Hong Kong Company and It's Tax Information
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Hong Kong was once described by Milton Friedman as the world’s greatest experiment in laissez-faire capitalism. It maintains a highly developed capitalist economy, ranked the freest in the world by the Index of Economic Freedom for 15 consecutive years. It is an important centre for international finance and trade, with one of the greatest concentrations of corporate headquarters in the Asia-Pacific region, and is known as one of the Four Asian Tigers. If you want to have more information about HK company tax filling and bookkeeping, please refer the following information for your reference.
1. Hong Kong company to do the tax filing - the difference between the limited company and the unlimited company
Auditing: the unlimited company does not have to go through the process of auditing. After completing the account, it can file tax return directly to Inland Revenue Department according to the accounting statement; while the limited company is different.
After the limited company has finished the accounting, it needs the Hong Kong auditor’s auditing and then gets the auditor’s report, the profits tax can be reported to the Inland Revenue Department after filling out the Profits Tax Calculation form based on the data listed in the audit report.
2. The profits tax rate in Hong Kong
Auditing: The unlimited company tax rate is 15% and the limited company tax rate is 16.5%.
3. The annual inspection and annual return are different
Auditing: It is necessary for the limited company to do the inspection(Inland Revenue Department) and Annual Return (Companies Registry).
The unlimited company only needs to do the annual inspection, which means that the unlimited company only needs to go to the Inland Revenue Department to update the Business Registration Certificate and doesn’t have to go to the Companies Registry to do Annual Return.
4. Hong Kong companies to file tax returns - how to judge whether their company is able to report zero tax
In Hong Kong, companies that are not operating can directly report zero tax (there is still need to do auditing without operation), and those companies that operate are necessary to do accounts and audits before filing tax returns.
Of course, in a sense, as long as you conduct business transactions or activities in the name of the company, it counts as an operational matter.
5. The types of tax filing for Hong Kong companies are divided into:
1) Zero tax return - suitable for inactive companies that do not operate ( inactive in Companies Registry);
2) Direct tax return after accounting - suitable for operating unlimited companies;
3) Taxation after accounting and auditing - suitable for operating limited companies.
6. Preparation and documents for company accounting and tax filing
1) Preparation before accounting
(1) Although the Hong Kong government requires to file tax returns yearly , companies usually cannot begin to handle their accounts at the end of the year. Generally, they should start preparing accounting documents when there is an operational transaction.
(2) Classification and sorting of documents: The sales invoices, purchase invoices and expense invoices are sorted, packed and placed in categories and time series. If there are many receipts, you can add a number with a pencil in the upper right corner of the receipt. And note that the date of the document provided is the same as the date of the account.
(3) Documents that can be put into the account: Compared with mainland China, Hong Kong government recognizes all invoices and receipts with company signatures.
2) Documents submitted by Hong Kong companies for their accounting
(1) Bank statement and bank receipt;
(2) Sales: invoice, contract;
(3) Purchase: invoice, contract;
(4) Expense: salary, rent (need to provide the lease contract or agreement), freight, etc.;
(5) Other related documents: one original of the regulations, annual return, all documents of company change(if any), fixed assets documents, capital contribution related documents, the first 3~5 purchase and sales invoices and the corresponding payment documents for the next accounting year.
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