and Hong Kong helping entrepreneurs to establish and expand their businesses. 

Background ofHong Kong Economic and Trade Office in Guangdong (GDETO)

Hong Kong Government established the first GDETO in July 2002. Since then, there are total of five offices set up to foster closer links between Hong Kong and China.  GDETO’s cover Fujian, Guangdong, Guangxi, Hainan and Yunnan. With a view to strengthening and deepening the liaison and co-operation with Shenzhen, Fujian and Guangxi. The HK Government subsequently set up the Shenzhen Liaison Unit, Fujian Liaison Unit and Guangxi Liaison Unit in order to enhance better and quicker services to cross boarder business entrepreneurs.

The GDETO is responsible for handling economic and trade matters between Hong Kong and the five provinces/region. In fact, GDETO serves to promote Hong Kong’s economic and trade interests. While GDETO seeks to attract direct investments into Hong Kong. The Office performs the following functions –

Missions

1/ Economic and Trade Liaison

GDETO to further develop and promote the economic and trade relations between Hong Kong and the five provinces/region. By enhancing communication and co-operation with the provincial government and the relevant local authorities

2/ Enhancing Understanding between the Five provinces/region and the Hong Kong Governments

GDETO acts as a platform to enhancing information exchange on economics and trade development.

3/ Support to Hong Kong Enterprises

 GDETO to strengthen communication with the Hong Kong businessmen operating in the five provinces/region. And provide better support by obtaining and disseminating information on provinces’ policy and legislation. The information is relating to commerce and trade and their latest economic developments. The commerce and trade-related issues of common concern among Hong Kong businessmen. GDETO will refer them to the relevant authorities and follow up with discussions. However, it is not in a position to arbitrate on individual commercial and legal disputes;

4/ Investment Promotion 

GDETO to provide information and services aimed at promoting investment from the five provinces/region to Hong Kong;

5/ Promoting Hong Kong

GDETO to project a positive image of Hong Kong as a good business partner. 

6/ Assisting Hong Kong Residents in distress 

GDETO to provide practical assistance to Hong Kong residents in distress in the five provinces/region; 

7/ Passport Replacement Service 

GDETO to provide SAR passport replacement service for eligible applicants with a valid HKSAR permanent identity card.

Achievements

Hong Kong and Guangdong Economic and Trade Relationship

Hong Kong is the major source of foreign capital in Guangdong Province. In 2018, Guangdong Province newly established 31,018 Hong Kong-funded enterprises, accounting for 86.7% of the province, and actually absorbed $99.52 billion of Hong Kong capital.

Number of Guangdong enterprise invested in Hong Kong: 6827 Enterprises, valued at USD95.151 Billion

Number of Guangdong enterprise listed in Hong Kong: 238 Enterprises, valued USD772.7 Billion

Hong Kong and Guangxi Economic and Trade Relationship

Hong Kong is also the major source of foreign capital in Guangxi Province. Up to 2018 year ended, the total number of approved Hong Kong-funded enterprises in Guangxi District reached 6,884, accounting for 60.7% of the total number of foreign-funded enterprises in the region. And then the direct investment of Hong Kong companies to nearly US$27.205 billion, accounting for 58.7% of the total area.

Hong Kong and Hainan Economic and Trade Relationship

Hong Kong is the major source of foreign capital in Hainan Province as well. Up to 2018 year ended, the total number of approved Hong Kong-funded enterprises in Hainan District reached 6,438, accounting for 59.9% of the total number of foreign-funded enterprises in the region. The direct investment of Hong Kong companies via contract to nearly US$39 billion, accounting for 59.8% of the total area. In fact, the direct investment is US$6.69 billion, accounting for 65.6% of the total area.

Hong Kong and Yunnan Economic and Trade Relationship

Hong Kong is either the major source of foreign capital in Yunnan Province. Up to 2018 year ended, the total number of approved Hong Kong-funded enterprises in Yunnan District reached 1,877, accounting for 38.2% of the total number of foreign-funded enterprises in the region. And the direct investment of Hong Kong companies via contract to nearly US$22.53 billion, accounting for 63.8% of the total area. In fact, the direct investment is US$12.4 billion, accounting for 61% of the total area.

Hong Kong and Fujian Economic and Trade Relationship

Hong Kong is also the major source of foreign capital in Fujian Province. Up to 2018 year ended, Hong Kong investors set up more than 27,400 enterprises. The direct investment is CNY62.07 billion. The total amount of export from Fujian to Hong Kong is CNY50.29 billion.

Visions

Since the establishment of GDETO, it has been committed to providing a wide variety of services to assist investors including:

  • Promote Hong Kong

Organize exhibitions and other promotional activities to introduce the latest situation of Hong Kong to mainland residents. Aims to deepen the overall knowledge and understanding of Hong Kong. GDETO actively encourages mainland enterprises to use Hong Kong as a springboard to enter the international market. As Hong Kong’s positive international image is well popular. 

  • GDETO Newsletter

    GDETO publishes the “GDETO Newsletter” every Friday. The Newsletter contains the latest information on commerce and trade-related policies / regulations and the economic developments in the provinces/region.  As well as on major economic and trade activities held in the five provinces/region. 

  • Economic and Trade-Related Publications / Leaflets

    GDETO produces and regularly updates various publications / leaflets. The publication helps Hong Kong businessmen obtain the latest economic and trade-related information. In addition, the publications together with reference materials are sent to major chambers of commerce, semi-government organizations in Hong Kong and related departments in Mainland.

  • Gatherings with Heads of Hong Kong’s Trade and Industry Associations

    The GDETO organises “Gatherings with Heads of Hong Kong’s Trade and Industry Associations”. To have a view to maintaining direct communication with chairmen/presidents of major trade and industry associations in Hong Kong. Expects to get a better understanding of the problems encountered by their members when investing in the region. Also gauging the associations’ views on the investment and business environment of the five provinces/region. The gatherings also aim to seek trade associations’ comments and suggestions. So as to facilitate our provision of services to Hong Kong businessmen in a more effective and efficient manner.

  • Conveying Hong Kong Enterprises’ Views on Issues of Common Concern

    GDETO has been actively monitoring the implementation of policies and regulations. And then GDETO will take appropriate follow up actions. Including referring issues of common concern to Hong Kong businessmen to the relevant authorities of the five provinces/region.

  • Study Missions to The Five Provinces / Region

    The study missions aim to update participants on the latest economic / trade developments and investment environment. As well as to help them establish contacts with the local governments and business communities in order to facilitate their investments and explore business opportunities.

  • Seminars

    In order to enhance Hong Kong investors’ understanding of the economic and trade-related policies / regulations and investment environment. GDETO organises seminars conducive to the business development of Hong Kong enterprises and invites representatives of local authorities or experts from various sectors to elaborate on the policies or issues of concern to Hong Kong businessmen. These seminars help Hong Kong businessmen better understand the latest operation situation of the five provinces/region.

    Invest Hong Kong Service Centre

    GDETO has set up an Invest Hong Kong Service Centre providing free consultation service relating to investing in Hong Kong for enterprises from the five provinces/region.

  • Trade Study Missions

    The GDETO organises trade study missions to enable potential investors from the five provinces/region to know more about the latest trade environment, exchange information with government officials, professional bodies, members of trade and industry organisations and to enhance their confidence in investing in Hong Kong.

  • Seminars on Investing in Hong Kong/CEO Luncheon/Dinner for Mainland Enterprises

    GDETO organises from time to time various types of investment promotion activities. For instance, individual consultation, roundtable meeting, seminar, exchange forum, CEO luncheon/dinner etc.  The topics covered include investment environment for various sectors, visa application, financing and listing and so on. These activities aim to provide an exchange platform for Mainland enterprises which intend to invest or have already invested or set up companies in Hong Kong. Let them discuss with experts/professionals of relevant industrial and service sectors. So as to enhance their understanding of Hong Kong’s investment environment. 

  • Resource Centre

    The GDETO has set up a resource centre with a collection of the latest trade-related information regarding the five provinces/region and Hong Kong.

  • Integrated Trade Information Platform

    GDETO has established hyperlinks with the websites of the five provincial governments and their major municipal cities to enable members of the public to know the latest trade and economic situation.

For further information, please contact us.

You may want to read: CHINA SIMPLIFIED ITS INCORPORATION PROCESS SINCE 2016

 

Hong Kong Government Special Work Arrangement Extended

The Government announced on 21st December 2021 that to further extend the special work arrangement for the public services. Aside from those providing emergency and essential public services, all government employees will continue to work from home until January 6 next year.

Why extended the Special Work Arrangement?

The decision was made because the local COVID-19 epidemic situation remains severe. The measures aim to significantly reduce people flow and social contact. And expect to stop the virus further spreading in the community.

What is next?

The Government will closely monitor the epidemic situation and review the arrangement before 6th January.

What can you do?

Noting that the reduction in public services may cause inconvenience. The Government appealed for public understanding. In addition, the Government encourages people to use alternative means. For instance, online channels, drop-in boxes or the post to receive the services they need.

In fact, the Government also urged employers to allow their staff to work from home as far as possible according to operational needs.

For further information, please contact us.

You may want to read: GOVERNMENT DEPARTMENTS OF HONG KONG PROVIDE LIMITED SERVICES

香港政府特殊工作延长安排

政府于2021年12月21日宣布，进一步延长公共服务特殊工作安排。除了提供紧急和必要的公共服务外，所有政府雇员将继续在家工作，直到明年1月6日。

为什么要延长特殊工作安排？
之所以做出此决定，是因为当地的疫情情况仍然很严峻。这些措施旨在显著减少人员流动和社会接触，希望能阻止病毒在社区的进一步传播。

下一步是什么？
政府将密切监察疫情，并在1月6日之前对安排进行审查。

你能做什么？
公共服务的减少可能带来不便，政府呼吁公众理解。此外，政府鼓励人们使用替代手段，例如在线渠道，投递箱或邮政接收他们需要的服务。

事实上，政府还敦促用人单位根据业务需要，尽量允许其员工在家工作。

如果您遇到相同的问题，请尽快与我们联系。
您可能想要了解：香港政府部门提供有限服务