After company incorporation, many novice entrepreneurs would worry about missing procedures and late submission of tax returns. Since business activities generally involve a lot of expenses and income, it is crucial to open a corporate account. This article will give you a brief introduction to the important information of corporate tax filing, as well as a comparison of the basic fees for business accounts of six Hong Kong banks.
First Tax Return for Corporates
Eighteen months from the date of company incorporation, the newly established company will receive the first Profit Tax return form issued by the Inland Revenue Department (IRD). Companies who file Profit Tax for the first time enjoy a deferment of submission, they can submit the form within three months, though they cannot apply for another deferment. After that, companies need to file the Profits Tax within one month.
Company Tax Filing Time
The IRD will issue Profits Tax return form to all limited companies on the first working day of April each year, the completed forms must be returned within one month. A limited company also needs to hire an accountant to conduct an audit, and submit the annual financial statement together with the tax form.
Enterprises can choose freely for the end date of the financial year. Hong Kong companies generally set December 31 or March 31 as the financial year end date. If the company has appointed a tax representative and submits the Block Extension Scheme for lodgement of tax returns. If approved, the submission deadline can be extended by several months.
For unlimited companies operating as sole proprietorship, the proprietor only needs to file Profits Tax in Part V of the Individuals Tax Returns. It is generally issued on the first working day of May each year and must be filed within one month. The deadline can be extended for one month automatically if the return is filed electronically through eTAX.
Assessable Profits (or adjusted losses) refer to the net profits (or losses suffered) of any person arising in or derived from Hong Kong during the financial year.
Under the two-tiered Profits Tax rates, for limited companies, the Profits Tax rates for the assessable profits of limited companies and unlimited companies are as follows:
|Assessable profits up to first HK$2,000,000||Any part of assessable profits over HK$2,000,000|
Documents Required for Company Tax Return
- Completed Profits Tax Return form "Limited Company (BIR51) / Partnership Business (BIR52)"
*For sole proprietorship* Tax Return – Individuals (BIR60)
- Annual financial statement
- Calculation of Assessable Profits (or adjusted losses) and related appendix
- Other supporting documents
Company Tax Return Process
- Receive the tax return issued by the Inland Revenue Department (IRD)
- Arrange accountants to audit, prepare financial statements, and then complete tax returns
- Submit the audit report together with the tax return form to IRD before deadline
- IRD receives the mentioned documents and conducts assessment
- The company receives the tax demand note issued by IRD
- The company pays tax on time according to the amount shown on note
- The company obtains receipt for tax filing
What Companies are Exempt from Filing Taxes?
According to IRD, if the corporate does not operate during the financial year, as the business is yet to open, or it is closed, and does not generate Assessable Profits, it will be regarded as a "dormant company". Dormant companies can apply to IRD for exemption from auditing, accounting and Profits Tax paying such as not opening or closing business, and does not generate taxable profits, it will be regarded as a "dormant company" and apply to IRD for exemption from auditing, accounting, Profits Tax paying and complete the "declaration of zero income”.
Compare Fee of Opening A Corporate Account Between
When filing tax return, companies are required to state various operating expenses in audit report. The bank record will be a mess if business transactions are done with a personal account. It is possible for those personal accounts be investigated and suspended. The account owner could be blacklisted from opening an account with the same bank group for seven years. So, it is best for companies set up a corporate account. The following are the basic charges of that between six Hong Kong banks:
|Account opening fee (HKD)||Minimum deposit amount (HKD)|
|Hang Seng Bank|| Open Biz Virtual+ Account online (desktop/mobile) $600
Integrated Business Solutions Account $1,200
|No minimum monthly deposit for the first 24 months for Biz Virtual+ Account, thereafter $50,000
Integrated Business Solutions Account: $50,000
|HSBC||$1,300|| HSBC Sprint Account: $50,000
HSBC Business Direct: $50,000
|Bank of China (BOCHK)||$1,200|| Business Integrated Account: $50,000
Business Integrated Account – Plus: $200,000
Business Integrated Account – Elite: $1,000,000
|Standard Chartered||Local company: $150
Overseas company : $2,000
|The Bank of East Asia (BEA)||$10,000||$10,000|
Tax filing begins eighteen months after the incorporation of a Hong Kong limited company. Limited companies are required to hire an accountant to conduct audit. Corporate accounts are essential for a more transparent financial statement. It is not uncommon for business starters to hire business consultants to handle the said procedures. With more than twenty years of experience, OneStart Business Centre has been trusted partners with local banks to facilitate the opening of company accounts for startup entrepreneurs and SMEs. OneStart also specializes in professional accounting and audit services. To know more, feel free to call 3575 6888, or Whatsapp OneStart Business Consultants to learn more about company incorporation!
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