SPECIFIED PERSONS FOR OBTAINING PROTECTED INFORMATION

To enhance protection of sensitive personal information, while keeping up the transparency and usefulness of the Register. The Companies Ordinance (Cap. 622) is carrying out in 3 phrases from August 2021 through end of 2023. Only Specified person can access the protected information.

protected information

Where are we now?

The Registry of Hong Kong is now preparing for the implementation of Phase 2. Furthermore, the New Inspection Regime on 24th October 2022. Under Phase 2, the Protected Information on the Index of Directors will be replaced by correspondence address and partial IDNs for public inspection. So, the public cannot access the protected information. Only the “Specified Persons” can access via a One-time application or via a special account.

Who are the Specified Persons?

  1. Certified public accountant (Practising)
  2. Designated Non-Financial Business and Professions”(DNFBP) including accounting professional
    • A certified public accountant or a certified public accountant (practicing), as defined by section 2(1) of the Professional Accountant Ordinance;
    • A corporate practice as defined by section 2(1) of the Professional Accountants Ordinance; or
    • A firm of certified public accountants (Practising) registered under Part IV of the Professional Accountant Ordinance.

Who needs a special account?

For those specific persons who require routine access to Protected information on the Register for the performance of functions specified in section 12(11) of the Regulation, including Certified Auditors and Company Secretaries.

Who can apply for the special accounts?

  • Only a natural person who is a specified person can apply for disclosure of Protected Information through a Special Account.
  • If the specified person is not a natural person, such as a corporate practice or a firm of certified public accountants (practicing). They can submit their application for disclosure of Protected Information via the Authorised Representative’s Special Account.

For further information, please contact us.

You may want to read: NEW INSPECTION REGIME FOR THE COMPANIES REGISTER

IR56 FORMS DEADLINE EXTENDED TO 1 JUNE 2022

The Inland Revenue Department (IRD) on 1st April 2022 issued about 220,000 IR56 forms, 120,000 property tax returns and 300,000 employer’s returns for the year of assessment 2021-22. Thereafter, about 2.48 million tax returns for individuals will be issued on June 1.

Don’t forget to file your IR56 forms

Hong Kong Taxpayers have to file their returns within one month from the date of issue of the relevant returns. Nevertheless, for employer’s returns, the deadline for filing is extended to June 1, 2022. In fact, for cases with tax representatives appointed, the deadlines for filing returns are set out in the Block Extension Letter posted on the department’s website.

How to file?

IRD encourages individuals to file the tax returns through eTAX electronic services. The eTAX services permit individuals to use the Government’s “iAM Smart” digital services to log in and sign the tax returns. If you are going to file your tax returns by posted. No matter you are individuals or employers, you have to pay sufficient postage for your returns. Otherwise, underpaid mail items will not be accepted.

For further information, please contact us.

You may want to read: What to do when I receive a Profit Tax Return?

COMPANIES ORDINANCE AND BUSINESS REGISTRATION ORDINANCE HIGHLIGHTS

Hong Kong Local registered companies must comply with the requirements of the Companies Ordinance (Chapter 622, Law of Hong Kong). And deliver statutory returns to the Registrar of Companies within prescribed time periods including:

  1. Section 658 requires a company to deliver a notice of change of address of registered office in Form NR1 within 15 days after the change.
  2. Section 645 & 652 states that any change in company’s director, company secretary and/or in the particulars. The company must, within 15 days after the change, deliver a notice of change in Form ND2A and/or Form ND2B.
  3. Sections 662 & 664 states that a company must deliver an annual return Form NAR1 together with annual registration fee
    • Private company: within 42 days after the anniversary of the date of incorporation of the company every year;
    • Public company: in respect of every financial year, within 42 days after the company’s return. The company’s return date is the date that is 6 months after the end of the company’s accounting reference period. The return must be accompanied by certified true copies of the company’s financial statements, directors’ report and auditors’ report;
    • Company Limited by Guarantee: in respect of every financial year, within 42 days after the company’s return. The company’s return date is the date that is 9 months after the end of company’s accounting reference period. The return must be accompanied by certified true copies of the company’s financial statements, directors’ report and auditors’ report.
Companies Ordinance

What you have to do?

Business registration and its renewal are statutory requirements under the Business Registration (Chapter 310 of the Laws of Hong Kong) administered by the Business Registration Office of the Inland Revenue Department. You still need to submit your annual return together with the annual registration fee to the Registrar of Companies within the prescribed time period. If you fail to file your annual return on time, then it will cause a substantially higher registration fee.

What is the consequence if failure to comply to the Companies Ordinance?

If a company fails to comply with the requirements of the Companies Ordinance, the company and every responsible person of the company. Including every director, company secretary and manager of the company are liable to prosecution. And if convicted, default fines.

For further information, please contact us.

You may want to read: Companies Ordinance 2018: Keeping of Significant Controllers Register

CAN DONATIONS BE TAX DEDUCTIBLE IN HONG KONG?

Donations to tax-exempt charities or to Government for charitable proposes is tax deductible. The amount can deduct from your net assessable income or assessable profits. Thus, a qualified donations is tax deductible for both an individual or a company.

Eligibility for Deduction

You may claim a deduction for a donation of money to any approved charity under section 88 of the Inland Revenue Ordinance or to the Government for charitable purposes. You can also claim a deduction for any approved charitable donation made but not claimed by your spouse.

Donations Not Accepted as Tax Deductions

Not all payments to tax-exempt charities are deductible. The following are not the examples of payments allowable donations:

  • Payments for lottery or raffle tickets; admission to film shows or charity shows; grave spaces
  • Payments made for services such as saying prayers or the reservation of a space for ancestral worship
  • Purchase of goods in bazaars
  • Payments made to a church, a tax-exempt charity, through dropping cash in the donation bag without donation receipt.

What is the tax-deductible ceiling?

Donors may claim up to 35% of total assessable income or profits for the tax year. This provides substantial benefits for donors in Hong Kong. For example, if the assessable income is HK$500,000 after allowable expenses, individuals may claim up to HK$175,000 in approved charitable donations. On the other hands, the aggregate deduction of donations cannot be less than HKD100.

Lodging a Claim for a Deduction

To lodge a claim, you should enter the total amount of approved charitable donations made during the relevant year of assessment in your Tax Return – Individuals (BIR60). This donation can be claim once.

Supporting Documents

You need not to submit any documentary evidence to your tax return. However, you must ask for donation receipts from the tax-exempt charity or the Government. Furthermore, you should retain the receipt for 6 years after the expiration of the year of assessment.

For further information, please contact us.

You may want to read: Tax Deduction for Charitable Donations in Hong Kong

Hong Kong Stamp Duty – Stamping of Tenancy Agreement (2)

Previously, Centre O talked about what is stamp duty and how to submit the stamp duty. In this blog, Centre O is going to talk about the duty rates, penalty and show you how to calculate the stamp duty.

Duty Rates

Stamp duty on tenancy agreements is calculated at rates. And the rate is vary with the term of the tenancy as follows: –

TermStamp Duty Rate
Not defined or is uncertain0.25% of the yearly or average yearly rent
Does not exceed 1 year0.25% of the total rent payable
Exceeds 1 years but not exceed 3 years0.5% of the yearly or average yearly rent
Exceed 3 years1% of the yearly or average yearly rent
Key money, construction fee etc.
mentioned in the tenancy agreement		4.25 of the consideration if rent is also payable under the tenancy agreement. Otherwise, same duty as for a sale of immovable property
Duplicate or counterpart$5 each

Penalty for Late Stamping

If you forgot or late to stamp. Then you are subject to have a penalty payment as below: –

Stamping DelayPenalty
Not exceeding 1 month2 times the amount of stamp duty
Exceeding 1 month but less than 3 months4 times the amount of stamp duty
Any other case10 times the amount of stamp duty

How to calculate the stamp duty

In order to show you a clear picture of the calculation, we have drafted some examples. Yet, the document is stamping within 30 days from the date of signing. Otherwise, there will be penalties.

1/ Fixed Rent8 months agreement with monthly rental $5000 Calculation: $5000x8x0.25% = $100
2/ Fixed Rent with duplicate24 months agreement with monthly rental $5000 + 2 copies Calculation: $5000x24x0.5% +$5 = $605
3/ Varied Rent48 months agreement + 2 copies First 24 months: $12,000 Last 24 months: $15,000 ($12000×24+$15000×24)/4 x 1% +$5 = $1625
4/ Rent-Free Period24 months agreement with 2 months rent-free period + 2 copies Monthly rental: $10,000 ($10000×22)/2x 0.5% +$5 = $555

For further information, please contact us.

You may want to read: CALCULATE STAMP DUTY RATES FOR COMPANY SHARE TRANSFER

https://www.centreo.hk/search/?q=stamp+duty

HONG KONG COMPANY’S OBLIGATIONS

Hong Kong is famous for easy and straight forward rule and tax policy. So Hong Kong can attract investment from worldwide entrepreneurs and startups. No matter how easy or simple regulations, you might miss or confuse with the mandatory submission. Centre O is going to go-thru 3 forms: Annual Returns NAR1, Employer’s Returns & Profit Tax Returns. We hope you can understand the whole progress in advance. Instead of learning via paying penalties.

Deliver to WHOM?

All business owners have to communicate with Inland Revenue Department (IRD) and Company Registry (CR)annually. CR is responsible for all Hong Kong limited company which is established under the Company Ordinances. While IRD is responsible for the Business Registration including tradename of sole proprietorship and partnership.

What forms you need to Deliver?

NAR1

You have to deliver annual return form (NAR1) to Company Registry . NAR1 contains the particulars of the company such as the address of the registered office, shareholders, directors, company secretary, etc. as at the made up date of the return.

Employer’s Return

Employer’s Return (ER) contains the amount your company have been paid for your employees. So, ER needs to deliver IRD. Then IRD can assess the tax payable for your employees.

Profits Tax Return

Profits Tax Return should deliver to IRD. Then IRD will access your company’s tax payable according to your filing.

Who needs to deliver?

NAR1

If your limited company is established under the Company Ordinances, then you need to deliver the NAR1 annually.  If you own a sole proprietorship or partnership, then NAR1 is not your issue.

Employer’s Return

All type of business structure, you have to submit your Employer’s Return. If you are owner of a limited Company, then you have to declare how much the company have been paid for directors, full time and part time employees. Even though the director doesn’t have any renumeration.

Profits Tax Return

All type of business structure, you have to deliver Profits Tax Return for your company. If you are running gain, you must deliver every year; Unfortunately, you ran loss, then IRD will not send Profits Tax Return to you in the coming 2 years. However, if you make profit, you must inform IRD.

When to deliver?

NAR1

For the limited companies, you have to file your NAR1 within 42 days on the company anniversary date to CR. For example, you incorporation date is 1 Jan 2023, then you have to file your NAR1 on or before 12 Feb 2024.

Employer’s Return

IRD schedules to deliver Employer’s Return in early April annually. You have to fill and submit to IRD within 1 month. IRD doesn’t accept any deadline extension. So, you better prepare your data accurately monthly. As you need to report the salary have paid from 1st April previous year till 31 Mar current year. Then you can fill up quick and accurately without headache.

Profits Tax Return

For the new startup, IRD will send Profits Tax Return after 18 months of your incorporation. If you are running gain, then every April you will receive a green envelope. And you have to file the Profits Tax Return within 1 month. However, for limited companies and partnerships still can apply for extension for 8-11 month via your tax representative.

For the sole proprietorship, your envelope schedules to come in May every year. Then you can file the Profit Tax Return with your Salary Tax Return together.

Starting from 2023, all business structure have to file your Profit Tax Return together with a management account statement and signed by an auditor or directors.

For further information, please contact us.

You may want to know: What are Hong Kong Limited Company Annual Obligations

ULTIMATE GUIDE TO SET UP A HONG KONG EMPLOYMENT AGENCY

Hong Kong is back to the world platform. Hong Kong is still serving as an internationally recognised commercial and business hub. Also, Hong Kong government encourages new business establishments. It attracts a huge number of professionals and talents around. In other words, Hong Kong is a perfect place to set up an employment agency (EA). As you are access a professionals or talents directly.

Employment Agency Licence in Hong Kong

According to the Employment Ordinance (EO), you must apply for an employment agency licence before you provide job placement service. However, if you are providing the job placement service without a valid licence is liable for an offence. Then the penalty is subject to maximum HKD350,000 and imprisonment for 3 years upon conviction.

How to set up a Hong Kong Employment Agency?

Before starting any kind of job placement business, you have to obtain an employment licence in Hong Kong Labour Department. No worries! The 2-step application procedure is very straightforward.

  1. Name approval
  2. Documents submission

Name Approval

Your employment agency must have a unique name. And meet the following conditions:

  • The name should not be similar to any of the competitor’s agencies.
  • No infringement of other companies’ trademarks
  • The name should not have any controversial or offensive element

Documents Submission

  1. For a Sole Proprietorship
    • Hong Kong Permanent Identity Card, otherwise, passport is needed
    • A recent passport photo of the applicant;
    • Photocopy of the valid Business Registration Certificate
  2. For a Partnership
    • Hong Kong Permanent Identity Card, otherwise, passport is needed
    • A recent passport photo of the applicant;
    • Photocopy of the valid Business Registration Certificate
    • Photocopy of the HKID / passport of each of the other partners
    • Document signed by all partners confirming the appointment of applicant as licensee
  3. For a Limited Company
    • Hong Kong Permanent Identity Card, otherwise, passport is needed
    • A recent passport photo of the nominated operator;
    • photocopy of the valid Business Registration Certificate
    • Photocopy of the HKID / passport of each of the other partners
    • Document signed by all directors or directors’ meeting minutes confirming the appointment of nominated operator; and
    • Photocopies of (i) the Certificate of Incorporation; (ii) Incorporation Form (NNC1) / Annual Return (NAR1) and (iii) Notice of change (in particulars) of company secretary and director (ND2A / ND2B), if applicable

For further information, please contact us.

You may want to read: THE NITTY GRITTY OF SETTING UP A BUSINESS IN HONG KONG

HONG KONG: ULTIMATE GUIDE TO SET UP A TRAVEL AGENCY

In general, “Travel Agency” means a company that arrange and organise services related to transportation & accommodations. In fact, travel agencies can provide far more services to customers than ticketing and hotels reservation. If you want to start a travel agencies business , you will need to apply for a Travel Agent’s license and Business Permit from Travel Industry Authority (TIA).

travel agency

Criteria for applying Travel Agent’s License?

  1. Incorporate your business properly in Company Registry
  2. Valid Business Registration
  3. The Travel Agencies license holder needs to fulfill below conditions
    • Not an undischarged bankrupt;
    • No criminal record;
    • Not a mentally disordered person;
    • Any payment arrangement with business creditors;
    • Taking care of the application and renew of license, permit and pass;
    • Response for the management of the travel agent business.
  4. Capital requirement: HKD500,000 or above
  5. HKD500,000 as a guarantee money in the form of bank guarantee
  6. Assign an authorized representative and the representative have to fulfil below conditions
    • Not an undischarged bankrupt;
    • Any payment arrangement with business creditors;
    • No criminal record;
    • Not a mentally disordered person;
    • Management role in the travel agencies;
    • Secondary Education Level and 5-year tourism management experience or 10 years tourism management;
    • Completed TIA authorized representative course

Criteria for issue business permit

  1. Applicant holds a valid travel agent licence.
  2. The local place of business and the location of the place are suitable for travel agent business. For example, you cannot set up a travel agencies with your residential address, virtual office or work space sharing office. While, you need to also have a company sigh on your main door for people to easily identify your travel agencies.

How Long does it take for the Licensing ?

The process takes 4-6 weeks. You can apply the travel agent’s license and the business permit at the same time.

For further information, please contact us.

You may want to read: THE NITTY GRITTY OF SETTING UP A BUSINESS IN HONG KONG