Does GSHK provide accounting services?

Yes. Our Hong Kong company setup program is managed by CPA (Practising). In other words, we can provide you with an all-in-one accounting service to complete your annual corporate tax reporting. 

Corporate tax reporting is very important to all business owners who register their companies in Hong Kong. In Hong Kong, the only corporate tax reporting is the Profits Tax Return which is a mandatory filing on an annual basis. To have a deeper understanding of profit tax reporting, we hereby provide simple guideline for you as business owner to follow in this article.

Finding a qualified accountant and auditor

Before the tax reporting process, you must have 

1. an accountant to record all your relevant transactions during the year; and 
2. a qualified auditor to do statutory audit on your company account.

Preparing financial statements 

As a business owner, it is mandatory for you to file the corporate tax returns together with your audited financial statements and profits tax computation to Inland Revenue Department (Tax Department) annually. Prior to the filing process, you need to seek assistance from an Certified Public Accountant. He will record all your transactions to derive annual financial reports. These reports comprise with profit and loss statement that demonstrates the performance of the company, and balance sheet (comprising 3 parts: Assets, Liabilities and Shareholder’s equities) that demonstrates the financial position of your company at the end of the year.  

Audit process and tax computation

Once the financial statements are produced, they are used to undergo the audit process performed by auditor. Audit is statutory and mandatory process annually in Hong Kong. Auditor will review the financial statements with supporting documents to ensure the accuracy of the statements and give appropriate opinion (or comment) on the statements. He or she also prepares the tax computation based on the information provided on statements. From the tax computation, you will then realize the amount of tax to be levied on your company. Please be reminded that this is not the final amount of tax you pay because these documents still need to go under assessment by the Tax Department.

5 tax incentives

Hong Kong offers several tax incentives to promote economic growth and attract investments. These tax incentives encompass profit tax exemptions for onshore and offshore investments in the city. Here are some notable tax incentives:

• Offshore Profits Tax Exemption: Hong Kong provides a complete exemption from profits tax for income generated from offshore activities. Companies engaged in offshore businesses with no Hong Kong-sourced income can enjoy this exemption (plz add a smiling emoji). 
• Two-Tiered Profits Tax Regime: The two-tiered profits tax regime offers reduced tax rates for the first HK$2 million of assessable income, benefiting small and medium-sized businesses. This progressive tax structure fosters a competitive environment by offering a lower tax burden for smaller enterprises while larger companies still maintain the 16.5% tax rate. 
• Tax Deductions for Research and Development (R&D): Companies conducting qualified R&D activities in Hong Kong can claim tax deductions on their R&D expenditures, encouraging innovation and technological advancement. 
• Deductions for Capital Expenditure: Certain capital expenditures, such as machinery and equipment purchases, can be deducted from assessable profits over time, lowering the overall tax liability.
• Tax Incentives for Specific Industries: Hong Kong provides sector-specific incentives for industries like aerospace, and ship leasing, offering reduced tax rates or other benefits to attract investment in these sectors.

Mandatory Forms required for submission

During the procedure of the production of tax computation, your accountant advises to you some incentives as above you can use to relieve your tax liabilities. You then take this opportunity to claim more incentive or exemptions by filling the relevant forms, especially PROFIT TAX RETURN, according to the information provided on financial statements and tax computation. These documents and forms must be prepared together with financial statement and tax computation for submission to Tax Department. 

When to submit

Filing a corporate profits tax return in Hong Kong typically begins with the release of income tax returns in April, often during the early part of the month. After receiving the Profit Tax Return (PTR), taxpayers usually have one month to apply for a statutory extension if needed. For instance, if the Hong Kong fiscal year starts on April 1, 2023, and ends on March 31, 2024, the PTR is typically issued on March 1, 2024. Understanding the timing and deadlines is crucial, as it ensures businesses can accurately prepare and submit their corporate tax returns within the stipulated timeframe, preventing potential penalties or issues with tax compliance.

Beware of tax submission deadline

As a business owner registered your business in Hong Kong, you need to be watchful of the deadline of the tax return submission. Therefore, we always advice you that when one business year has been over, all income and expenditure documents must be well organised for accounting and auditing and you must allow some time, say the duration of 3 to 4 weeks, to have the financial reports and tax computation generated for the corporate tax reporting. Hence, we can avoid unnecessary penalties for failure of corporate tax return submission.

Chat With Our Accountants

To avoid getting into trouble with the Hong Kong Inland Revenue Department, and to make sure you will receive an unqualified opinion from our auditor, customers shall check with our accounting team at info@getstarted.hk before business commencement. Don’t wait any longer, let us reduce overwhelm. Enjoy open communication with our accountants.