Many Hong Kong companies have recently been repeatedly notified to handle their company audits. Why are they always being urged to get their Hong Kong company audited?
01
Over a million companies are lined up for audits and tax filings
Domestic companies are required to declare corporate income tax based on the fiscal year, which is uniformly defined as the calendar year, from January 1st to December 31st.
Unlike the mainland, the Hong Kong tax authority does not have a unified fiscal year for all companies. Companies have a certain degree of autonomy and can choose any month-end as their fiscal year-end based on their own circumstances. However, the tax authority has strict requirements for the deadline for company tax filings, usually requiring submission within one month of receiving the tax return.
The time required for a Hong Kong company to complete an audit can vary depending on the volume and complexity of the business, ranging from a few weeks to several months. Considering this, for a long time, the Hong Kong tax authority has allowed companies with year-end financial dates in certain months to apply for an extension in filing tax returns.
02
How to choose a company's fiscal year-end?
For the first time, when selecting an annual closing date for your Hong Kong company, you may let a professional agency assist you in calculating and choosing.
If you choose March 31st as the year-end date, it can be extended to November 15th of the same year. If you select December 31st as the year-end date, it can be extended to August 15th of the following year.
If you choose another date as the year-end, there is no extension; the declaration must be completed within one month of receiving the tax return.
Please note! Delayed applications must be submitted to the tax authority within one month of the tax return issuance; otherwise, the opportunity to request an extension will be missed.
Most Hong Kong companies typically choose March 31st and December 31st as their fiscal year-end dates. They can apply for an extension, ensuring ample time for accounting and tax reporting, thus avoiding penalties for late filing.
