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Get Ready! 2022 HK Company Audit Peak is coming!

Feb 8, 2022 elitestage No Comment

HONG KONG
Every year, Hong Kong Companies shall complete the profit tax return and submit it to Inland Revenue Department, and usually it’s a coming peak for accounting and audit.
Profit Tax Returns Fillings
Annual corporate income tax returns must befined with Inland Revenue Department on 1 April every year. There’s a risk of penalties id the deadline is missed.

As per Companies Ordinance （section 405），all Hong Kong companies are required to have their financial statements audited and submitted to the government annually. Accounting records and books must be maintained reflecting the accurate solvency of the company.Consequences of late filling: the court may impose a fine up to HK$10,000 and a fine of 3 times the amount of tax undercharged.

Elite Stage accounting and tax team can assist you to complete your annual accounting, tax obligations and annual compliance requirements.

Salaries Tax return filling

Employer’s Return of remuneration and Pensions

Why shall HK companies do auditing?
It is required by laws and regulations.
According to Company Ordinances in Hong Kong, all HK companies shall commission accounting firms to audit their financial statements every year. Newly registered HK companies will receive their first profits tax return after 18 months of establishment, with a tax return period of three months.Within 7 years, Inland Revenue Department has right to check HK companies’ accounts through their bank accounts’ information, customs records and so on.

It promotes HK companies’ development.
Maintaining good audit records and tax records every year is conducive to demonstrating the strength and credibility of HK companies. Through auditing, HK companies can clearly understand their profit and loss, and know the companies’ assets and liabilities through the balance sheet.The audit reports will help HK companies timely adjust the trade structure, improve the companies’ management abilities, and promote the sustainable development of the HK companies.

It helps maintain HK bank accounts.
The audit report is an important document for maintaining a HK company’ bank account better. As the risk control systems in the banking sector are strengthening, more and more banks send emails or letters to the owners of HK companies to ask for their audit reports, so as to understand the operation of their HK companies. If HK companies do not submit their audit reports in time, their HK bank accounts have the risk of being closed.
Attention
Doing auditing is also necessary for bank loan. If a business owner wants to use a HK company to borrow money in China or other countries, the lenders will generally require two to three consecutive years of audit reports and tax records of the HK company.
It becomes more strict under the effect of CRS.
With the implementation of CRS, more and more overseas financial account information and overseas income have been exchanged, which means that the scrutiny of HK companies’ audit will be stricter. The implementation of CRS is beneficial to combating tax evasion and avoidance, and it makes individuals’ offshore accounts more transparent. Under this circumstance, business owners need to timely report the account information of their HK companies and complete their audit reports every year.
Attention
If the HK company invests and establishes other companies (Guangzhou companies) or branches and subsidiaries, the HK company shall provide the audit reports of these relevant companies.
Consequences of not doing auditing
HK companies will be fined.
If HK companies fail to submit profit tax return within the time limit or conceal the true tax payable, Inland Revenue Department can impose a maximum penalty of three times the amount of tax payable. If the circumstances are very serious, criminal responsibility of HK companies shall be investigated in accordance with the law.
A CASE
A HK company didn’t file the tax return by the due date and it received a penalty letter from Inland Revenue Department.

HK bank accounts will be closed.
 
If HK bank accounts are shutdown due to the audit problems, it will not only affect the cash flow of HK companies, but also bring troubles to the directors and shareholders. What’s worse, the HK bank accounts even have risks of being blacklisted by the banking systems, which makes HK companies harder to open new accounts in the future.
 
Doing auditing in time is significant to HK companies, and audit reports are also important documents which will support HK companies’ international bidding, financing and their public listings. As the HK company audit peak is coming soon! HK companies should prepare for the audit in advance!
Elite Stage has always been committed to providing customers with comprehensive and reliable financial planning, in-depth understanding of the customer’s operating model to provide the most appropriate method, helping customers complete the accounting and auditing of HK companies successfully, and enabling customers to operate legally in Hong Kong.

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