Checklist for Accounting and Auditing in Hong Kong

If you are interested in running a business in Hong Kong, the first thing you need to know about are accounting, auditing standards, and tax filing. In order to stay away from any penalties for incorrect tax filings and any legal issues down the road.

The Inland Revenue Department ( IRD)  financial year starts on April 1st and ends on March 31st of the next year. If you have a newly formed Hong Kong company, then within the first 18 months of the incorporation of your business. The IRD will issue a letter requesting to submit the Profit Tax Returns and the supplementary Form.

Submission of the Profit Tax Returns form probably a big headache for you. The good news is that Centre O have created a checklist to make the process easier and to make sure you are not going through it by yourself.

Keep Operating Records

Gather the company’s operating records including bank statements, invoices, vouchers, bills and receipts. The records should keep in an order and in month-to-month basis. Then it simplifies the process of management account generation.

Decide Financial Year End

The first account closing of a company can be within 18 months from the incorporation date. However, it is common in Hong Kong to close accounts in December or March. Once you have confirmed the closing date, it will remain the same in subsequent years. Unless you request a specific change.

Prepare Management Accounts

Preparing management accounts is a hard time traditionally. It involves lots of paper work and calculation. Over the years, some cloud-based accounting software for example: XERO. It can help company work better, quicker and truly go paperless with their accounting. It can generate a full set of management account (Profit and Loss and Balance Sheet) by simply clicking a button.

Audit the Management Accounts

Hong Kong companies have to present the management accounts and operating record to an appointed licensed Certified Public Account (CPA). CPA will examine the audit report and documents. The audit process takes 8-10 weeks. Once the audit report has been approved and signed by relevant parties. It is ready to be submitted to IRD together with the Profit Tax Return (PTR).

Fill in and File the Profit Tax Return

A company can expect its first PTR from IRD around 18 months after its incorporation date, and then yearly thereafter. The original PTR form must be filled, signed and submitted together with the audited accounts to IRD. 

Wait for IRD to Review and Conduct Tax Assessment

IRD will assess the amount of tax you should pay based on the information on the PTR form and audit report. If any tax is payable, IRD will issue a tax assessment to the company. Hong Kong has a Two-Tier tax system. 8.25% for the first $2 million profit; while 16.5% for profit over $2 million.

Still need help on the work, you can simply hire Centre O to be your tax representative, we will notify, fill and file all the necessary IRD documents for you.  For further information, please contact us.

You may want to read:OUR ANNUAL SERVICE FEE OF ACCOUNTING, AUDITING AND TAX FILING

Company Secretarial Services for a Hong Kong Limited Business

Centre O offers many Hong Kong Limited business on Company Secretarial Services. We received numerous requests on a consistent basis to take over the role as appointed company secretary. The entrepreneurs were angry with the unsatisfied secretarial practices with their pervious suppliers. The reasons may be varied, but the common reasons can be concluded as hidden charges and cannot fulfill the requirement of the Company Registry. Then result in unexpected expenses and affected the credibility and image of the company. 

If you have suffering from a bad experience of secretarial service, then you are better to end your relationship with your current service provider to change to another. However, Centre O knows “Change of Company Secretary” is not an easy and simple process. Centre O created a  Company Secretarial Services checklist below and hopes to ease the process. Once you have decided to change the company secretary, please search for certain requirement before onboarding.

 

Choose a New Service Provider

Importantly, don’t judge by price. Find the one that best suits your needs and the needs of your company. Take the price, quality of service, and responsiveness into consideration.

 

Get Certified True Copies of Your Know-Your-Customer Documents

Without a doubt, all Trust or Corporate Service Provider (TCSP) license holders are required to collect certified true copies of the ID and address proof or corporate documents of directors and shareholders of the company. Certified copies can be issued by a lawyer, Notary Public, CPA, TCSP licence holder, or equivalent government authority.

 

Check if Business Registration Certificate is Up to Date

Not only, the Business Registration Certificate (BRC) should be updated every year. If your service provider is capable. Then your BRC should be up to date. Otherwise, please pay for your renewal fee at the Company Registry (CR) immediately. Then find a professional one.

 

Filed the Latest Annual Return yet?

But also, all Hong Kong companies need to file an Annual Return (AR) on time every year. Check with your current company secretary if you submitted the AR form to CR summarising the details of your company yet? If not, then it is another reason for you to move!

 

Collect All Forms Submitted After Latest AR

In addition to these, when making any changes of your company, you should report to the CR and Inland Revenue Department (IRD). Your new incoming company secretary will need a copy of all documents related to changes made after your latest AR submission.

 

Retrieve all Corporate Records

In short, check with your existing company secretary if they are maintaining your company records. You should retrieve the records for your safekeeping. Aside from the other documents mentioned above you should also make sure to obtain the following:

> Certificate of Incorporation

> Register of Members

> Articles of Association

> Register of Secretaries

> Significant Controller’s Register

> Register of Directors

 

Give all Company Documents to the Incoming Company Secretary

The new incoming company secretary will collect all your company latest documents and information. The purpose is to make sure your company record is up to date with CR and IRD requirement. If yes, you can appoint the new company secretary officially.

For further information, please contact us

You may want to read: http://centreo.hk/requirements-choosing-company-secretary/

政府统计处雇佣及职位空缺调查

很多人可能会问什么是政府统计处？政府统计处负责统计有关香港经济及社会的数据，并对外公布官方数字。政府统计处的工作是在《普查及统计条例》（第 316 章）。该条例还规定了政府统计处要对有关个人和企业的数据采取严格的保密和保障措施，填写问卷的个人或企业补习担心信息安全问题，可放心填写。
并非每个机构单位都会收到由政府统计处发出的问卷调查。问卷的调查对象是通过科学的抽样系统选取出来的。能够参与问卷调查是一件值得庆幸的事情，一般而言，规模较大和从事选定行业的机构单位有较大机会获抽选为样本，收集的数据将用于编制统计数据，不会透露任何有关公司的信息。
如何处理问卷？ 
根据《政府统计处条例》，雇佣和职位空缺调查是属于强制性的。根据条例第 13(1) 条，任何人获送递关于统计调查的问卷后，必须亲自或者委托他人按问卷所示的方式如实填报问卷上的信息，并与问卷上所指明的日期或之前交回问卷。 
若有人未在规定日期前向政府统计处将问卷交回，政府统计处会安排统计员致电或者到访其单位机构收集所需资料。
 
如需了解更多信息，请联系我们。
你也可以了解： 税务局公共服务的最新安排

Census and Statistics Department Survey of Employment and Vacancies

Many people may ask what is Census and Statistics Department (C&SD)?  This department provide major social and economic official statistics  about companies in Hong Kong. The law governing the work of the C&SD is the Census and Statistics Ordinance ( Chapter 316). C&SD provides census of population and collection, compilation and publication of statistical information concerning Hong Kong and any matters connected therewith. The Ordinance also provides strict safeguards on the confidentiality of data pertaining to individuals.

It’s an honour when  your company has been selected to participate in the survey. Generally, large establishments and establishments engaged in selected trades have higher probabilities of being selected.The data collected will be used for compiling statistics which will not enable information relating to individual companies to revealed.

What to do with the questionnaire? 

The survey of Employment and Vacancies is mandatory under the Census and Statistics Ordinance. According to section 13(1) of the Ordinance, if you received a questionnaire from C&SD. You or others person to the best of your knowledge and belief have to complete the questionnaire in the manner specified in the questionnaire. Then you have to return the questionnaire on or before the date specified in the questionnaire. In general, 

Within the survey, it also stated the deadline of returning the completed questionnaire. If failed, a census officer of this department will contact you by telephone or in person to collect the required data.

 

For further information, please contact us.

You may also read: LATEST ARRANGEMENTS FOR PUBLIC SERVICES OF INLAND REVENUE DEPARTMENT

Inland Revenue Department – Tax Audit & Investigation

In combating tax evasion and avoidance, the Inland Revenue Department (IRD) of Hong Kong adopts the “Assess First, Review Later” approach as its assessment mechanism on tax returns and other supplementary information submitted by taxpayers while at the same time fully utilises advanced technology in selecting cases not subject to review and conducts automated assessment. IRD uses certain criteria for proper case selection depending on the current business environment in society and performing review annually.

Major reasons for being selected for investigation by Inland Revenue Department are listed below:

  • The auditors’ report in respect of accounts of an incorporated business is heavily qualified
  • Mainly cash transactions 
  • A business has an unreasonably low turnover or profit as compared with other businesses in the same industry
  • Failure to submit tax return on time in past years
  • Failure to maintain sufficient business records
  • A large scale of domestic and cross-border transaction between a company and its associated companies
  • A company is operating on a going concern basis even though its profits encounter continued low growth or losses
  • Profits significantly declined due to changes in group structure
  • The taxpayer acquired valuable assets or injected a large amount of capital by using unknown sources of finance into a business
  • Other cases referred by other government departments or reported by informers

For further information, please contact us

 

You may also read: WHAT TO DO WHEN RECEIVING A LETTER FROM INLAND REVENUE DEPARTMENT?

Latest arrangements for public services of Inland Revenue Department

In view of the latest situation of COVID-19 and in response to the Government’s announcement that limited service arrangements for government departments will be implemented to reduce social contact, the Inland Revenue Department announced from tomorrow (March 23, 2020) it will suspend the provision of all of its services, except for the following:

Offices Opening hours
Central Enquiry Counter
(only for enquiries relating to tax clearance for taxpayers leaving Hong Kong)		 From 9am to noon and from 1:30pm to 4pm,
Monday to Friday
Business Registration Office From 9am to noon and from 1:30pm to 4pm,
Monday to Friday
Stamp Office From 9am to noon and from 1:30pm to 4pm,
Monday to Friday

The department appeals to members of the public for their understanding that the above services will only be provided at a much reduced scale and that services in all other areas will not be provided at the service counters. They should also be prepared to experience a longer waiting time before they can be served. Depending on the situation at the service counters, the department may stop members of the public from joining the queues for services at any time before the close of the opening hours.

In light of public health considerations, all visitors entering or remaining in the department’s premises are required to wear surgical masks. Any visitor who does not wear a surgical mask will not be served and will be asked to leave the department’s premises. Members of the public who feel unwell should refrain from visiting the department. The department encourages the public to use its electronic services to handle their tax affairs as much as possible.

The department further announced that deadlines for tax payments, lodgement of objections and holdover applications as well as submission of tax returns and information that fall between March 23 and April 3 will be automatically extended to April 6.

The department will review the situation and make further announcements as necessary.

For further information, please contact us

税务局 – 税务稽查及调查

符合免税慈善机构或慈善目的的捐赠可以扣除。你可选择从薪俸税的应课税入息、利得税的应课税溢利及个人入息课税的总入息中申领。在这里，您可以简要了解这些扣除额。
扣除资格
你可根据《税务条例》第 88 条向任何获批准的慈善机构或为慈善目的向政府捐款而申请扣除，您也可以申请扣除任何已批准但未由您的配偶申请的慈善捐赠。
免税额
经批准的慈善捐款的总扣除额不得少于 100 港元，扣除可允许开支和折旧津贴或应评税利润后的总扣除额不得超过您收入的 35%。如果您有一个以上的收入来源并且您选择了个人入息税，那么在某种税种（例如利得税）下的核准慈善捐赠中未使用的部分可以根据个人入息税进行扣除。最后，它必须是自愿捐赠和货币形式。
不接受减税的捐赠
并非所有支付给免税慈善机构的款项都可以扣除，以下不是属于捐赠的付款示例：
彩票或抽奖券的付款；电影或慈善演出入场券；坟墓
为祈祷或预订祖先崇拜空间等服务而支付的费用
在集市上购买商品
通过在没有捐赠收据的情况下将现金放入捐赠袋中，向教堂（一家免税慈善机构）付款。
提出扣除要求
要提出索赔，您应该在您的纳税申报表 – 个人 (BIR60) 中输入有关课税年度内所作的认可慈善捐款总额。这笔捐款可申请一次。
如需了解更多信息，请联系 我们 
你也可以了解：http : //centreo.hk/what-to-do-when-i-receive-profit-tax-return-form/

税务局公共服务的最新安排

由于新型冠状病毒肺炎 (COVID-19) 的影响，以及配合政府宣布实施的最新有限服务安排以尽量减少社交接触，税务局宣布从2020 年 3 月 23 日起，除以下服务外，暂停提供所有服务：
办事处
办公时间
中央询问处
（只限有关离港人士清缴税项的查询）
周一至周五上午 9 点至中午以及下午 1:30 至下午 4 点
商业登记处
周一至周五上午 9 点至中午以及下午 1:30 至下午 4 点
印花税局
周一至周五上午 9 点至中午以及下午 1:30 至下午 4 点
由于有关服务的规模缩减，柜台减少，市民等候的时间会较平时更长，税局也会视乎服务柜台的情况，有可能会在办公时间结束前任何时间提前停止让市民排队等候服务，如前去办理业务的市民造成不便，敬请原谅。
税局建议市民如非必要情况，尽量使用税局提供的电子服务以处理他们的税务事宜。如需出入税局请戴好口罩，任何未佩戴口罩的访客将不会获得服务，并会被要求离开部门的场所。
税务局还宣布，所有于3月23日至4月3日到期的缴付税款、提出反对及暂缓缴税申请、提交纳税申报表或其他资料等事宜的限期会自动顺延至4月6日。
（微信公众号上写的是5月份）
税务局会检视情况，在有需要时再作宣布。
如需了解更多信息，请联系我们

税务局的来信

许多人在收到税务局的来信后开始担心。在吓坏之前，您应该先检查信件左上角的文件编号。它们大多从 4A、4B、4C 开始。有了这个文件号，它表明税务局发来的是关于贵公司的税务审计和调查文件。
税务局调查重点关注3大类：
税务调查——税务局正在处理一个非常严重的案件，纳税人将在所有相关年份接受调查，并可能被起诉刑事起诉
现场审计——大多数情况是现场审计，使用基于一年结果的预测方法
反避税——防止纳税人使用激进的避税计划
税务局档案编号如何解读？
其实档案号会显示很多重要的信息，比如严重程度、调查性质等等
4B8-A246810-ABC(37)
4B8 代表纳税人案件为刑事检控组，税务总局会要求纳税人及法定代表出席会议
4C6 / 4C7 将纳税人案例代表为反避税群体，常见的案例是纳税人使用过去激进的避税做法
A123456的第二细分，
A代表反避税、
B代表税务调查、
C 代表现场审核
最后一部分（37）代表税务大楼的楼层：
37楼刑事检控案
10楼现场审核
35楼税务调查及实地审计
 
税务局通常需要三个月到两年的时间处理，具体取决于您案件的复杂程度。如果纳税人能够提供所需的信息，税务局将相应地结案。
 
如需了解更多信息，请联系我们
您还可以了解：Center O  会计、审计和报税年度的服务费