Hongkong General Information
Hongkong is on the south east coast of China and consists of a large number of islands and a part of the mainland totalling approximately 1,064 sq km. On 1 July 1997 all of Hong Kong reverted from British Control back to China and became a Special Administration Region "SAR" within the People’s Republic of China (PRC). Population About 7 million. Hong Kong elects its own legislature and maintains its own court structure. The Future of Hong Kong Under the "one country - two systems" philosophy, the SAR has executive, legislative and independent judicial power. The capitalist system, legal structure and lifestyle remain unchanged. Hong Kong remains a free port with a free flow of capital and a freely convertible Hong Kong dollar. With China pushing forward with the modernisation of its own economy, the PRC has expressed the wish that Hong Kong should assist in this endeavour. It has stated that its future development will be based on market led reforms with socialist characteristics and this has led to the opening up of its economy to foreign investments. It is widely recognised that Hong Kong is and will continue to be a significant gateway to China.

Hong Kong is the leading South East Asian centre for both finance and commerce and ranks as the world’s third largest financial centre after New York and London. The Hong Kong Stock Exchange is the most active in Asia outside Japan. Language The official languages are English and Chinese, with English being used in the commercial and political context and Cantonese Chinese used widely in industry and domestic trade. Currency The Hong Kong Dollar, which is officially pegged to the US Dollar.
Company Information on Hongkong Exempt Companies
•        Type of Company: Private Company limited by Shares.
•        Procedure to Incorporate Submission of Memorandum and Articles of Association and a Declaration of Compliance. A Notice of Situation of Registered Office is also required to be filed within fourteen days of the date of incorporation.
•        Restrictions on Trading Cannot undertake banking or insurance activities or solicit funds from or sell its shares to the Public.
•        A Hong Kong Company has all the powers of a natural person.
•        Registered Office must be maintained in Hong Kong.
•        Name Approval Required ! It is not possible to reserve a name. It is essential to check that there is no similar or identical name on the register, which would prevent the company being incorporated.
•        Shelf Companies Available.
•        Time to Incorporate is approximately two weeks from the submission of documentation.

•        Name Restrictions A name that is similar to or identical to an existing company. A name that constitutes a criminal offence or is otherwise contrary to the public interest. A name that implies royal or government patronage.
•        Names Requiring Consent or Licence: Building society, Chamber of Commerce, co-operative, imperial, Kaifong, mass transit, municipal, royal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, fund management, asset management and investment fund.
•        No disclosure of Beneficial Ownership to Authorities
•        Authorised and Issued Share Capital The standard authorised share capital is HK$ 10,000. The minimum issued capital is two shares of par value.
•        Hong Kong is one of the few countries in the world that tax on a territorial basis. Many countries levy tax on a different basis and they tax the world-wide profits of a business, including profits derived from an offshore source. Hong Kong profits tax is ONLY charged on profits derived from a trade, profession or business carried on in Hong Kong. Consequently, this means that a company which carries on a business in Hong Kong, but derives profits from another place, is not required to pay tax in Hong Kong on those profits. Hong Kong sourced income is currently subject to a rate of taxation of 16 per cent. There is no tax in Hong Kong on capital gains, dividends and interest earned. The principle of Hong Kong income tax is that it is a tax on income that has its source in Hong Kong rather than a tax based on residence. Income sourced elsewhere, even remitted to Hong Kong, is not subject to Hong Kong profits tax at all. Consequently, if a Hong Kong company’s trading or business activities are based outside Hong Kong no taxation will be levied. The factor that determines the locality of profits from trading in goods and commodities is generally the place where the contracts for purchase and sale are effected. "Effected" does not only mean that the contracts are legally executed. It also covers the negotiation, conclusion and execution of the terms of the contracts. If a business earns commission by securing buyers for products or by securing suppliers of products required by customers, the activity which gives rise to the commission income is the arrangement of the business to be transacted between the principals. The source of the income is the place where the activities of the commission agent are performed. If such activities are performed through an office in Hong Kong, the income has a source in Hong Kong. Hong Kong has no double tax agreement with any country, with the exception of a limited treaty with the United States of America relating to shipping matters only. As Hong Kong taxes on a territorial basis, this means that income derived from a local company from outside Hong Kong will not generally suffer double taxation in Hong Kong. Many countries which tax their residents on a world-wide basis also provide their companies operating in Hong Kong with unilateral tax credit relief for Hong Kong tax paid on income derived in Hong Kong. The Hong Kong Inland Revenue allow a deduction for foreign tax paid on a turnover basis in respect of income which is also subject to tax in Hong Kong. Therefore, businesses operating in Hong Kong do not generally have problems with double taxation of income. Withholding taxes, currently being 1.6%, are only imposed on royalties paid to non-resident recipients not related to the payers. If they are related parties then a tax rate of 16.5% will be applicable.
•        Licence Fees The Business Registration Fee (BRF), currently HK$ 2,450(HKD450 in 08-09), is due and payable within one month of the date of incorporation and then annually on the anniversary of the first payment.
•        A Hong Kong company must keep accounting records, which may be kept at the registered office address or elsewhere at the discretion of the directors. Every company must appoint an auditor who must be a member of the Hong Kong Society of Accountants and hold a practicing certificate. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the tax authorities.
•        The minimum number of directors is ONE, who may be natural persons or bodies corporate. They may be of any nationality, and need not be resident in Hong Kong.
•        A Hong Kong company must appoint a company secretary, who may be a natural person or a body corporate, but the company secretary must be resident in Hong Kong.
•        The minimum number of shareholders is one.


our services

our services
Audit and assurance
Business recovery and restructuring
Business risk assurance and Sarbanes Oxley Compliance
Corporate finance
Forensic accounting, business intelligence and investigation
Human resources and related advisory services
Litigation support
Reporting accountants for Initial Public Offerings
Taxation structuring in Hong Kong and Mainland China
U.S. Individual Income Tax Filing

  Preparing Profits Tax Computation

We will help your company to obtain the maximum tax benefits and allowances.

Completing Profits Tax Return (Form BIR 51)

A taxpayer who files an “incorrect return” - by omitting or understating anything which the Inland Revenue Ordinance requires to be stated - without “reasonable excuses” commits an offence. The Commissioner of the Inland Revenue Department has the power to levy an assessment of additional tax or prosecuting the taxpayer for such offence.

We help you and your company to prepare and submit a correct return promptly.  

Applying for extension

The IRD requires tax returns to be completed and enquiries answered within a specific period of time, usually from 21 days to 3 months. Late return or reply may be subject to a fine or estimated assessment.

We may apply for a further extension in the capacity of your tax representatives in some cases and advise you on how to deal with some of the IRD’s enquiries.

Objection to assessment

When you receive a notice of assessment (you can tell whether it is a “normal assessment”, “estimated assessment” or “additional assessment” by referring to the small print of the “assessor’s notes” at the back of the notice) and do not agree to the amount assessed, you must lodge an objection in accordance with the Inland Revenue Ordinance within one month after the date of the notice; Otherwise, the assessment will most likely becomes “final and conclusive”, i.e. you have to pay the amount assessed even it turns out that you would not have been liable to tax if a proper objection has been lodged. Sounds harsh? It can be. The IRD may even issue further assessments if you do not lodge any objection at all.

We advise you to contact us or the IRD as soon as you receive an assessment and do not know what to do about it.

Holdover of provisional tax

Provisional tax is a tax which the IRD assess you or your company needs to pay in the following year of assessment. You can apply for an entire holdover, or a reduction of, the provisional tax under several circumstances, one of which is when the assessable profits for the year of assessment concerned are, or are likely to be, less than 90% of that of the preceding year of assessment.

Similar to objection, a taxpayer is required to apply for a holdover within a period of time after the date of the notice, which is 28 days before the due date for payment of the provisional tax, or 14 days after the date of issue of the notice, whichever is the later.

Replying letters and queries from the IRD in a prompt manner

Some enquiries from the IRD are straight forward which taxpayers can simply handle on their own. You should, however, be cautious to those that seems lengthy or may have considerable tax implications such as concerns over capital or revenue nature of property transactions.

We will give you advice based on our experience and published tax cases of recent years.

Assistance on Employer’s Returns (Forms IR56A, 56B, 56E, 56F etc)

The IRD will issue Forms B.I.R. 56A and I.R. 56B to employers for filing the remuneration and pensions of their employees. These forms are required to be submitted within one month or penalty will be imposed. The IRD has published comprehensive explanatory note on these two forms. You can visit the IRD’s website or click here for a copy.

Assistance on Notification of Remuneration Paid To Persons Other Than Employees

(Form IR 56M)

Double taxation relief

Field audit and tax investigation

Personal tax advice and compliance

Although personal tax advice could hardly be any professional firm’s core services, we do offer comprehensive review on our clients’ Individual Tax Returns, upon request, to make sure that provisions relating to personal tax allowances and exemptions, where applicable, are properly utilized.

The Inland Revenue Ordinance imposes various time limits for the above filings and applications. Hence, you should contact us as soon as you receive any tax letters, forms or assessments.

Making sense of some of the IRD’s letters and forms
Most of the IRD’s letters or forms are assigned a code on the lower left corner. What follows are brief explanation and general advice on some of the common forms which the Inland Revenue Department usually send to corporate taxpayers.

Form B.I.R. 51

This is a “Profits Tax Return” for corporations.

You should complete and submit this Return, together with a set of audited accounts, tax computation, a Form I.R. 51S, and in some cases a Memorandum and Articles, to the IRD within one month from the date of the Return.

You are advised to notify your tax representatives to apply for an extension for filing the Return, if appropriate.

Please note that the IRD may not require you to submit all of the above documents if your company is a “small corporation”.

Form 1931

This is a “Tax Demand Notice”.  

You should check whether the amount assessed is the same as that reported on the Profits Tax Return.

If so, all you need to do is to pay the tax before the payment due date so as to avoid a 5% surcharge of the tax amount being levied.

If the amount assessed is different from that reported on the Profits Tax Return, read the assessor’s note at the back of the Notice. Generally, the assessor will explain the adjustment(s) he has made. E.g. expenses might have been disallowed or depreciation allowances have been reduced.

Please note that this Notice can also be an “Estimated Assessment” (“E.A.”) issued by the Inland Revenue Department in the absence of a Profits Tax Return.

If you do not agree with the assessment, you should lodge an objection within one month of the Notice.  Otherwise, the assessment will most likely becomes “final and conclusive”, i.e. you have to pay the amount assessed even it turns out that your company would not have been liable to tax if a proper objection has been lodged.  The IRD may even issue further assessments (Form 1932) if you do not lodge any objection at all.

If you have any questions, you can call the assessor in charge whose telephone number is shown on the front page of the Notice; you can also call us on (021)56556829 for assistance.

Form 1812

This letter simply says that the IRD may not issue a Profits Tax Return to your company in the near future.

However, it remains your responsibility to report any assessable profits, or incidence of certain changes of status (see paragraphs (i) to (vii) on the Form), to the IRD within a specified period of time or your company may be fined.

We therefore advise you to continue your accounting record keeping and annual audit, so that we can inform the IRD of your assessable profit, if any, to avoid a possible fine.

If you have any questions, you can call the assessor in charge whose telephone number is shown on the front page of the Notice; you can also call us on (021)56556829  for assistance.

Form 1937

This letter is called “Loss Computation”. It confirms that your company has no chargeable profits for the year of assessment concerned.

It usually shows the amounts of

1. loss brought forward from previous assessment (if any);

2. adjusted loss for the year of assessment concerned; and

3. loss carried forward to the next year of assessment.

Read the assessor’s note at the back of the Notice, if any, for any adjustment or calculation he might have made which caused a difference from the loss (or profit) in the Profits Tax Return. If you do not agree with the computation, you should write to the IRD stating the reasons.

If you have any questions, you can call the assessor in charge whose telephone number is shown on the front page of the Notice; you can also call us on (021)56556829  for assistance.

Form 1902

This is a “Tax Assessment Notice AND Refund of Tax”.  

You should check whether the amount assessed is the same as that reported on the Profits Tax Return and see if you agree with the assessor’s note on the back of the assessment, if any.

You should lodge an objection within one month if you do not agree to the assessed amount or any particulars on the Notice.

If you agree with the assessment and the amount of tax refund, simply deposit the “tax refund cheque” attached on the bottom of the assessment to your company’s bank account.

If you have any questions, you can call the assessor in charge whose telephone number is shown on the front page of the Notice; You can also call us on(021)56556829 for assistance.  

Form 1932
This is an "Additional Assessment".

It is usually issued by the Inland Revenue Department due to non-compliance, e.g. failure to provide a return when required to do so.
the type of the UK company

New companies

1. Is there more than one type of company?

There are four main types of company:

Private company limited by shares - members' liability is limited to the amount unpaid on shares they hold. This includes those community interest companies (CICs) which are private companies limited by shares.
Private company limited by guarantee - members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up. This includes all RTM (Right to Manage) companies-, commonhold associations and those community interest companies which are companies limited by guarantee.
Private unlimited company - there is no limit to the members' liability.
Public limited company (PLC) - the company's shares may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them. This also includes community interest public limited companies. (that is, CICs which are PLCs). More about PLCs can be found in chapter 2.

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