Guide to Tax Compliance and Annual Filing in Hong Kong

As we move past Hong Kong’s 2021 Budget announcement, it’s a fitting time to give business owners an update on the obligations and deadlines for tax compliance and annual filings in Hong Kong in 2021.

Like any other functioning economy, tax compliance and filing are crucial in Hong Kong, and there are severe legal ramifications for those who do not correctly observe the law. Non-compliance with tax laws in Hong Kong can result in weighty penalties or the annulment of your business’s licence — so it’s prudent to check up on your responsibilities every year.

In this article, we’ll go over the major tax deadlines in Hong Kong for 2021, followed by an overview of your obligations for those taxes.

Hong Kong Annual Filing Requirements and Deadlines in 2021

All companies operating in Hong Kong (both local and foreign) are required to make annual filings for their taxes with the Inland Revenue Department (IRD) and Companies Registry. The annual tax filing obligations for private limited companies operating in Hong Kong are as follows:

Filing of Annual Return with Companies Registry

Any private limited company that is incorporated under the Hong Kong Companies Ordinance is obligated to file an Annual Return that is signed by a director, company secretary, manager, or authorised representative. The Annual Return is to be submitted to the Companies Ordinance.

If a private company has applied for dormant status due to no accounting transactions during the financial year, it shall be exempted from submitting an annual return.

An Annual Return contains the details of a private limited company, including its registered address, directors, company secretary, shareholders, etc. Records of the company’s financial accounts are not required to be included in an Annual Return.

A company must submit its Annual Return every year, within 42 days of the anniversary of the company’s incorporation date. A new Annual Return must be submitted every year, even if there have been no changes to the previous Annual Return.

If an Annual Return is submitted late, there will be higher registration fees, and the company and its officers may be subject to fines or even prosecution.

Submission of Company’s Annual Tax Return to Inland Revenue Department

In keeping with Hong Kong company law, any company operating in Hong Kong must file an annual tax return (also known as a Profits Tax Return), accompanied by audited accounts with the Inland Revenue Department of Hong Kong (IRD).

The IRD will issue Tax Return filing notifications to Hong Kong companies on April 1st every year. Newly incorporated companies will generally receive their notification 18 months after their incorporation date.

If a company needs more time, it can apply for an extension. Otherwise, if a company’s tax return is not submitted by the due date, the company and its officers may be subject to fees or prosecution.

Along with the Tax Return itself, the following documents must also be attached:

• A tax calculation showing how the profits (or losses) have been computed
• The auditor’s report, Profit and Loss Account, and company balance sheet, for the financial year

Related Read: How to Set up an eCommerce business in Hong Kong »

Ongoing Tax Requirements in Hong Kong

A private limited company operating in Hong Kong must do the following to adhere to Hong Kong Tax requirements:

• Keep a local registered address (P.O. Boxes are not permitted)
• Retain a company secretary who is a local Hong Kong resident (individual or body corporate)
• Retain at least one director who is a natural person (local or foreigner, who is over the age of 18)
• Retain at least one shareholder (local or foreigner, person or body corporate, who is over the age of 18)
• Retain an appointed auditor, unless the company is listed as “dormant”, i.e. there are no accounting transactions during the financial year
• Inform the Companies Registry of any changes to the company’s registered details, including particulars of shareholders, directors, company secretary, registered address,  changes in share capital, etc. as follows:
  • Declaration of change of the registered office’s address – within 15 days after the date of the change
  • Declaration of change of secretary and director (Appointment/Cessation) – within 15 days from the date of appointment or removal
  • Declaration of change of details of secretary and director – within 15 days from the date of change of details
  • Declaration of change of a company’s name – submission of form NNC2 within 15 days after special resolution to change the company’s name
  • Declaration of the ratification of a special resolution or certain other resolutions – within 15 days after the ratification of the resolution
  • Declaration of any relocation of the company’s statutory books from the company’s registered office – within 15 days after the relocation
  • Declaration of any allocation or issuance of new shares – within one month after the allocation or issuance.
• Renew business registration one month before expiration every year, or once every three years, depending on whether your Business Registration Certificate is valid for one year or three years.
• A company’s Business Registration Certificate is required to be shown at all times at the primary place of business.
• Hold an Annual General Meeting (AGM) within 18 months from the date of incorporation; future AGMs need to be held every calendar year, with the period between each AGM not exceeding 15 months.
• The directors must submit the company’s financial accounts in accordance with Hong Kong’s Financial Reporting Standards (FRS) structure. A director’s report must be prepared with the annual accounts.
• Compliance with annual accounts filing deadlines and requirements of Hong Kong’s Tax Authority and Companies Registry.
• Sustain the company’s Business Registration Certificate, Incorporation Certificate, Articles of Association, share certificates, registers, minutes of all meetings that include directors and members, updated financial records, and company seal.
• Sustain all other necessary business licences.
• Sustain detailed and accurate accounting reports to show the assessable profits of the company. All accounting documents must be retained for seven years from the transaction date. Failure to do so may incur penalties. If the company’s accounting records are held outside of Hong Kong, the returns must be kept in Hong Kong.

A Hong Kong company’s records must include:

• The books of all accounts that record payments and receipts, or expenditure and income
• Any documentation necessary to support the entries in the books of account, e.g. bank statements, invoices, vouchers, receipts etc.
• A full record of the assets and liabilities of the company
• A daily record of all money accepted and disbursed by the business with supporting details of the receipts or payments

Conclusion — Where to Next for Your Hong Kong Tax Responsibilities in 2021?

It should be known that ultimately, the director of the company is responsible for the ongoing tax compliance of the company. Any issues with non-compliance can lead to fines or even prosecution in some cases.

To keep up with your responsibilities, we recommend you take a look at optimising your tax processes to save time, money, and potential headaches.

When seeking tax advice in Hong Kong in 2021, we encourage you to be discriminating — you should be receiving nothing less than trouble-free corporate tax filing services that optimise your operations for maximum profit.

If you’d like help in your corporate tax filing in 2021, InCorp has a team of export accountants, lawyers, and bankers that can help you make sure your company takes comprehensive advantage of Hong Kong’s tax system.

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