Bookkeeping and Accounting in Hong Kong

Managing a Hong Kong company can seem complex at first, especially for international founders. Many are surprised by the sequence of renewals, filings, audits, and other obligations that must be completed each year. Understanding the full cycle of Hong Kong accounting, audit, and annual compliance is critical to avoid penalties, banking complications, or missed deadlines.

In this guide, we break down every step of the annual compliance process, bookkeeping and accounting in Hong Kong, explain the roles of service providers, and provide practical tips to help you stay organized and compliant while taking advantage of Hong Kong’s favorable tax system.

Annual Compliance Cycle for Hong Kong Companies

Your Hong Kong company follows a predictable annual routine. Once you understand it, you can plan ahead and prevent surprises. Here’s a step-by-step look at the annual compliance cycle:

1. Business Registration Renewal (BR)

Your Business Registration (BR) acts as your company’s official ID in Hong Kong. BR renewal is mandatory and forms the first step in keeping your Hong Kong company compliant.

Renew your BR around your incorporation anniversary. The process usually takes about one week. Service providers or your company secretary typically handle the payment and collect the new certificate. Banks and financial institutions often request the latest BR for verification purposes.

2. Annual Return Filing (NAR1)

The Annual Return (Form NAR1) confirms your company’s directors, shareholders, company secretary, and registered address.

• Your company secretary usually only needs confirmation that no ownership changes occurred.

• If there are changes in directors or shareholders, the secretary updates the Companies Registry before filing the Annual Return.

• Deadline: 42 days after your incorporation anniversary.

• Often filed alongside BR renewal.

Banks may request the latest BR and NAR1 documents for verification when opening accounts or processing transactions.

Tip: Filing your Hong Kong annual return on time ensures continuous compliance and smooth banking operations.

3. Bookkeeping and Accounting

Accurate bookkeeping is also the foundation for audits, filings, and future compliance with the Hong Kong tax system. After the financial year ends, collect all relevant documents for your accountant:

• Bank statements

• Invoices and receipts

• Contracts and agreements

Accountants prepare financial statements and may ask follow-up questions or request clarifications. Align your bookkeeping with the Profits Tax Return (PTR) submission schedule to avoid last-minute stress.

4. Annual Audit

All active Hong Kong companies are required to conduct an annual audit, except for dormant companies.

• The audit is performed by a Certified Public Accountant (CPA) in Hong Kong.

• CPA reviews financial statements, confirms their integrity, and issues audited statements.

• Audited statements often accompany the PTR submission to the Inland Revenue Department (IRD).

Key point: Even if your company is small, accurate audits ensure your Hong Kong corporate tax compliance and facilitate smooth banking relationships.

5. Profits Tax Return (PTR)

The Profits Tax Return (PTR) is a critical step in compliance with the Hong Kong profit tax obligations. Hong Kong profits tax is calculated on net profit, not revenue, making clear and organized financial records essential.

• First PTR: 18 months after incorporation.

• Subsequent PTRs: annually, based on your financial year.

• Typically filed 3–5 months after year-end; extensions of up to 3 months are common.

• The PTR includes audited financial statements prepared by your accountant.

6. Paying Profits Tax

After submitting the PTR, the IRD issues a Notice of Assessment (NOA).

• Pay within 1–2 months if tax is due.

• Companies with offshore status or losses may receive a “nil” notice.

Hong Kong’s low corporate tax rates and optional tax deductions make it a highly efficient jurisdiction for international founders.

7. Property Tax Return (if applicable)

It applies only if your company owns local real estate in Hong Kong and rents it out.

Submitted alongside the PTR. Most trading or consulting companies without Hong Kong property can skip this step.

8. Employer Filings and Staff Obligations (if applicable)

If you hire employees in Hong Kong:

• Employer’s Return (IR56B) and annual summary (IR56A) must be filed.

• Forms IR56E, F, G are filed for new hires, terminations, or departures.

• Mandatory Provident Fund (MPF) contributions: monthly payment and annual summary.

  Fully remote teams outside Hong Kong are exempt from these filings.

  
  

9. Annual License Renewals (if applicable)

Relevant for regulated businesses; renew 1–2 months before expiration. Most consulting or trading firms do not require license renewals.

10. Dividends

After closing the financial year and confirming profits, the board can declare dividends. Banks may require audited statements for large distributions. Hong Kong allows tax-efficient profit distribution: no dividend tax, withholding tax, VAT, or GST.

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Core Service Providers: Company Secretary & Registered Address

Mandatory service providers ensure compliance and reduce risk.

1. Company Secretary

   • Maintains statutory books, prepares board resolutions, files changes with Companies Registry.

   • Acts as official correspondence contact.

   • Without a licensed secretary, the company is non-compliant.

     
     

2. Registered Address

   • Official government mailing address and statutory book location.

   • Often provided as a virtual office.

   • Essential for legal and audit correspondence.

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Bookkeeping, Audit, and Filing in Hong Kong

Accurate bookkeeping is the foundation for audits, PTR, and global compliance, so you need to:

• Maintain clear records of all invoices, contracts, and bank statements.

• Accountants prepare financial statements, reviewed by a CPA.

• Audit confirms the integrity of financial statements.

• PTR files follow the audit to ensure timely tax compliance.

  
  

Timing Recommendations:

• Start bookkeeping immediately after year-end.

• Allow 4–6 weeks for accountant review and audit preparation.

• Schedule PTR submission with potential extensions in mind.

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Optional Services: Beyond Compliance

Additional services help your Hong Kong company operate globally with minimal in-house support.

Examples:

• Document Handling: 

  Mail forwarding, Certificates of Good Standing, legalization/apostille.

• Banking Support: 

  Offshore claims, KYC/EDD assistance, account management guidance.

• Strategic Advisory: 

  Global structure advice, practical trade insights, expansion planning.

  
  

Why it matters: 

Founders with sensitive passports or complex setups benefit from providers who combine compliance knowledge with real business experience.

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Choosing the Right Service Provider

Experience matters as much as compliance knowledge.

So when you choose your service provider, consider the following criteria:

1. Teams experienced with high-risk or sensitive founders.

2. Providers who actively run businesses, not just law or accounting firms.

3. Ability to handle practical banking, tax, and document challenges.

   
   

Outcome:

Avoid costly mistakes, delays, and rejections while building a trusted global presence.

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Key Takeaways

• Annual cycle:

  BR renewal → Annual Return → Bookkeeping → Audit → PTR → Profits Tax → Optional filings.

• Mandatory services: Company secretary and registered address are essential.

• Bookkeeping & audit: Core for compliance and timely PTR.

• Optional services: Banking, document handling, and advisory streamline operations.

• Provider selection: Provider with practical experience plus compliance expertise is critical.

  
  

Next Step: 

Audit your compliance workflow and confirm your service provider covers both mandatory and optional services.