Let us explain the requirement & procedure of accounting & audit issues and HK taxation as well. This is a case study for a company incorporated in September 2013.
Accounting & auditing
According to the statutory requirement under the Hong Kong law, the first set of financial statements should be prepared for period covering not more than 18 months from the date of incorporation. Hence, may I suggest you choose (say 31st December or 31st March) to be your financial year end date? Your first audit will then cover a period from the 16th September 2013 (date of incorporation) to 31st March 2014 / 31st December 2014.
If your company commenced its business during the above period, you need to prepare the following documents (up to 31st March 2014 / 31st December 2014):
– All sales invoices/ consulting service invoices;
– All purchases invoice/ subcontractor’s invoices;
– All expense receipts;
– All bank statements;
– General ledger and management account (i.e. Trial Balance, Balance Sheet and Income Statement). If this one you cannot provided, we can provide bookkeeping service to handle it.
If not yet commenced business, you may report a “Nil” profits tax return (“PTR”) to Inland Revenue Department (“IRD”), Hong Kong Tax Authority , with the declaration of not yet commence business by the director or company secretary of the company. But please note that you are still required to perform first audit in accordance with the Hong Kong Companies Ordinance which mentioned above.
Taxation
Normally, IRD will issue your first PTR to the company after 18 months from incorporation date. It should be submitted within THREE months from the date of issuance of PTR. Once reporting the financial year end date to IRD, the submission deadline of the annual PTR together with the audited financial statements are as follows:
| Financial year end as at | Tax filing date | Documents ready for audit |
| 1) 31st March | 15th Nov | Not later than 1st Sept |
| 2) 31st December | 15th August | Not later than 1st June |
| 3) Other dates than (1) or (2) e.g.30th June | 30th April | Not later than mid of Feb |
If all your company’s income are sourced outside HK, your company will not be subjected to HK tax, you may apply offshore profits claim once you submitted your PTR and financial statements. IRD will then issue an offshore claim queries letter to you for the proof by providing the passport of the directors/ sales representatives and some samples of sales and purchase/service fee invoices, contracts/agreements and shipping documents e.g. bill of lading. We shall provide the professional service for answering this offshore tax queries to you.
We hope the above will give you a clear picture of HK audit and taxation system. If you choose our service, please let us know which financial year-end date you will use, your business nature, commencement date of your business and volume of transaction during the above mentioned period. We shall then send you a fee quotation for the accounting, audit & taxation services.