Regulation Update: New Inspection Regime
New Inspection Regime
Personal information contained in Register maintained by the Companies Registry are open for public inspection.
The personal information includes, the usual residential addresses (“URAs”) of directors and full identification numbers (“IDNs”) of directors, company secretaries and other individuals such as liquidators and provisional liquidators.
To protect personal information, relevant provisions of the Companies Ordinance regarding New Inspection Regime has been passed.
For the implementation of this new regulation, there are total 3 phases: –
Phase 1 From 23 August 2021, companies may replace usual residential addresses (“URAs”) of directors with their correspondence addresses, and replace full identification numbers (“IDNs”) of directors and company secretaries with their partial identification numbers on their own registers for public inspection;
Phase 2 From 24 October 2022, Protected Information of the Directors and other individuals will be replaced with correspondence addresses and partial identification numbers for public inspection. Protected Information contained in documents filed after commencement of this phase will not be available for public inspection.
Phase 3 From 27 December 2023, data subjects could apply to the Registry for protecting from public inspection their Protected Information contained in documents filed with the Registry, and replace such information with their correspondence addresses and partial identification numbers. “Specified persons” could apply to the Registry for access to Withheld Information of directors and other persons.
Accounting
Regarding to accounting, there is no requirement to appoint an external accounting professional to prepare financial statements.
The financial statements can be prepared internally if you or your accounting staff can do so.
For the newly incorporated company, the first accounting period is specified by the directors that falls within 18 months after the company’s incorporation date. In other words, the first accounts cannot be longer than 18 months.
Then, every subsequent accounting period is a period of 12 months after the end of the previous accounting period unless it is altered.
The accounting period can be altered by a resolution of directors but the altered accounting period cannot be longer than 18 months.
Audit
About the audit of financial statements, it should be carried out by a Practising Certified Public Accountant in Hong Kong.
It is the auditor’s responsibility to obtain sufficient documentation in order to issue the audit opinion according to the audit findings. The auditor reviews the financial statements and general ledger of business transactions together with supporting documents.
The audited financial statements must include statement of financial position (balance sheet), auditor’s report, statement of comprehensive income (profit and loss account) and notes to the financial statements.
The audited financial statements should be approved by the board of directors and adopted by the members of the company.
Taxation
Hong Kong Tax System is simple and tax rate is low compared with most of Asian countries.
There are three direct taxes in Hong Kong. First is profits tax, i.e. corporate income tax. Second is salaries tax to individuals. Third is property tax chargeable on rental income from real estate.
Hong Kong adopts territorial basis of taxation. That means only business profits, employment income and property rental income arising in or derived from Hong Kong is taxable.
Moreover, Hong Kong has no capital gains tax, no VAT and GST.
Currently, Hong Kong has concluded more than 30 bilateral comprehensive tax treaties.
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Hong Kong Basic Accounting and Taxation in Hong Kong
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