Nuances of passing the audit in Hong Kong 2021
Auditing in Hong Kong in 2021 is a mandatory procedure. This territory is not classified as a classic offshore and involves a number of requirements for the preparation and submission of financial statements. In addition, companies in Hong Kong in 2021 must pay income tax.
In Hong Kong, the territorial principle of taxation is used. If the activities of the company have no connection with Hong Kong, it is possible to get an exemption from the fee. Regardless of whether the firm operates within or outside the territory, the audit in Hong Kong in 2021 is mandatory for all.
The first tax report must be submitted no later than 3 months from the date of issue of the first return. The company has the right to choose the end date of the first reporting period on its own. The duration of the first reporting period can be 1.5 years. The Tax Service recommends defining the period so that it is not less than 12 months, but not more than 18 months.
What documents are required to have for the audit:
- Contracts with customers with a signature on them;
- Purchase orders for deliveries;
- Contracts with suppliers;
- Information that confirms the shipment of goods;
- Statements from the financial institution that show the movement of funds;
- Information from payment orders.
Audits must be performed by independent licensed persons. Auditing is mandatory for all companies regardless of the size of the turnover. After the financial statements are submitted, the auditors check the primary documents. Even if the income was generated outside the territory, the company must keep accounting records and be audited every year.
How to choose an auditor
Only certified accountants with a license to practice in Hong Kong are eligible to provide auditing services. They also need to be registered and have at least 4 years of relevant work experience.
The auditor examines the documentation for compliance with the conditions of the law. The results of the audit are recorded in the documentation submitted to the Income Administration.
After the audit of the financial statements, a positive or negative audit opinion can be given and comments can be included in the audit report. The auditor has the right not to give an opinion if the documentation is incomplete or insufficient. To learn more about the nuances of the audit, contact our experts at IT-OFFSHORE.