Why do Hong Kong companies need to be audited every year?

Hello, I'm glad to answer your question.

According to article 122 of the Hong Kong Companies Ordinance, Hong Kong companies must entrust Hong Kong certified public accountants to audit their accounts every year, that is, audit the company's accounts, regardless of whether they are profitable or not. The purpose is to inform the company's directors and major shareholders of the company's financial status, and also to declare the company's financial status to the Hong Kong Inland Revenue Department. If Hong Kong companies are discovered by the tax bureau without auditing their accounts, they may face heavy fines and close their bank accounts.

Benefits of auditing the accounts of Hong Kong companies:

1. After the audit report is submitted to the Hong Kong government, it can be used to prove the authenticity of the tax declaration materials submitted by the company, the authenticity and legality of the company's operation, and avoid the tax inspection of the company by relevant units.

2. Hong Kong has given extremely favorable tax policies to domestic enterprises. One obvious thing is that if a Hong Kong company makes profits overseas, it can apply to the Inland Revenue Department for exemption from paying local taxes. If you want to be tax-free, you need to prove that it is indeed profitable overseas, and issuing an audit report is undoubtedly the best proof.

3. In business cooperation, the credit audit of partners is undoubtedly one of the important links, and the annual audit report can not only prove the operating status of your company, but also show the strength and sincerity of your company to the other party, thus enhancing the confidence of partners and investors. In some government bidding or fund-raising activities, the company's audit report is also one of the conditions that must be presented.

4. Any profitable Hong Kong company that has been operating for more than one year must produce the audit report of the previous year when it needs to cancel the company.

5. It also plays a great role in bank financing. If the company has been making profits for more than three consecutive years and has an audit report, it will be very beneficial to the credit review of banks in Hong Kong.

6. If the financial tax return is submitted and confirmed as a loss by the Hong Kong Inland Revenue Department, the company's future profits can be made up indefinitely.

The above is about the accounting audit of Hong Kong companies. I hope it can help you.