Accounting Services

All companies operating or incorporated in Hong Kong are subject to taxation under the Inland Revenue Ordinance (IRO). The primary obligation is to file a Profits Tax Return (PTR) annually with the Inland Revenue Department (IRD). Companies must also maintain accurate accounting records and submit audited financial statements alongside their PTR submission.
In addition to Profits Tax, businesses must comply with:
– Employer’s Returns (Form IR56B)
– Payroll and MPF (Mandatory Provident Fund) contributions
Hong Kong’s tax regime is based on a territorial source principle, meaning only income sourced in Hong Kong is subject to taxation. There is no capital gains tax, dividend tax, or VAT. Learn more from the IRD’s official tax guides.

Tax deadlines in Hong Kong depend on your company’s financial year-end. The IRD issues Profits Tax Returns on April 1 each year. Businesses must file within one month of issuance unless they qualify for a Block Extension Scheme.

Yes. All Hong Kong-incorporated companies (unless dormant) are required to prepare audited financial statements annually in accordance with the Companies Ordinance (Cap. 622). These statements must be signed by a Certified Public Accountant (CPA) licensed by the Hong Kong Institute of Certified Public Accountants (HKICPA).

Only companies officially declared dormant with no accounting transactions are exempt from audit obligations. This status must be registered with the Companies Registry.

Hong Kong’s Profits Tax applies only to profits that arise from or are derived from Hong Kong-based operations. This system is highly favorable for international companies, as offshore income is generally exempt if properly documented.

To claim an offshore tax exemption, businesses must demonstrate through contracts, invoices, shipping documents, and correspondence that their profit-generating activities occurred outside Hong Kong.

Hong Kong offers a two-tier Profits Tax regime for corporations:
– First HKD 2 million: 8.25%
– Remaining profits: 16.5%
For unincorporated businesses (sole proprietors/partnerships):
– First HKD 2 million: 7.5%
– Remainder: 15

Individuals pay Salaries Tax on their net chargeable income using:
– Progressive rates: 2%–17%
– Or a flat rate: 15%

All businesses in Hong Kong must keep books of account for at least seven years, including:
– Invoices and receipts
– Payroll records
– Bank statements
– General ledgers

Eligible private companies may adopt the SME-Financial Reporting Standard (SME-FRS) if they:
– Are not listed
– Are not regulated financial entities
– Meet asset and turnover criteria

Employers are responsible for:
– Monthly payroll processing
– Payslip issuance
– Tax deductions (IR56B reporting)
All records must be kept for at least seven years. Many SMEs outsource payroll to reduce costs and ensure compliance.

Under Hong Kong law, employers must enroll eligible employees into an MPF scheme within 60 days of employment. Contributions are:
– 5% of monthly relevant income (capped at HKD 1,500)
– Paid monthly by the 10th of each month
Full details at MPFA official site.

Companies engaged in cross-border transactions must comply with OECD-aligned transfer pricing rules in Hong Kong. Related-party transactions must be conducted at arm’s length, with appropriate documentation.

Hong Kong has DTAs with over 40 countries, including:
– China
– Singapore
– UK
– France

Consequences of non-compliance include:
– Fines up to HKD 10,000
– Additional tax of up to three times the underpaid amount
– Estimated assessments issued by the IRD

Failing to maintain proper books, skipping audits, or neglecting MPF contributions can lead to enforcement action by the IRD and MPFA.

Hiring an experienced accounting firm in Hong Kong ensures proper bookkeeping, accurate tax filing, and compliance with statutory requirements. Themis Partner provides expert guidance on audit preparation, manage MPF and payroll obligations, and help businesses navigate complex cross-border tax matters.
With professional support, companies can avoid costly penalties, streamline their financial processes, and focus on strategic growth while staying compliant with Hong Kong’s legal and accounting standards. Contact us today to optimize your accounting operations in Hong Kong.