Hong Kong Audit and Profits Tax: What Mainland Owners Must Know

Key facts: (1) Statutory audit by a Hong Kong CPA is mandatory annually — no small-company exemption exists. (2) Profits tax: 8.25% on assessable profits up to HKD 2 million, 16.5% above. (3) Offshore claim: if profits derive from activities outside HK, an offshore claim can reduce tax to zero, but since the 2023-24 FSIE regime expansion, claims require detailed documentation of operations. (4) First filing: about 18 months after incorporation; IRD then issues returns on a 3-year cycle with annual audits still required. (5) Penalties for late filing escalate and IRD now cross-checks with mainland tax data under CRS arrangements.