Frequently asked questions

In most cases, yes. Subject to limited statutory exceptions — such as a company that has validly obtained dormant status — a Hong Kong incorporated company is generally required under the Companies Ordinance (Cap. 622) to have its financial statements audited each year by a practising CPA, regardless of size.

In most cases, yes. A company is only relieved of the annual audit if it is formally registered as "dormant" by special resolution filed with the Companies Registry. A company that is simply quiet, but not formally dormant, still needs an annual audit.

It depends mainly on how complete and well-organised your records are. With clean, complete books, a straightforward SME audit is usually a matter of weeks — which is where good bookkeeping pays for itself.

It depends on your transaction volume. Active businesses benefit from monthly or quarterly bookkeeping so you always know where you stand; smaller or dormant companies may only need an annual write-up before audit.

Common cloud platforms such as Xero and QuickBooks, or your existing system — whatever fits how you actually operate. Advice on setting up the right system is part of the service.

Yes. Payroll processing, MPF administration, and statutory long service / severance payment calculations can all be handled alongside your bookkeeping.

The main one is Profits Tax. For companies, the first HK$2 million of assessable profits is taxed at 8.25% and profits above that at 16.5% (for unincorporated businesses, the two tiers are 7.5% and 15%). A company with no assessable profits pays no Profits Tax — but it must still file a return and, in most cases, submit audited accounts.

You can choose, but by convention most companies use 31 December or 31 March. A new company’s first accounting period can run up to 18 months.

There are three direct taxes: Profits Tax (on business profits), Salaries Tax (on employment income, at progressive rates up to 17% or a standard rate on net income, whichever is lower), and Property Tax (15% of the net assessable value of rental income, after a 20% statutory deduction). There is no VAT, sales tax or capital gains tax.

Generally no. Hong Kong is a free port and charges no customs tariff on most goods — the exceptions are liquor, tobacco, hydrocarbon oil and methyl alcohol. Import and export declarations must still be lodged, however.

Approved charitable donations are deductible for Profits Tax, provided the total is at least HK$100 and does not exceed 35% of your assessable profits.

Yes. Tax losses can be carried forward without time limit and set off against the company's profits in later years.

Because a year's actual profits are only known after the year ends, the IRD charges a provisional tax during the year based on the previous year's result. When the actual assessment is issued the following year, the provisional tax already paid is credited against it.

Whether profits are Hong Kong sourced depends on the nature of the profit-producing activities and where they are carried out; the absence of a Hong Kong office or employees is not, by itself, determinative. Where profits neither arise in nor are derived from Hong Kong, they may be non-taxable — but this is never automatic: you must file the return and make an offshore claim to the IRD, supported by evidence. Additional rules may also apply to certain foreign-sourced income received in Hong Kong by members of multinational enterprise groups.

Most likely yes. Such arrangements require examination of the underlying agreements and the actual activities carried out. The company may be regarded as carrying on an agency or service activity, and any fee, commission or other income may need to be reported. Accounting, audit and tax-filing obligations may still arise.

No. Every Hong Kong company must report to the IRD regardless of where its business or banking takes place. If it has no Hong Kong-sourced income it can apply to the IRD for an exemption, but the return must still be filed.