Metopro Associates Limited was established in 2004 and offered professional services to our clients for over 18 years. We are group of accountants with CPA qualification, tax consultants, Licensed Company Secretary, business consultants. Our group provides the comprehensive services of Company Formation, Accounting, Financial Strategy, Tax Planning, Tax Filing, Full Corporate Services, Provision of Registered Office, Virtual Office, Trade Service (includes LC submission, CO application, Shipment etc.), Management Service, Human Resources & Administration (includes payroll, recruitment etc.).
- What is the basic requirement of company incorporation?
- What is the Annual Statutory Requirement?
- What is the deadline for submission of profits tax return?
- What is Common Reporting Standard (CRS) and Tax Residence?
- What is Significant Controller Registers (SCR)?
- What is licensed company secretary and due diligence?
- What is the work flow of Accounting and Audit?
- Which documents and information required for Accounting?
- What is Hong Kong Profits Tax?
|At least ONE shareholder (sole shareholder) either natural person or corporation of any nationality or any jurisdiction.|
At least ONE director (sole director) of any nationality. If the sole director is a corporation, an addition natural person be appointed as the second director.
At least ONE company secretary either a local resident or local Hong Kong Company
At least ONE designated representative for keeping the Significant Controllers Registers (SCR)
The designated representative can be a shareholder or director (both resided in Hong Kong) of the
company or licensed company secretary
The registered office must be a physical address in Hong Kong (P.O. Box is not a valid address for
Holding a valid Certificate of Incorporation
Holding a valid Business Registration Certificate
Registered Capital—no minimum requirement, say HK$1.00. We suggest HK$10,000 divided into 10,000 nos. of share
|In accordance to Companies Ordinance and Inland Revenue Ordinance, every limited company is required to submit the following Returns to Companies Registry and Inland Revenue Department every year. The director and/or Principal Officer are responsible to submit the said Returns on time.|
Every company must make an annual return which should be filed with the Registrar of Companies once every year. The information in this return should be made up to the anniversary of the date of incorporation. The contents of the Return will include the particulars of each shareholder, director, company secretary of the Company. The share structure of the Company, the location of the Registered Office etc. All the information will be published at the Companies Registry and open to public for company searching.
Employer’s Return of Remuneration and Pensions AND Remuneration
Paid to Persons Other Than Employees
Employer’s Return of Remuneration and Pensions
The Inland Revenue Department will request the Company to submit the employer’s return every year.
The director or the principal officer of the Company must complete the form even though the company has not employed any staff since incorporation
The contents of the Return will include the number of staff to be employed, the particulars of each staff and the total remuneration of each staff during the said period. Based on those information, the Inland Revenue Department will access the tax liabilities of the local staff.
Remuneration Paid to Persons Other Than Employees
If the company paid the fees to the following persons who are not employed as employee of the Company, then the company is subject to complete the specific return of “Remuneration Paid to Persons Other Than Employees”: to the Inland Revenue Department upon request
· Consultants, Agents, Brokers, Freelance, Artistes, Entertainer, Sportsmen, Writer
· Freelance guides etc.
The Inland Revenue Department may issue the individual tax return to the payee (for local person) or share the tax information to their local tax authority (persons from overseas) under the Common Reporting Standard (CRS)
Profits Tax Return
In general, the 1st profits tax return will be issued to the Company on the 18th month since incorporation. The Inland Revenue Department will allow the Company to submit the 1st profits tax return within 3 months from date of issue.
In general. the ongoing profits tax return will be issued on 1st April every year.
A certified copy of the balance sheet, auditor’s report, profits and loss account, tax computation with supporting schedules showing how the amount of Assessable Profits (or Adjusted Loss) has been arrived at to be submitted to Inland Revenue Department on time.
The fiscal year ended of the Hong Kong Government is from 1st April to 31st March of the following year. However the fiscal year ended of the Company will depend on the client. We will adjust the date of submission of profits tax return based on the actual fiscal year ended of the Hong Kong Government.
1st Profits Tax Return
In general, the Inland Revenue Department will issue the 1st Profits Tax Return on/before the 18th month since incorporation. The Company is requested to complete and submit the 1st profits tax return with audit reports, tax computation within 3 months against the issue date of the 1st profits tax return. Please note that the Company is required to conduct statutory audit no matter the Company is running on shore business or offshore business. The Company is still required to complete and submit the Profits Tax Return with NIL figure even though the Company has not yet commenced on business. The Inland Revenue Department will determine if the Company is subject to tax or not.
2nd profits tax return and thereafter
The Inland Revenue Department (IRD) will issue the 2nd and thereafter the profits tax return on 1 April of every year. And the deadline for submission profits tax return will depend on the fiscal year ended of our clients. For example:
|Fiscal year ended||IRD Deadline for submission of profits tax return||Our Deadline for accounting and audit works|
|30th June, 30th Sep (N code)||Next 4th May||On/before 31st December of the same year|
|31st Dec (D code)||Next 15th August||On/before 31st March of the following year|
|31st Mar (M code)||Coming 15th November||On/before 30th June of the same year|
It is the practice of the Inland Revenue Department not to call for the annual submission of Profits Tax Returns by Companies in circumstances where:-
The Company has not yet commenced business since incorporation. (after the submission of 1st profits tax return with NIL figure)
The Company is running loss
However, the Inland Revenue Department will review the Company’s position and may issue a Profits Tax Return at any time she may think fit.
So our client is strongly requested to prepare the accounting and audit report ANNUALLY.
|Common Reporting Standard (CRS)|
From 1 January 2017, to help protect the integrity of tax systems, governments around the world are introducing a new information gathering and reporting requirement for financial institutions. This is known as the Common Reporting Standard (the “CRS”).
Under the CRS, the banks and/or all financial institutions require the account holders to disclose the location of tax resident. If the account holder is a tax resident outside the jurisdiction where the account holder is held, the banks and/or financial institutions may need to give the national tax authority this information, along with information relating to the account holder. That may then be shared between different jurisdictions’ tax authorities. Therefore the account holder is required to disclose the Jurisdiction of Residence and Taxpayer Identification Number (TIN) to the banks and/or financial institutions.
Tax Residence,Taxpayer Identification Number (TIN)
Tax residence is determined under the domestic laws of each jurisdiction. The jurisdiction-specific information the TINs is split into a section for individuals and a section for entities.. The definition of Tax Residence and format of TIN would be accessed under the following web site.
|Keeping of Significant Controllers Register (SCR)|
The Companies (Amendment) Ordinance 2018 (“the Amendment Ordinance”) was effective on 1 March 2018.
The Amendment Ordinance introduces new requirements on the keeping of significant controllers registers by companies incorporated in Hong Kong to enhance the transparency of corporate beneficial ownership.
Under the Amendment Ordinance, all companies incorporated in Hong Kong (except listed companies) are required to identify a person / persons who has /have significant control over the company and maintain a significant controllers register which will be accessible by law enforcement officers upon demand. Each company must also designate at least one person as its representative to provide assistance relating to the significant controllers register of the company to law enforcement officers.
The Amendment Ordinance requires a company to keep a SCR in either the English or Chinese language, containing required particulars of its significant controllers (including registrable person and / or registrable legal entity). The SCR should be kept at the company’s registered office or a prescribed place in Hong Kong
The Significant Controllers Register (SCR) will include the following information of a registrable person / legal entity:-
The correspondence address
The passport no. or HKID card no.
Date of becoming a registrable person
Nature of control over the company
The company will have to designate a representative to serve as a contact point for providing information about the SCR and related assistance to law enforcement officers. We, Metopro Associates Limited being an qualified and licensed company secretary, can offer ourselves be the Designated Representative of our clients.
If a company fails to comply with the requirement of keeping a SCR, the company, and each of its responsible persons, will be liable on conviction to a fine up to $25,000 and a daily fine of $700.
|Licensing requirements for Trust or Company Service Provider (TCSP)|
With effective from 1 March 2018, any company service provider is required to apply for a license under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (“the “AMLO”). Any person / legal entity who carries on a company service business in Hong Kong without a license commits an offence and is liable on conviction to fine of up to HK$100,000 and imprisonment up to 6 months.
A license company secretary can provide the following services:-
Acting as, or arranging for another person to act as a director / secretary of a corporation
Providing a registered office, business address, correspondence or administrative address
Acting as, or arranging for another person to acts as:-
A trustee of an express trust; or
A nominee shareholder for a person other than a corporation whose securities are listed on a recognized stock market.
Due Diligence and compliance inspection
1) Company Service Provider is implemented and administered by the Registry for Trust and Company Service Providers of the Companies Registry.
2) Trust and Company Service Providers are also required to comply with the statutory customer due diligence and record keeping requirements.
3) Staff of the Company Registry will conduct inspections on the business premises of TCSP licensees to ascertain whether licensees have complied with the AMLO, including the inspection and making copies of records or documents, and making enquiries about any record or document relation to the business carried on, or any transaction carried out, by the licenses.
4) We, Metopro Associates Limited, being the qualified and licensed company secretary will conduct due diligence of existing clients periodically. All the clients are requested to provide the following documents and/or information includes but not limited to (a) new passport (b) new residential address (c) new telephone no., email address etc.
5) If clients failure to furnish the required documents and/or information (per point 4), we reserve the right to terminate the services without further notice.
|1 Preparation Stage – accounting|
We will collect all the documents (please refer the documents and information for accounting) and/or information from our clients. We will analyze all the data and post all the transactions into appropriate accounts.
2 Operation Stage – accounting and audit
During the course of accounting or audit (in a later stage), we may request our clients to provide more information and/or supporting documents. It may involve a lot of time for documents flow and clarification. We are not able to complete the final accounts if our clients do not provide all the information and/or documents that we required.
3 Final Stage – audit
Upon completion of final accounts, we will send the draft accounts to our clients by email for approval. It is a very important procedure, we want to ensure if all the financial information are properly recorded in the accounts and confirmed by our clients. Once we have got the proper approval from clients, then we will send the final accounts to our audit division for audit.
4 Signing the Audit Report
When the audit reports are issued, then we will send the audit reports together with profits tax return (if any), tax computation, other statutory documents to our clients for signing. Our clients are requested to sign back ALL the ORIGINAL documents to us by courier.
In order to protect the interest of our clients, we always request our clients to confirm the latest address and telephone no. so that we can send those documents to the right place and right person.
5 Deadline for submission of profits tax return and audit reports
Our clients are always reminded to provide all the required information and/or documents for accounting and audit purpose on time. If we do not receive all the information and/or documents, we cannot complete the works of accounting and audit, then we cannot submit the profits tax return to the Inland Revenue Department before the deadline. Subsequently, our clients may be subject to penalty for late submission of profits tax return and audit reports. The Company may finally be prosecuted by Court if there is no response from clients despite of several reminders by the Inland Revenue Department.
In general, we need at least 2.5 months for accounting works and 1.5 month for audit works subject to our clients can provide all the required information and/or documents for accounting and audit purpose. Therefore we need at least 4 months working time before the deadline of submission of audit report and profits tax return.
6 Essential Documents
If the clients cannot provide the following documents, our audit division may not issue the audit reports or qualify the related items when we express the opinion in the auditor’s report.
· Bank Confirmation issued by the banks
· The supporting documents showing the break down and/or opening balance.(if the accounts are
conducted by previous accountant or by clients.) of each ledger.
· The supporting documents for accounts receivable or accounts payable
· The supporting documents for sale, purchase, payment, receipt etc.
· The Employer’s Return (if any)
· The MPF statement (if any)
|We always request our clients to keep the following documents properly. It will not only save a lot of time for accounting and audit works but also reflect an accurate financial statement of the Company. In general, we advise our clients to keep the following documents properly.|
1 Bank Statements
Without the special arrangement, the bank will send the Electronic Bank Statements (eSatement) to account holders by email directly. The bank only keep the eStatement for the latest 12 months. So our clients are always reminded to keep all the bank statements in an electronic folder or print out the hard copies and keep those bank statements in a plastic folder or in a box file.
If the account holders lost or misplaced the said bank statements, the account holders are requested to apply the re-printed bank statements from the bank. The bank will charge the handling fee of each bank statement. For example, if there are 3 monthly bank statements are missing, then the bank will charge the fees for 3 months. Furthermore, the length of re-printed bank statements may require at least ONE to TWO months or even longer period. So our clients are always reminded to keep all the bank statements safely and properly.
2 Bank Debit and Credit Advice
Please print out all the debit advices when you make the payment via internet. The bank will not issue any payment record when the payment is made by internet banking. Our clients are also reminded to attach the supporting documents for any debit or credit advice, such as the invoice copies to customers and invoice or Purchase Order copies from suppliers. A simple description on bank debit or credit advice is useful for future checking.
If the account holders lost or misplaced the said bank debit and credit advice, the account holders are requested to apply the re-printed bank debit and credit advice from the bank. The bank will charge the handling fee of each bank debit and credit advice. For example, if there are 3 bank debit (or credit) advices are missing, then the bank will charge the fees of each bank debit (or credit) advice. Furthermore, the length of re-printed bank debit or credit advice may require at least ONE to TWO months or even longer period. So our clients are always reminded to keep all the bank debit and credit advices safely and properly.
3 Incoming Invoice log (invoices from suppliers or service providers)
Please keep all the incoming invoices, purchase orders (either original or copy) in a plastic folder. It is most helpful if those incoming invoices are recorded in an excel file and attached with the hard copies. In connection with bank debit advice, we are able to identify the breakdown in the accounts payable.
4 Outgoing invoice log (invoices to customers)
Please keep all the outgoing invoices, Sale Confirmation (either original or copy) in a plastic folder. It is most helpful if those outgoing invoices are recorded in an excel file and attached with the hard copies. In connection with bank credit advice, we are able to identify the breakdown in the accounts receivable.
|Profits Tax Rate : 16.5%|
With effect from 2018/2019 (after 1 April 2018) Under the two-tiered profits tax rates regime, the profits tax rate for the first $2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations and 7.5% (half of the standard rate) for unincorporated businesses (mostly partnerships and sole proprietorships). Assessable profits above $2 million will continue to be subject to the rate of 16.5% for corporations and standard rate of 15% for unincorporated businesses.
All entities with profits chargeable to Profits Tax in Hong Kong would qualify for the two-tiered profits tax rates, except those with a connected entity which is nominated to be chargeable at the two-tiered rates
If, at the end of the basis period of the entity for the relevant year of assessment, the entity has one or more connected entities, the two-tiered profits tax rates would only apply to the one which is nominated to be chargeable at the two-tiered rates. The others would not qualify for the two-tiered profits tax rates. Further, if a corporation has made an election under section 14B(2)(a) (qualifying professional reinsurance business and authorized captive insurance business), section 14D(5)(b) (qualifying corporate treasury centre), section 14H(4)(b) (qualifying aircraft lessor) or section 14J(5)(b) (qualifying aircraft leasing manager), the corporation would not qualify for the two-tiered rates.
A Simple Guide on The Territorial Source Principle of Taxation
Hong Kong adopts a territorial source principle of taxation. Only profits which have a source in Hong Kong are taxable here. Profits sourced elsewhere are not subject to Hong Kong Profits Tax. The principle itself is very clear but its application in particular cases can be, at times, contentious
Hong Kong’s basis of taxation on profits from businesses
Hong Kong adopts a territorial basis for taxing profits derived from a trade, profession, or business carried on in Hong Kong. Profits Tax is only charged on profits which arise in or are derived from Hong Kong. In simple terms this means that a person who 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.
Many places levy tax on a different basis. Unlike Hong Kong, they tax the world-wide profits of a business, including profits derived from an offshore source.