Directors’ legal obligations in Hong Kong
Healy Consultants helps our multi-national Clients’ timely discharge their annual Hong Kong accounting and tax and audit obligations. It is important our Clients’ cooperate with us to meet Hong Kong statutory deadlines.
Our Client’s responsibility
- The directors (click link) of a Hong Kong company are obliged (click link) to timely prepare reliable and accurate annual financial statements; to give a true and fair view of the business activity during the accounting period. The financial statements are to comply with Accounting Standards;
- Annually, the directors are responsible (click link) for submitting a legal annual return to Hong Kong Companies Registry (click link), comprising signed financial statements, within 42 days after the anniversary of the date of the company’s incorporation in that year;
- Annually, the directors are responsible (click link) to pay an annual company business license renewal fee HK$105 to Hong Kong Companies Registry (click link), within 42 days after the anniversary of the date of the company’s incorporation in that year;
- Annually, the directors are responsible (click link) for submitting a corporation tax return to Inland Revenue Department Hong Kong (click link), including signed financial statements, within 1 month from the date of issue of the corporation tax return form.
Healy Consultants' responsibility
- Timely inform our Client of upcoming statutory deadlines;
- Prepare financial statements from the trial balance supplied to us by our Client;
- From the signed financial statements, submit a quality corporation tax return to the Hong Kong Government;
- Legally minimize our Clients’ international tax burden;
- Secure an exemption from independent statutory annual audit obligation;
- Healy Consultants’ accounting and tax team can assist our client to timely discharge their annual accounting and tax and audit requirements stipulated by Hong Kong Companies Registry and Inland Revenue Department Hong Kong and minimize the administration burden;
- Our help includes: i) conducting monthly bookkeeping services ii) reconciliation of bank statements and management accounts iii) schedule and liaison with independent auditor iv) compilation and preparation of our accounting reports and financial reports for in accordance with the HKFRS (Hong Kong Financial Reporting Standards) v) filling of legal annual return with Hong Kong Companies Registry and submission of corporation tax return with Inland Revenue Department Hong Kong;
- So you are crystal clear as to how we timely complete our Client statutory obligations, refer to this link to view a detailed project plan for our Client’s accounting and tax and audit engagement.
Failure to accurately and timely complete annual accounting and tax obligations
- Directors of a Hong Kong company that provides false or misleading financial statement shall be guilty of an offence and liable on conviction to a fine under Companies Ordinance;
- An officer of the company who is intent to deceive, furnish or make any false or misleading statements shall be prosecution under section 80(2) of the Companies Ordinance;
- Failure to settle the annual business license renewal fee within the stipulated timeframe shall be liable to late government filing penalties;
- Failure to file legal annual return within the stipulated timeframe shall be guilty of an offence and shall be liable on prosecution and conviction to a fine not exceeding HK$50,000 and also a daily default fine of HK$1,000 under section 662 of the Companies Ordinance;
- Failure to file corporation tax return form, accounting and tax computation before due date will trigger IRD’s punitive actions under section 80(2) of the Companies Ordinance under Part XIV on any person who without reasonable excuse. The offence is subject to a fine of HK$10,000 and treble the amount of the tax undercharged;
- Tax evasion shall be liable on prosecution under section 82 of the Companies Ordinance. The offence is subject to a fine of HK$50,000 and treble the amount of the tax undercharged and 3-year imprisonment;
- Under Section 71(1) of the Inland Revenue Ordinance (Cap. 112), tax charged under the provisions of this Ordinance shall be paid in the manner directed in the notice of assessment on or before a date specified in such notice. Any tax not so paid shall be deemed to be in default;
- In cases of default tax, the taxpayer will incur: i) 5% penalty on the total amount of tax in default including the second instalment amount which will be immediately due if the first instalment is not paid by the due date ii) 10% further penalty on all unpaid amount (including 5% surcharge) after the expiry of 6 months from the due date.
ConclusionI thank our Clients’ for helping us complete their annual Hong Kong accounting and tax and audit obligations.