Is Accounting, Auditing, and Tax Filing Required for a Dormant Hong Kong Company Upon Receiving a Profits Tax Return?

Posted by City AI Accounting on 2025-02-05 | Featured

Is Accounting, Auditing, and Tax Filing Required for a Dormant Hong Kong Company Upon Receiving a Profits Tax Return?

Some business owners may ask: If my company hasn’t been operational and has no income, do I still need to file taxes?

The answer is yes. Upon receiving a Profits Tax Return, even if the company has not conducted business during the reporting period, proper bookkeeping, auditing, and tax filing are required.

Below are key points explaining the importance of these processes:

1、Legal Requirements

According to Hong Kong’s Companies Ordinance and Inland Revenue Ordinance, all registered companies (regardless of operational status) are legally obligated to complete bookkeeping, auditing, and tax filing upon receiving a Profits Tax Return. Even if the company has no income, it must still submit the necessary financial documents to the Inland Revenue Department (IRD) to confirm that no tax is payable for the reporting period.

2、Maintaining Accounting Consistency

A company’s financial records should be maintained continuously from its incorporation without gaps. Missing records for any period can lead to questions from the IRD or misunderstandings regarding the company’s financial position, potentially causing unnecessary complications and losses.

3、Operational Activities Beyond Revenue

Some business owners believe that only companies generating income are considered operational and require bookkeeping and auditing. However, this is not the case. While revenue is a critical aspect of business operations, a lack of income does not equate to a lack of activity. Expenses such as government fees, rent, salaries, and utilities are also part of operations and must be recorded for auditing purposes.

4、Facilitates Investment and Loan Applications

Maintaining consistent bookkeeping and auditing allows a company to present complete and coherent financial statements. This demonstrates professionalism and integrity, instilling confidence in investors, banks, and partners. Accurate financial records also provide strong support for financing, partnerships, and long-term growth.

5、Smooth Company Closure

If a company plans to close or deregister, audited reports and tax records are required. Failure to complete bookkeeping, auditing, and tax filing on time may result in rejection of the deregistration application or the imposition of penalties.

Even if a company has no revenue, it must still comply with legal requirements by completing bookkeeping, auditing, and tax filing upon receiving a Profits Tax Return. These steps not only ensure compliance but also preserve the company’s integrity and financial completeness.

City AI Accounting has extensive professional experience in bookkeeping, auditing, tax filing, and company secretarial services. For any inquiries, please feel free to contact us。

Other Information

Introduction to the Core of School Accounting: General School Account & Project Account

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