Audit & Tax Filing

Under the Hong Kong Companies Ordinance, all limited companies registered in Hong Kong must undergo a statutory audit annually, regardless of size or whether they have revenue. Only dormant companies may apply for exemption.

Typically 2-4 weeks, depending on account complexity and document completeness. If accounting records are well-prepared, the audit is much faster. We recommend using our accounting services to ensure smooth preparation.

Hong Kong profits tax rate is 8.25% on the first HKD 2 million of profit and 16.5% above that. Only profits sourced from Hong Kong are taxable -- offshore income may be exempt.

If your company profits primarily come from outside Hong Kong, you can apply to the IRD for offshore exemption to avoid profits tax. Sufficient evidence of business nature and profit source is required. Contact us to discuss whether this applies to your company.

Audit has 4 priced tiers by monthly expense (not annual revenue): Tier 1 (< HK$15,000/mo), Tier 2 (HK$15,000–50,000/mo), Tier 3 (HK$50,000–100,000/mo), Tier 4 (HK$100,000–200,000/mo). Above HK$200,000/mo, contact us for a personalized quote.

No, we do not sign it. Statutory audits are performed by practising CPAs; we handle bookkeeping and year-end preparation, and we liaise with the auditor throughout. In Hong Kong a statutory audit must be carried out by a practising accountant — that is a legal qualification, not a preference. Our job is to make that step fast and smooth: books kept current all year, and the year-end pack delivered complete in one go.

No, and this catches out most overseas founders. Section 359 of the Companies Ordinance grants small private companies a reporting exemption, which simplifies the disclosures in the financial statements — the audit itself still happens. Hong Kong has no size-based audit exemption at all. The only genuine exception is formal dormant status: a special resolution passed by all members and filed with the Companies Registry within 15 days, with no accounting transactions whatsoever for the year.

Without an appointed tax representative, the return is generally due one month from the date it is issued. With a representative you get the block extension scheme, which sorts companies by accounting date: April to November year-ends are code N (effectively no extra time), December is code D (extended to around mid-August the following year), and January to March is code M (around mid-November). Note that an extension defers the return, not the tax payment.

Penalties come in three layers and they stack. A fixed penalty of around HK$1,200 for a first offence, rising to around HK$3,000 if it is still not filed; prosecution for failing to file on time; and additional tax under section 82A of the Inland Revenue Ordinance of up to three times the tax undercharged. Miss the deadline and the IRD can raise an estimated assessment, which does not lapse simply because it looks too high.

No. Only one entity among connected entities may elect the two-tier rates. Companies are connected where one controls the other — generally more than 50% of the shares or voting rights — or where both are controlled by the same person or entity, and the test looks at control, not at whether the businesses are related. You nominate which company elects when filing, and that choice is worth revisiting each year. Hong Kong also has no group loss relief.