Hong Kong is known for its unique culture, culinary history, and of course gambling. But Hong Kong is also one of the easiest places in the world to do businesses in, edging out the 5th place position from the United States in World Bank’s “Doing Business” rankings. Because of this, many companies choose Hong Kong as a hub for Asian operations. Another huge draw for Western companies is the fact that the official languages of Hong Kong are Chinese and English. If you are a company currently doing business in Hong Kong or debating on whether to be one of those companies, continue reading. We have put together a great overview of the payroll requirements in Hong Kong but this article will focus on Hong Kong fiscal year end standards, tips, and dates to note.
Depending on the type of company you choose to operate as in Hong Kong, the decision may be very straightforward. All unincorporated businesses in Hong Kong have a fiscal year end date of March 31st; no decision necessary. On the other hand, if you are using a Hong Kong Limited Company (Ltd.) you can choose any fiscal year end you need. Typically companies setting up a subsidiary in Hong Kong will choose a fiscal year end that matches their primary headquarters location for ease of accounting alignment.
Because the standard Hong Kong fiscal year end is March 31st, if you choose a different date for your year end, you will have different filing dates for tax returns. To get a better idea of what those different dates look like, take a look at this table created Corporate Hub HK.
Short answer, yes. There is a process, obligations, and tax implications but it is possible. It is best to work with a Hong Kong focused financial advisor if this has to happen.
There are many general compliance requirements for operating a Hong Kong company. You can find a complete list here. There are two big year end requirements that every company needs to comply with.
Every company needs to file a tax return with IRD on an annual basis. Hong Kong does offer extension programs if necessary and as we mentioned previously, the filing date can vary depending on your selected Hong Kong fiscal year end. Along with this tax return, you must include a balance sheet and a tax computation that shows how the profits were calculated. For more information about tax implications, take a look at this great overview that PWC put together.
This particular filing is not contingent on your selected fiscal year end date, but instead must be filed with the Hong Kong Companies Registry annually within 42 days of the incorporation anniversary. For more information on the obligations a company has to the Hong Kong Companies Registry, take a look at this checklist their office put together.
Thank you for taking the time to read this article today. If you have any questions about Hong Kong payroll, treasury management, or more details about the Hong Kong fiscal year end procedures, do not hesitate to reach out to us. Our team is here to help and guarantees compliance to all our clients!
**This article is for informational purposes only. It is not intended to constitute legal advice.