Hong Kong company bookkeeping and audit: what is mandatory, what counts as a transaction, what the audit costs
Author: Vivi, Company formation and annual compliance, Hong KongPublished: Updated:
Short answer: bookkeeping for a Hong Kong company means three things, and all three are mandatory. Recording transactions through the year, an annual audit by a licensed Hong Kong CPA, and a profits tax return filed together with the audited statements and a tax computation. Turnover is irrelevant: a company with no payments at all files the same set, with zeros in it.
The first return usually arrives about eighteen months after incorporation. Tax is two-tiered: 8.25% on the first HK$2 million of assessable profit and 16.5% above that.
What to do during the year
Hong Kong does not require monthly filings the way mainland China does. That does not mean the year can pass without records: at year end the auditor asks for a document behind every line of the bank statement, and if it is missing they either will not sign the accounts or will sign them with qualifications that the tax office then reads.
What to keep from day one:
- statements for every account, payment platforms included;
- supplier invoices and customer invoices;
- the contracts that payments were made under;
- receipts for the company’s own costs: secretary, address, audit, advertising, subscriptions;
- director resolutions for anything material.
That is bookkeeping in the narrow sense: post every transaction, attach a document, reconcile to the bank. In the Premium package we do it, up to 15 transactions a month. In Basic and Standard you or your accountant keep the books and we prepare the data for the audit.
What counts as a transaction
The most common question when choosing a package. A transaction is one line on the statement: money in, money out, a currency conversion, a fee. One supplier invoice paid with one transfer is one transaction. A refund from the supplier is another.
Which gives a simple rule: take last month’s statement and count the lines. Up to 15 a month fits Premium. More than that, we quote for volume, which is more honest than pretending a hundred advertising charges cost the same to book as five.
| Package | Price | Bookkeeping included |
|---|---|---|
| Basic | $1,100/yr | none, only the deadline calendar and the secretary |
| Standard | $2,000/yr | preparing data for the audit and tax return, working with the auditor |
| Premium | $3,200/yr | bookkeeping up to 15 transactions a month plus everything in Standard |
The audit: who, when, how much
The audit is done by a licensed Hong Kong auditor, not by us. We prepare the data, answer the questions and keep the timeline. The auditor examines the accounts, signs them and issues an opinion that goes to the tax office with the return.
The fee depends on turnover and transaction count and follows the auditor’s own schedule. It is the one line in our price list marked on request, because it genuinely depends on you: a company with five payments a month and one with two hundred take the auditor different amounts of time. We give an estimate up front once the year’s volume is clear.
Small companies used to have a concession: with gross income under HK$2 million the return could be filed without supporting documents. That was abolished from the 2022/23 year of assessment. Now any company with income files the return with the financial statements and the tax computation attached.
The return and the tax
The first profits tax return normally arrives about 18 months after incorporation, once the first accounting period has closed. After that it is annual, on a date set by your financial year end. Deadlines and penalties are covered in our compliance calendar.
Tax is two-tiered: 8.25% on the first HK$2 million of assessable profit and 16.5% on the rest. The 2026/27 Budget waives 100% of the 2025/26 profits tax up to HK$3,000 per case. That is a routine annual measure, not something to build a financial model on.
Profit sourced outside Hong Kong can be exempt, but offshore status is a claim you have to substantiate, not a box to tick. The Inland Revenue Department asks where negotiations happened, where contracts were signed and where decisions were made. Count that benefit into your budget only after a conversation with a tax adviser about your specific flows.
Dormant companies
If the company does nothing, the obligations do not go away. The annual return, the Business Registration renewal and the tax return are still filed; the audit can be skipped only with a formally arranged dormant status. Abandoning a company is not the cheap option: fees and penalties keep accruing, and the director acquires a compliance history that shows up at the next incorporation and the next bank application.
How it works in practice
Through the year you keep the documents and, on Premium, send us statements once a month. Sixty days before the financial year closes we remind you and start assembling the auditor’s file. The auditor asks questions, we answer them with you. Accounts signed, return filed, you receive the tax computation and the calendar for the next year.
To find out which package fits, send us one month of statements and a rough annual turnover. From those we can name the package and give an audit estimate.
Questions
What counts as one transaction?
One line on a bank or payment platform statement: an incoming payment, an outgoing payment, a currency conversion, a fee. One supplier invoice settled by one transfer is one transaction. Thirty small advertising charges a month are thirty transactions, which decides whether the Premium package with its 15-a-month limit is enough or you need a quote for volume.
Can a small company skip the audit?
No. The old concession for companies with gross income up to HK$2 million was abolished from the 2022/23 year of assessment, and the return is now filed together with the financial statements and tax computation. The audit is done by a licensed Hong Kong CPA. Only a properly dormant company can be exempt, and that status has to be arranged.
When does the first tax return arrive?
Usually around 18 months after incorporation, once the first accounting period has closed. That does not mean nothing needs doing until then: the auditor will want every statement, invoice and contract from day one, and reconstructing them later is slower and more expensive.
What if I do not pay tax because the profit is offshore?
Offshore status is a claim the Inland Revenue Department examines and asks questions about, not an automatic exemption. Decide it with a tax adviser looking at your actual flows. The return and the audit are filed either way.