If you are seeking this information, you will also need to know what is required to start a company in Hong Kong. I suggest that you read this article to learn about all the necessary requirements for opening and maintaining a company in Hong Kong.
Regarding the need to perform accounting for companies in Hong Kong, the answer is: yes, it is necessary.
If the company has activities, it is mandatory to follow the regulatory accounting and tax protocols, such as:
1. Accounting Records: The company must maintain accurate and up-to-date accounting records that reflect its financial performance and financial position. These records should be sufficient to explain the company’s transactions and financial status. Under the current regulation, the company must keep these records for at least 7 years.
According to Hong Kong Institute of Certified Public Accountants (HKICPA), there are three reporting standards in HK, namely, (1) Small and Medium-sized Entity Financial Reporting Standard (SME-FRS), (2) The Hong Kong Financial Reporting Standard for Private Entities (HKFRS for Private Entities) and (3) Hong Kong Financial Reporting Standards (HKFRS). SME-FRS is the simplest one among the three Standards. However, applying SME-FRS needs some pre-conditions, otherwise HKFRS for Private Entities need to be used. HKFRS is more relevant to those companies listed in the Stock Exchange of Hong Kong.
2. Annual Audit: Generally, an annual management accounts, which consists of the income statement and balance sheets, are prepared and audited by a Hong Kong Certified Public Accountant (CPA) registered in the Hong Kong Institute of Certified Public Accountants. The audited financial statements must then be presented to the shareholders during the Annual General Meeting (AGM).
3. Tax Compliance: The company must comply with Hong Kong’s tax regulations, which include filing the audited financial statements and tax computation with the Inland Revenue Department (IRD, the “IRS” of Hong Kong), along with the Profit Tax Return (if any).
If the company is inactive (i.e., it has no operations/activities), the director can consider claiming the company as “Dormant”. However, it is not enough for the company to simply refrain from activities to be considered inactive or dormant; it must also be declared as such, by a director written resolution, which is required to submit to CR. Under the dormant status, however, the accounts still need to keep up-to-date records.
Attention: Failure to comply with these requirements can result in penalties or legal consequences against the company and its directors.
At BRASIA, our accounting team has extensive experience in maintaining companies' accounting records, generating financial reports (in English), and assisting in understanding local regulatory obligations. We also coordinate the entire audit process and tax filings.
Our accounting team speaks English and can support you directly when needed. For subsidiaries in Hong Kong that require balance sheet consolidation, we offer customized reports according to the shareholder’s needs.
If you are looking for accounting support for your company in Hong Kong, or if you are looking for to set up a company, contact us at info@brasia.hk.
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