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Frequently Asked Questions

FAQs

Frequently asked questions about entrepreneurship, tax filing, auditing, accounting, secretarial, etc.,

They can be viewed according to the following categories, and you can also enter keywords to start searching for related questions and answers.

Company Formation

What are the requirements for setting up a limited company in Hong Kong?


A Hong Kong limited company can be established by a shareholder and director who is 18 years of age or above, a Chinese resident holding a passport or ID card, or an overseas person. In addition, a Hong Kong address must be provided as the registered address, and a Hong Kong resident or a professional company must be appointed as the company’s legal secretary.




Can a mainland resident establish a Hong Kong company?


Can a mainland resident establish a Hong Kong company?




How long does it take to establish a Hong Kong limited company?


10 working days.




Does the business registration certificate have to fill in the nature of the business?


Not necessarily. If the company does not want to specify it, it can be omitted.




Will the business scope on the business registration certificate restrict the company from expanding other businesses?


The business scope generally refers to the company's main business. The business registration certificate does not restrict the company's business scope and therefore does not restrict the company from expanding other businesses.




Are there potential risks in buying a ready-made shell company?


Ready-made shell companies are very common in most countries and regions, such as Hong Kong, Singapore, British Virgin Islands (BVI), the United States and the Cayman Islands. Usually, the ready-made shell company does not conduct business and open a bank account before the sale, so there is no potential risk in buying a ready-made shell company.




Can the company change the company name?


Yes. Like a newly registered company, the company name to be used must also be searched first. If there is no duplicate name, it can be changed to the Companies Registry. It takes about 10 working days to change the name.




Is it possible to establish a limited company without the words "limited" or "Limited"?


The name of a Hong Kong limited company must contain the words "limited" or "Limited" in English to indicate that the shareholders of the company bear limited liability for future debts.




Can I use simplified Chinese characters in the Chinese company name of a local company?


No. The Chinese company name of a local company must be in traditional Chinese characters.




What are the restrictions on the company name?


Unless you apply for a license separately, the company name cannot contain words such as "bank" or "insurance", nor can it contain words that might misunderstand the company's relationship with the government.




Can the company name only be registered in Chinese or English?


Yes, if you need to open a bank account, you must register an English name.




What is the difference between shareholders and directors?


For the difference between shareholders and directors, please refer to the following comparison of rights and responsibilities. The rights and responsibilities of shareholders are as follows:

  • Participate in the shareholders meeting and enjoy voting rights based on the proportion of shares
  • Understand the company's operating and financial status
  • Elect and be elected as a member of the board of directors
  • Get dividends
  • Priority purchase of shares transferred by other shareholders
  • Priority to subscribe for newly issued shares of the company
  • After the company is wound up, the remaining property will be distributed in accordance with the law
  • The shareholders meeting reviewed and passed the annual audit report
  • Appoint or dismiss directors through the shareholders meeting, and decide on the remuneration of directors
The rights and responsibilities of directors are as follows:
  • Responsible for the company's daily operations and decision-making
  • Keep accounting books and business records
  • Responsible for bank account management
  • Represent the company to borrow loans and use company property as collateral
  • Draw up a profit distribution plan
  • Draft a plan to increase the registered capital
  • Convene a general meeting of shareholders
  • Implementation of the resolutions of the general meeting of shareholders




Can shareholders and directors be the same person?


Yes. Company shareholders and directors can be the same person.




How many shareholders and directors does a limited company have at least?


At least one shareholder and director. A shareholder can serve as a director concurrently.




Can non-Hong Kong residents become shareholders and directors of Hong Kong limited companies?


At least 18 years of age, Chinese resident or overseas person holding a passport or ID card can become a shareholder or director of a Hong Kong limited company.




If I am not a Hong Kong resident, do I have to hold a passport to become a shareholder and director of a limited company?


No need. However, if the company wants to open an account in a Hong Kong bank, shareholders and directors need to hold valid passports or passes and ID cards.




Do I need to report to the government department for changes in company information and director information?


Yes. If there is any change in company information, the company secretary must report to the Companies Registry in the appropriate specified form and within a specified period in accordance with the relevant provisions of the Companies Ordinance. Depending on the content of the information, the company secretary may also need to report to the Business Registration Office.




After the company is registered, how should I open a bank account?


All shareholders and directors must attend the bank account opening procedures, but some banks have different requirements for shareholder attendance. The company needs to bring company registration documents and go to the bank to open an account.




What documents do I need to open a bank account?


Banks generally require companies to provide the following documents:

  • Original meeting minutes for approval of account opening
  • Company registration certificate (accountant notarized copy)
  • Business registration certificate (accountant notarized copy)
  • Notice of appointment of directors and secretary (notarized copy of accountant)
  • Articles of Association (notarized copy of accountant)
  • ID card/passport of each director
  • Proof of personal address of each director




Is the bank account of a limited company operated by shareholders or directors?


In addition to the personal operation of shareholders and directors, a third party can also be authorized to operate the account.





Hong Kong company annual review

How to apply for Hong Kong company annual review?


Mega Solutions provides annual review services for Hong Kong companies. Existing customers only need to sign the confirmation letter and annual declaration documents. New customers also need to provide photocopies of Hong Kong company registration certificates, business registration certificates and other documents.




When is the annual review of a Hong Kong company usually processed?


The Hong Kong government requires Hong Kong companies to replace their business registration certificates and submit annual returns on the anniversary of their establishment. Any extension will cause unnecessary fines and credit risks for the company.




What are the fees for the company's annual review?


Hong Kong companies must pay the Hong Kong government a business registration certificate fee of HK$2,250 and annual return fee of HK$105 to the Hong Kong government.




What are the consequences of failing to go through the annual review after the deadline?


In addition to repaying the government fees owed before the deadline, an additional fine of HK$300 per year is required for the overdue business registration certificate renewal. For late submission of the annual return, the government fees or fines will gradually increase as shown in the following table: Company shareholders and directors may be prosecuted, and upon conviction, default fines will be imposed. The maximum fine for each default is HK$50,000.




The company has not been in business for the past few years. Why does it still have to deliver the annual return for registration?


All companies incorporated under the Companies Ordinance must comply with the requirements of the Ordinance, including the delivery of annual returns and payment of required registration fees within the prescribed time limit each year. A private company must deliver its annual return 42 days after the anniversary of the company's incorporation. If the private company has declared inactive status under section 5 of the Companies Ordinance and delivered the relevant special resolution to the Companies Registry, it will be exempted.




If the company announces that it is inactive, what documents need to be delivered for registration?


According to Article 5 of the Companies Ordinance, a private company may pass a special resolution to declare the company inactive and deliver the resolution to the Registrar of Companies for registration.




When did the company become an inactive company?


If a company passes a special resolution announcing that the company is inactive, the company will be inactive from the following dates:

  • The date on which the special resolution was delivered to the Registrar of Companies; or
  • The later date specified in the special resolution.




The company delivered a special resolution registration to the Registrar of Companies after the anniversary of its founding this year, announcing that the company has been inactive from the date of delivery of the special resolution. Is it necessary to deliver this year’s annual return?


According to section 663 of the Companies Ordinance, the requirement of delivering annual returns for registration does not apply to inactive companies. However, if the private company is an inactive company 42 days after the anniversary of its establishment this year, the company still This year’s annual return must be delivered.




When will an inactive company cease to be an inactive company?


An inactive company is no longer an inactive company if:

  • The company has delivered a special resolution (pdf format sample) to the Registrar of Companies for registration announcing that the company intends to conduct an accounting transaction; or
  • Related to the company’s accounting transactions.




If the inactive company has delivered a special resolution to the Registrar of Companies announcing that the company intends to conduct an accounting transaction and resume activities this year, is it necessary to deliver this year's annual return?


If a private company ceases to be an inactive company and the effective date is on or before the 42nd day after the company’s founding anniversary this year, the company must still deliver this year’s annual return.




If an inactive company conducts any accounting transactions, can it be exempted from delivering annual returns?


If an inactive company conducts any accounting transaction, the company ceases to be an inactive company, and the exemption of delivering the annual return will cease from the date of the accounting transaction.





Accounting and auditing

After the establishment of a Hong Kong company, how to handle annual accounting and auditing?


It can be handled by a professional accounting firm in Hong Kong. Wanjia provides comprehensive accounting and auditing services. The company only needs to provide invoices, bank statements, expense statements, salary records and other information to assist in the accounting and auditing work. The charges are based on the transaction volume.




After the establishment of a Hong Kong company, do the annual financial statements have to be audited?


For a limited company established in Hong Kong, its annual accounts must be reviewed by an independent auditor (auditor) in accordance with the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and must be reviewed and reviewed at the company’s annual general meeting. by. In addition, the Hong Kong Inland Revenue Department will require companies to attach audited financial statements when submitting tax returns as reference materials for tax assessment.




How to calculate the start and end time of the Hong Kong fiscal year?


Normally is March 31 or December 31 as the year end, but other months can also be set as the year end. According to the needs of various industries, you can decide by yourself.




How long must the company's business records be kept?


The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) requires that sufficient records must be kept to determine the company's assessable profits. All records must be kept for 7 years from the date of transaction. Failure to keep sufficient records is an offence and can be fined up to 100,000 yuan.




What business records does the company need to keep?


Please click here to refer to the instructions for keeping business records compiled by the Hong Kong Inland Revenue Department.




After receiving the notice of not issuing tax forms from the tax bureau, does it mean that the company does not need to adjust and audit the accounts?


Receipt of the notice of temporary non-issuance of tax returns does not mean that the company does not need to keep accounts and audits. It only means that the Inland Revenue Department does not voluntarily issue profits tax returns. If the company generates any profits in any tax year, it must take the initiative to report The tax bureau applies for a tax return. The annual accounts must be reviewed and approved by an independent auditor (auditor) in accordance with the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and must be reviewed and approved at the company's annual general meeting.





Hong Kong Taxation Knowledge

What are profits tax, salaries tax and property tax?


Taxes in Hong Kong are mainly divided into three categories, namely: profits tax, salaries tax and property tax. Profits tax is 16.5% of the company’s taxable profits; salaries tax is calculated based on salary income at a progressive tax rate, and the tax ceiling shall not exceed 15% of total salary income; property tax is based on the rental income of the property, deducting 20% ​​of repairs and expenses The standard allowance is calculated at 15%.




What taxes do Hong Kong companies pay every year?


Hong Kong companies only need to pay profits tax each year, which is calculated at 16.5% of profits. If the company is not profitable, there is no need to pay profits tax.




When does a newly established company usually start filing tax returns?


Eighteen months after the establishment of a limited company, it will receive a profits tax return issued by the Hong Kong Inland Revenue Department. Unless an extension is approved by the Inland Revenue Department, tax returns will be filed within three months after receipt of the tax form. Failure to submit the tax return before the expiry of the specified period is illegal and will be punished. The first financial statement of a newly established company can choose to have an 18-month fiscal year, and then every 12-month fiscal year, and the date of the selected fiscal year cannot exceed 18 months.




When does a company usually pay taxes?


When the tax return is submitted to the Inland Revenue Department and the assessor has determined the amount of tax to be paid, a tax payment notice will be issued, and the company must pay the tax on the specified date.




What is provisional profits tax?


Profits tax is levied based on actual profits during the tax year. Since the profit of a certain year cannot be determined until the end of the year, the tax bureau will collect provisional tax before the end of the year. After the profit assessment of the relevant year in the next year, the provisional tax paid can be used to pay the profits tax payable in that year.




Can Hong Kong company profits offset the previous year's losses?


Losses incurred in a certain tax year can be carried forward and used to offset the company's profits in subsequent years.




Do Hong Kong import and export goods need to pay customs duties?


Except for tobacco, alcohol and gasoline, import and export commodities are generally not subject to tariffs. However, import and export commodities must be declared at customs.




My Hong Kong company only opens an account in the bank to collect and pay the Chinese company’s purchases. Does the Hong Kong company need to do accounting, audit and tax returns?


Yes, because the company is established for the purpose of profit, even if Hong Kong only plays the role of collection and payment, accounting and auditing are required, and the entire collection and payment process is listed through accounting, and then the Hong Kong company is determined according to the situation. Actual income.




My company only opens accounts with foreign banks in China, but does not open an account in Hong Kong. Does the company's business do not need to file tax returns in Hong Kong?


No. Hong Kong law stipulates that all Hong Kong companies have the obligation to report their financial status to the Hong Kong Inland Revenue Department, regardless of whether their business takes place in Hong Kong. If the company's income is not derived from Hong Kong, it can apply to the Inland Revenue Department for tax exemption.




What are the restrictions on donation deductions in Hong Kong's tax regulations?


Donations to recognized charities can apply for tax deductions. However, the total amount of donations must be no less than $100 and no more than 35% of the assessable profits.




After receiving the notice of non-issuance of tax forms from the tax bureau, the company does not need to adjust the accounts and audit?


Receipt of the notice of temporary non-issuance of tax returns only means that the Inland Revenue Department does not voluntarily issue profits tax returns. However, if the company has any profits in any tax year, it must actively apply for tax returns to the Inland Revenue Department and file tax returns, that is Indicates that accounting and review are required every year.




What tax responsibilities should employers fulfill?


Employers must keep the following records for employees:

  • Personal information (name, address, Hong Kong ID card number or passport number and issuing country, marital status)
  • Nature of employment (full-time or part-time)
  • Employed position (for example: sales manager, salesperson, worker, internal lawyer, accountant, director)
  • The amount of salary paid in cash or other methods (whether paid in Hong Kong dollars, foreign currencies or overseas)
  • Non-cash and other incidental benefits (e.g. dormitory, vacation trip benefits, share rewards, share subscription rights)
  • Employees and employers pay contributions to MPF schemes (or similar schemes)
  • Employment contract and subsequent amendments
  • During the employment period, the employer must provide the tax bureau:
  • Update of employee's personal information, such as: employee's new residential address and mailing address or marital status change
  • Changes in terms of employment, for example: employees changed from full-time to part-time
  • Employee's Hong Kong Identity Card Number
  • Fill in the employer’s tax return and declare the salary paid to the employee. The employer must complete and return it to the Inland Revenue Department within 1 month of the issuance of the form.
  • Business operators must keep business records (including records of payment of employee salaries) for at least 7 years.





Deregister Hong Kong company

Can a Hong Kong company be deregistered?


Yes. There are several conditions must be met:

  • Get the consent of all shareholders
  • The company has no operations or business operations, or has ceased operations for more than 3 months before applying for cancellation
  • No outstanding debts, including government fees and taxes
  • Must obtain the "No Objection Written Notice" issued by the Commissioner of Inland Revenue of Hong Kong




The company has outstanding debts, can it apply for deregistration?


If the company has debts, it can also apply for cancellation, but it must meet one of the following conditions:

  • The parent company or subsidiary company, directors, shareholders, etc. agree to be responsible for repaying debts
  • The creditor signs a consent form to waive debt collection




Do I need to submit financial statements when applying for cancellation of a Hong Kong company?


Not necessarily. If a Hong Kong limited company has been established for more than 18 months and the Inland Revenue Department has issued a profits tax return, in this case, the company must complete the tax return and submit it together with a financial statement audited by a certified public accountant Inland Revenue Department.




Is it necessary to submit an annual return during the application for cancellation of a Hong Kong company?


Yes. The company still has to submit the annual return on time until the company registry informs that the company has been deregistered.





Registered address of the company

Do I need to have an office or address to register a company in Hong Kong?


Registering a company in Hong Kong requires a registered address in Hong Kong, but it does not necessarily require additional office rental. Hong Kong rents are expensive, Mega Solutions can provide company registered address services for virtual offices, and customers do not need to rent expensive offices. For details, please contact us for enquiries.




Does the company's registered address have to be in Hong Kong?


Yes it is. All companies registered in Hong Kong must have a registered address in Hong Kong. Because all government letters are sent to this address.




Does the change of company address need to be reported to the government department?


Yes. If there is any change in company information, the company secretary must report to the Companies Registry in the appropriate specified form and within a specified period in accordance with the relevant provisions of the Companies Ordinance. Depending on the content of the information, the company secretary may also need to report to the Business Registration Office.




What is a virtual office service?


Virtual Office is non-physical office. Since registering a company in Hong Kong requires a registered address in Hong Kong, the virtual office service provides businesses with business addresses and related services, such as mail processing, answering phone calls, etc. Customers can save the cost of renting a physical office, allowing start-ups to be established quickly The company focuses on business development.





Company secretary

What is a company secretary?


According to the Hong Kong Companies Law, a limited company must appoint a company secretary. Its responsibilities are to arrange meetings, prepare meeting minutes, and submit statutory documents to government departments to ensure that the company meets statutory requirements.




What are the qualification requirements for company secretary?


If it is an individual, it must be a Hong Kong resident who has reached the age of 18; if it is a company legal person, it must be a limited company registered in Hong Kong.




Can the sole director of the company serve as the company secretary at the same time?


Section 475(2) of the Companies Ordinance (Chapter 622) expressly prohibits the sole director from concurrently serving as the company secretary.




What if there is no suitable person to be appointed as the company's legal secretary?


Relevant secretarial services can be provided through other qualified companies. Mega Solutions provides professional secretarial services. For details, please contact us.




Do I need to report to the government department if the company secretary's information is changed?


Yes. For any change in company information, the company secretary must report to the Companies Registry in accordance with the relevant provisions of the Companies Ordinance in an appropriate specified form and within a time limit. Depending on the content of the information, the company secretary may also need to report to the Business Registration Office.