Hong Kong Accounting & Tax Glossary

BIR52 is the annual Profits Tax Return form filed by corporations with the Inland Revenue Department. The IRD issues BIR52s in bulk each April, and the deadline to file depends on the company's accounting year-end: April year-ends by 15 August, November year-ends by 15 May, all others within 1 month of issue.

A Business Registration Certificate is required under the Business Registration Ordinance for all businesses operating in Hong Kong. Issued by the IRD, it must be obtained within 1 month of commencing business. Annual renewal costs HKD 2,000 plus a small government levy.

A Certificate of Good Standing is issued by the Companies Registry and confirms that a Hong Kong company is currently registered, is not in the process of being wound up, and has filed its statutory returns. Commonly required for overseas bank account openings, DUNS numbers, and US tax forms such as W-8BEN-E.

The Hong Kong tax year (year of assessment) runs from 1 April to 31 March. However, companies may choose any date as their accounting year-end. The Profits Tax is assessed based on the company's accounting period ending within the relevant year of assessment.

The Companies Registry (CR) is the government body responsible for incorporating Hong Kong companies and maintaining the public register of all HK and registered non-HK companies under the Companies Ordinance (Cap. 622). Every HK private limited company must file an Annual Return (NAR1) within 42 days of its incorporation anniversary.

A private company limited by shares is the most common business structure in Hong Kong for foreign investors and local businesses. Incorporated under the Companies Ordinance (Cap. 622), it requires at least 1 director, 1 shareholder, and a company secretary. There is no minimum share capital. All HK private limited companies must have their accounts audited annually.

The Mandatory Provident Fund is Hong Kong's compulsory retirement savings scheme, established under the Mandatory Provident Fund Schemes Ordinance. Employers and employees each contribute 5% of relevant income, capped at HKD 1,500 per month each side (based on a maximum relevant income of HKD 30,000 per month).

Hong Kong taxes only profits arising in or derived from Hong Kong (territorial basis). Offshore profits are exempt from Profits Tax. The source of profits is determined by where the profit-generating activities (negotiation and conclusion of contracts) were performed. Post-2023, FSIE rules apply to passive income of large multinationals.

Hong Kong Profits Tax is levied on assessable profits arising in or derived from Hong Kong. Since 2018 a two-tier regime applies: 8.25% on the first HKD 2 million of assessable profits, then 16.5% above that. Only one entity per related group can benefit from the lower 8.25% rate.

Hong Kong Property Tax is charged at 15% on the net assessable value (NAV) of HK properties let out by their owners. NAV is the total rent received in the year, less rates paid by the owner, less a statutory 20% deduction for maintenance and repairs.

Salaries Tax is charged on income from employment, offices, and pensions arising in or derived from Hong Kong. Progressive rates of 2%, 6%, 10%, and 14% apply to net chargeable income. Tax is capped at 15% of net total income (standard rate), whichever produces the lower liability.

Hong Kong Stamp Duty is a transactional tax charged on instruments relating to the sale or transfer of Hong Kong stock and immovable property. Share transfers attract 0.1% from buyer and 0.1% from seller (0.2% total). Residential property attracts Additional Buyer's Stamp Duty (15%) for non-permanent residents and companies, plus scale Ad Valorem Duty.