As a world-renowned offshore financial center, Hong Kong has always attached great importance to commercial development, and the tax policies formulated by the Hong Kong government fully reflect its emphasis on commercial development. So what is the tax policy for Hong Kong companies? What should a newly established Hong Kong company pay attention to? Today, let’s take a look at the tax policies of Hong Kong companies with Finance and Taxation.
As a world-renowned offshore financial center, Hong Kong has always attached great importance to commercial development, and the tax policies formulated by the Hong Kong government fully reflect its emphasis on commercial development.
So what is the tax policy for Hong Kong companies? What should a newly established Hong Kong company pay attention to? Today, let’s take a look at the tax policies of Hong Kong companies with Finance and Taxation.
1. Hong Kong company accounting and tax reporting requirements
According to relevant Hong Kong laws and regulations, Hong Kong companies only need to file a tax declaration once a year, and at the same time as the tax declaration, they must submit a The company's accounts audit report issued by a third-party licensed accountant is used for tax assessment by the Hong Kong Inland Revenue Department.
Although we are still in the period of the epidemic, Hong Kong companies still need to file audit and tax returns. Now the tax bureau’s service windows have been reduced, and the service efficiency has dropped significantly compared with last year, so there have been a lot of tax returns in the near future. During the audit period, you can start preparing materials and arranging audit-related matters in advance!
According to the Hong Kong government's profits tax reporting regulations: for newly registered businesses (new companies), the first profits tax return will usually be issued approximately 18 months after the new business opens or is established_corporate; For continuing businesses (not new companies), profits tax returns are issued on the first working day of April each year.
April every year is the peak period for the issuance of Hong Kong tax forms, which is the time when Hong Kong companies file tax returns. According to Hong Kong legal provisions, as long as Hong Kong companies are registered normally, they must prepare accounts and file tax returns.
2. Hong Kong company accounting and tax filing time
1. The initial tax filing time for a newly established Hong Kong company is: within 18 months from the date of establishment, the tax will be received for the first time. After receiving the tax form issued by the tax bureau, the accounting audit and tax declaration must be completed within three months.
2. The annual tax form is issued for non-newly established Hong Kong companies: April 1 of each year. After receiving the profits tax form, the tax return must be completed within one month.
However, companies operating normally do not have to wait for receipt of tax forms before handling tax audit matters. The correct approach is: prepare financial information on time and submit it to the firm for accounting based on the company's own financial year-end date. Audits and tax filings.
Hong Kong companies’ tax returns and tax payments are separate. Tax returns must be filed but they do not necessarily have to be paid. Companies that are in negative profits after the audit do not have to pay taxes, and their net losses can be deducted. Deduct an annual profit gain.
Special note: If a Hong Kong company does not receive a profits tax form from the Hong Kong Inland Revenue Department within the tax filing deadline, it does not mean that the Hong Kong company does not need to keep accounts and file tax returns.
In this case, Hong Kong companies need to take the initiative to complete the tax return during the tax return period. If tax returns are late or fail to file, Hong Kong companies will face greater penalties, ranging from fines to the company's shareholders and chairman being blacklisted, having their bank accounts locked, or bank account funds being turned over to the Hong Kong government. library, was prosecuted or sentenced by a Hong Kong court.
3. Can Hong Kong companies make "zero declaration"?
The tax declaration of Hong Kong companies is a real tax declaration system. All Hong Kong companies need to file tax returns, whether they are operating or not.
4. What is zero declaration for Hong Kong companies?
"Zero declaration" means that after a Hong Kong company receives the annual tax return form issued by the Hong Kong Inland Revenue Department, it fills in "zero" in all business columns of the tax return form (including onshore business and offshore business) , that is, no business occurred that year, which is called a "business inactive report" in Hong Kong. In fact, "zero declaration" is just a common term in the mainland, and "business inactivity report" is the way for Hong Kong companies to file tax returns.
Of course, there is nothing inappropriate in the "Business Inactivity Report" ("zero declaration"), but "zero declaration" must also meet certain conditions in order to comply with the tax filing behavior prescribed by law.
Hong Kong companies need to meet the following conditions for zero declaration:
1. Not purchasing any Hong Kong property;
2. Not opening a bank account or accounting, There is no record of any bank statement;
3. No business is conducted, such as using a Hong Kong company to sign contracts and issue invoices, and records are kept at the customs, import and export companies, and logistics companies;
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4. There are no employees in Hong Kong;
5. There is no permission or authorization to use patents or trademarks;
6. There is no purchase or sale relationship with Hong Kong merchants;
7. There are no other profits from or generated in Hong Kong.
If the company’s actual situation does meet the conditions for zero declaration, it can declare zero. It is enough to provide dormant accounts and inactive audit reports in a timely manner and add that the company is indeed inactive. If you have an operating company that needs to prepare accounts and file taxes normally, your accountant will help you prepare these reports.
Risks faced by those who do not meet the conditions for zero declaration:
1. The Hong Kong Inland Revenue Department has the right to randomly inspect the financial accounts of Hong Kong companies. During the random inspection, if the Hong Kong Inland Revenue Department finds that the Hong Kong company is not If it meets the conditions for zero declaration but still makes zero declaration, the Hong Kong company’s behavior will be deemed to be inconsistent with tax avoidance. Especially under the CRS environment, the Hong Kong Inland Revenue Department will be more stringent in spot inspections of Hong Kong companies’ zero declarations.
2. Most companies will open offshore bank accounts after registering a Hong Kong company. If there is a record of discrepancies in the offshore bank account and the Hong Kong company is still making zero declarations, then the company’s offshore bank account It is easy to be discovered and have offshore accounts closed, causing the company to be unable to operate normally. And require back taxes to be accounted for and fines added.
3. Hong Kong companies with business transactions do not meet the conditions for zero declaration. If such a company is still making zero declaration, then the Hong Kong company will be punished by Hong Kong law for not meeting tax requirements.
4. Hong Kong companies that do not meet the conditions for zero declaration will be included in the government's blacklist due to non-compliant operations.
From this we can also see that Hong Kong company auditing is very important.
The audit report of a Hong Kong company is one of the documents proving legal operation, and its importance has become increasingly prominent. The Hong Kong Companies Ordinance and Taxation Ordinance stipulate that Hong Kong limited companies must prepare accounts (also known as bookkeeping) and audit (also known as auditors' reports) every year, regardless of whether they have profits or not, and report the company's financial status to shareholders, directors and the tax bureau.
If a company does not make an audit report, once it is investigated by the tax bureau, and the company cannot explain the source of the company's wealth, the tax bureau is likely to suspect that the company is engaged in illegal "money laundering". You may face heavy fines or even prison sentences, and your bank account may also be closed.
5. Hong Kong audit process
1. Organize company transaction records, documents (receipts and contracts) and bank statements
Each Hong Kong company In the process of business operations, everything will happen