Accounting and Taxation
Hong Kong is renowned for its low tax rates and simple tax regime, attracting numerous local and international businesses to establish and expand their operations in the region.
Hong Kong imposes only three types of direct taxes: Profits Tax, Salaries Tax, and Property Tax. Common indirect taxes such as Value-Added Tax (VAT), sales tax, and estate duty are exempted entirely.
Accounting services
Accurate and timely accounting information is crucial to the success of any business, as it reflects the company’s financial position and operational performance. We offer professional bookkeeping services on a monthly, quarterly, or annual basis, along with other related accounting services, including the design of chart of accounts, preparation and analysis of financial statements, statutory financial reporting, and the consolidation of financial statements for group companies.
Additionally, we provide specialized support for specific projects, such as:
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Organizing financial statement data for group companies, which is particularly important for potential listing plans or other special initiatives;
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Assisting with the establishment or migration of accounting systems, including the initial setup of the chart of accounts and inputting opening balances into the new system;
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Designing and streamlining the workflow for consolidated financial reporting of group companies, significantly reducing the time required to prepare monthly consolidated financial statements.
Taxiation
We offer comprehensive tax services, including acting as tax representatives, handling various correspondence with the Hong Kong Inland Revenue Department, assisting in the preparation and submission of Profits Tax returns and employer-submitted Salaries and Mandatory Provident Fund (MPF) returns, as well as drafting and responding to tax inquiry letters issued by the Inland Revenue Department.
Hong Kong operates a relatively simple tax system, with no dividend tax, capital gains tax, business tax, or value-added tax. The main types of taxes in Hong Kong include:
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Salaries Tax: applicable to income earned by salaried employees;
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Profits Tax: applicable to business profits of sole proprietorships, partnerships, and limited companies;
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Property Tax: applicable to rental income received by property owners.
Service Process
Inquiry – You may contact us via email at info@ineffablemomentcs.com for any questions or information related to accounting and taxation services.
Preliminary Quotation – We will collect the relevant company information from you and, upon review, provide an initial estimate.
Confirmation – Upon your acceptance of the preliminary quotation, we will request all routine operational records and relevant company documents. After verification, we will provide an accurate quotation and invoice.
Payment – All fees must be settled prior to the processing of documents. We accept payment in cash in person, by mailed cheque, or via bank transfer.
Processing – Upon receipt of signed documents and full payment, we will proceed with the accounting services.
Completion – Upon completion, clients may collect all documents in person at our headquarters.
(Under normal circumstances, the process typically takes approximately three to four months; however, the actual completion time may vary depending on factors such as the completeness of the information provided by the client, response times, and other unforeseen circumstances.)
Profits Tax
Standard Tax Rates
Profits tax is levied at the standard rates of 16.5% for corporations (primarily limited companies) and 15% for sole proprietorships or partnerships, based on their assessable profits. Business-related expenses incurred in generating assessable profits, such as rental for business premises, employee salaries, Mandatory Provident Fund (MPF) contributions (applicable only to non-corporate businesses), and interest on borrowings, are deductible for tax purposes.
Two-Tiered Tax Rates
Since the 2018/19 assessment year, the Inland Revenue Department (IRD) has implemented a two-tiered profits tax rate regime to benefit small and medium-sized enterprises (SMEs). Under this regime, the first HKD 2 million of profits of corporations is taxed at a reduced rate of 8.25%, with profits above this threshold taxed at the standard rate of 16.5%. For sole proprietorships and partnerships, the first HKD 2 million of profits is taxed at 7.5%, with the remaining profits taxed at the standard rate of 15%.
