- Annual compliance requirements in Hong Kong
- Annual filing requirements in Hong Kong
Besides being the heart of Asian financial markets, Hong Kong is a wishful location for foreign investments due to its open-oriented business policies.
It is easy to incorporate but to maintain the enterprise’s legal status, you should observe the annual compliance requirements in Hong Kong.
Obliged by law, Hong Kong corporates must sustain the company management, and annual filing with the Companies Registry (CR) and the Inland Revenue Department (IRD).
Unless otherwise stated, compliance information showed in this post is for a private limited company, which accounts for over 95% of new company registration in Hong Kong each year.
Annual compliance requirements in Hong Kong
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Investors should pay attention to its annual compliance requirements to ensure that a Hong Kong company stays legal and active.
The obligations comprise corporate management, yearly filing, and reporting.
Renewal of company secretary and registered office
Both local and foreign companies must appoint a Hong Kong resident as the company secretary. The secretary can be an individual or body corporate.
A local registered address is mandatory to form a Hong Kong firm, but a P.O. box is rejected. You’ll need to provide this address to the Companies Registry (CR) to receive notices from the Hong Kong authorities.
Accounting and auditing
Unless being is dormant status, a firm in Hong Kong must maintain an appointed auditor.
Furthermore, the company is also liable for preparing and retaining accounting records and annual accounts in Hong Kong.
One important note is that accounting and auditing procedures must align with Hong Kong accounting standards. And those accounts will be examined by a Hong Kong-registered auditor annually.
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Renewal of Hong Kong business registration
After company registration in Hong Kong, you’ll get a certificate and legally can start your company.
Business registration in Hong Kong can be valid for one year or three years.
Companies should annually renew one month before the expiration date (formation anniversary) to meet the compliance obligations of the CR.
As Hong Kong corporates, keeping these records and documents is vital:
- Certificate of Incorporation (CI)
- Certificate of Business Registration (BR)
- Articles of Association (AA)
- Records of resolutions, minutes of all meetings
- Updates of financial records (retained for seven years from the transaction date to avoid penalties)
- Company seal
- Share certificates
- Registers of members and directors
- Business licenses (if applicable).
All companies need to keep their statutory records at the company’s registered office or other places in Hong Kong as long as the company notifies CR.
Records of the company’s former members, resolutions, and meetings need to be maintained for at least 10 years.
Annual general meetings
The company should perform AGMs less than 15 months from the previous one and within 9 months after the company’s accounting reference period.
Moreover, Hong Kong-registered auditors must audit the Profit and Loss account and a balance sheet, and then file those with the Inland Revenue Department (IRD).
A director’s report must be prepared as well. Report details will be based on the checklist of the Companies Ordinance.
Importantly, it is the responsibility of the Hong Kong company to get directors’ approvals on such documents and present them to all shareholders of the company. The deadline for the presentation is 21 days before the AGM.
A Hong Kong company doesn’t need to hold an AGM if it falls in one of the following cases:
- Single-member company
- Dormant Company
- Everything required to be done in the meeting is done by a written resolution.
- A company can dispense with AGMs holding by a written resolution passed by all members.
Maintenance and update of any changes to the Companies Registry
According to Hong Kong compliance requirements, there must be at least one director, a natural person, and one shareholder (a person or a corporate body).
The good news is that a local or foreigner is acceptable. But the person must be above 18 years old. An individual can be a Hong Kong company’s sole director and shareholder.
In addition, it is compulsory to notify CR of changes in a Hong Kong company within 15 days of changes.
Below are some changes that you’ll have to inform the relevant authority:
- Registered office address
- Secretary and director’s appointment or cessation
- Secretary and director particulars
- Company name (filing form NNC2 after passing the special resolution of the name change)
- The allotment or issuance of a new share (within one month)
Since 1 March 2018, certain Hong Kong companies have had to maintain a significant controller register which must be available for inspection by law enforcement officers upon request. So, don’t forget to put this note in your consideration list before checking the next compliance duty.
Annual return and tax filing
Companies are responsible for annual filing requirements in Hong Kong.
Firstly, a Hong Kong company must file an annual return (form NAR1) with CR, which details the corporate particulars i.e., registered address, directors, shareholders, and company secretary.
Secondly, the company must complete also the annual profit tax return with IRD.
The next part sheds light on how and when corporates should file these returns to avoid violating Hong Kong’s annual compliance obligations.
Annual filing requirements in Hong Kong
According to the Hong Kong Companies Registry (CR) and Inland Revenue Department (IRD), either local or foreign corporations are accountable for annual filing requirements.
Annual return with CR
Your company shall file an Annual Return (form NAR1) signed by a director, company secretary, manager, or authorized representative.
For company types other than private, certified true copies of the financial statements are mandatory along with form NAR1. The documents also have to contain the report of the auditors and the report of the directors. If there is no change from the last filed return, you shall file a simplified version: AR2 or AR3.
Dormant corporates under the Companies Ordinance are exempted from filing annual returns.
You can also purchase physical forms and submit them directly at the Companies Registry. The address is the 14th floor, Queensway Government Offices, 66 Queensway, Hong Kong.
Private companies have to file this document once every year, within 42 days from the anniversary date of the foundation.
Consequences for non-compliance
What happens if your company does not file, or file late annual requirements? Consequently, non-compliance or late delivery of filing requirements to the Hong Kong authorities shall lead to heavy financial penalties or even possible imprisonment.
Local limited companies, including private limited companies in Hong Kong, are responsible for submitting statutory returns (particularly Annual Return Form NAR1 to the Registrar 42 days after the incorporation date anniversary every year.
When the company does not follow the filing deadlines or refuses to comply with the submission of the annual return, it shall face the following penalties:
- Late delivery of submitting annual returns: the company will be subject to a registration fee from HK$870 to HK$3,480.
- Non-compliance with the filing requirements due to delivery default (i.e. the Registrar accidentally cannot receive your annual return sent through post): the company will be subject to a fine of HK$50,000 per breach plus HK$1,000 daily fine.
Non-Hong Kong companies shall file the NN3 Annual Return (section 788), if breaching the late submission must face a higher payable fee from HK$1,200 to HK$4,800.
Additionally, the company must submit a certified copy of the most updated published accounts for 12 months (section 789) (if applicable) in 42 days after the incorporation date along with the annual return to the authority.
Read more about public rules as prescribed by the HK government.
Annual tax return with IRD
The profits tax return (PTR) must be filed with your company’s audited accounts.
These audited accounts include:
- A company’s balance sheet;
- An auditor’s report;
- A Profit and Loss account of the basis period; and
- A tax computation illustrating how assessable profits or adjusted losses are calculated.
Several common types of profits tax return (PTR) forms are:
- Form BIR51 (for corporations)
- Form BIR52 (for persons other than corporations)
- Form BIR54 (for non-resident persons)
Another alternative is to pay a visit to the Inland Revenue Department (Revenue Tower, 5 Gloucester Road, Wan Chai, Hong Kong) for directly issued forms and submissions.
The annual tax return is released by IRD on the 1st of April every year.
For newly formed companies, PTR must be filed for a maximum of 18 months from the incorporation date, and then every 12 months after the first tax return is made up.
PTR must be submitted to IRD within 1 month from the issuance date. Failing to file a tax return by the due date, filers may incur a penalty or prosecution.
Employer’s return with IRD
You will have to file an Employer’s Return of Remuneration and Pensions (BIR56A) and related forms (IR56B/E/F/G/M) with the Inland Revenue Department.
The purpose of this is to inform the IRD about changes in employees’ particulars, terms of employment, and Hong Kong identity card numbers. After filing, a copy of the complete form should be provided to the employee.
Online forms are available at www.ird.gov.hk. After completing the documents, you may file the return online at www.gov.hk/tc/residents/taxes/etax/.
On the other hand, you can receive the physical forms and submit them at the IRD.
Please note that you must complete the BIR56A form despite not hiring any employee, not operating, or being ceased. Additionally, an employer must keep payroll records of at least 7 years.
The IRD usually issues an Employer’s Return annually on the first business day of April.
As a first-time employer, complete and send Form IR6163 to notify IRD if you do not receive Form BIR56A by mid-April. Failure of timely submission is liable to heavy penalties and even conviction.
Several common forms and their filing due dates
- BIR56A for the annual employer’s return
This must be submitted within 1 month from the issuance date.
- IR56E for the still underemployment as of 31st of March
The form must be submitted annually together with the BIR56A, within 1 month from the issuance date of BIR56A.
- IR56E for the commencement of employment
The IR56E form must be submitted together with IR56B in the commencement year, within 3 months of the commencement of employment.
- IR56F for the termination of employment or death
Companies must submit this form together with IR56B for the cessation year, not later than 1 month before cessation.
- IR56G for the employee departure from Hong Kong
The deadline for this form is no later than 1 month before the expected departure date.
- IR56M & IR6036B for payments to persons other than employees
This must be submitted annually together with the BIR56A.
Briefly, the annual compliance requirements in Hong Kong are simple but attentive. People can easily find out the procedure, online forms, instructions, etc. on the websites of Hong Kong CR and IRD.
Being one of the most desirable jurisdictions for business start-ups and development, the Hong Kong Government is serious about its annual compliance obligations. You should be aware of the yearly filing to prevent unexpected penalties.
BBCIncorp serves your Hong Kong businesses in all stages of incorporation, maintenance, and growth during the company’s daily operation.
Take a look at our services and see how we can help you with Hong Kong company incorporation, corporate secretary, accounting, auditing, tax filing, and business advisory. Feel free to drop us a message via email@example.com if you’d like to discuss more with our consultants.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
- Annual compliance requirements in Hong Kong
- Annual filing requirements in Hong Kong
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