Accounting Case Study: Profits Tax Return
Read our case study for a Hong Kong company incorporated on March 30th, 2015 and what happens when the company is in due to file the profits tax return (“PTR”).
Accounting & auditing
According to the statutory requirement under the Hong Kong law, the first set of financial statements should be prepared for period covering not more than 18 months from the date of incorporation. Your first audit will then cover a period from the 30th March 2014 (date of incorporation) to 31st March 2015.
Your company commenced its business during the above period, you need to prepare the following documents (up to 31st March 2015):
– All sales invoices/ consulting service invoices;
– All purchases invoice/ subcontractor’s invoices;
– All expense receipts;
– All bank statements;
– General ledger and management account (i.e. Trial Balance, Balance Sheet and Income Statement). If this one you cannot provided, we can provide bookkeeping service to handle it.
Taxation
Normally, Inland Revenue Department will issue your first PTR to the company after 18 months from incorporation date. It should be submitted within THREE months from the date of issuance of PTR. Once reporting the financial year end date to IRD, the submission deadline of the annual PTR together with the audited financial statements is one month from the issuance date of the PTR.
If all your company’s income are sourced outside HK, your company will not be subjected to HK tax, you may apply offshore profits claim once you submitted your PTR and financial statements. IRD will then issue an offshore claim queries letter to you for the proof by providing the passport of the directors/ sales representatives and some samples of sales and purchase/service fee invoices, contracts/agreements and shipping documents e.g. bill of lading. We shall provide the professional service for answering this offshore tax queries to you.
We hope the above will give you a clear picture of HK audit and taxation system.