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closing my HK company

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  1. #1

    closing my HK company

    Hi everyone,

    I opened a company in december 2019 with a service, and stopped the activity in march 2020. I only issued 1 invoice , and decided to stop it because i realized it's not benefitial for me after all.

    i paid around 1000 USD to that company last december for business registration, virtual office...
    now i'm asking for deregistration, i paid for their service (around HK$ 2200), the anniversary of my registration happens mid december. They explained me that given this for deregistering (4 months before the anniversary), i might be obligated to renew the company for a year.

    This is a quote from them

    If there is any outstanding have not submit to IRD/CR, they will ask the company to submit it before the company dissolve, this will extend the process of deregistration and IRD & CR have the right to asked the company to renew for another year (renew BR & submit Annual Return).

    As the deregistration will take 10-12 months for processing, IRD & CR still have the right to decide to issue the renewal notice or not. it can only wait for their letter to know.

    i already paid them the fee for deregistration, but didn't send them the documents by post yet, so they didn't start the procedure yet.
    What i'm wondering is should i ask the same person to handle both my de-registration and my tax return / audit return, or if it's okay to let them handle the deregistration and ask someone (less expensive) to handle the accounting / auditing (without risking this mandatory renewal)



    Next problem is for the accountancy / auditing, they're asking me HK $9500, which is about 3.3 times more than what i will owe for taxes since my situation is the easiest you can think of (only 1 invoice of around 5000 USD to declare). This seems like an insanely huge price for me.

    is that a fair ? do you know any way of having it done for a cheaper price ?


    Thanks in advance if anyone has any inputs for me.

  2. #2

    Join Date
    Jan 2016
    Posts
    732

    Try profit accounting in central I think. They quoted me around 6k as I remember last year for taxation services. Yours should be similar as I had very few transactions to show too

    https://profitaccounting.hk/en/core-...qualifications

    selematon likes this.

  3. #3

    Join Date
    Jun 2013
    Posts
    53

    Can you do the accounting and tax yourself? If the company only engaged in limited activities, I imagine doing the tax work should not be too hard, unless its a legal requirement to engage a cpa?


  4. #4

    i actually have no idea. I'm not in Hong kong so i'm assuming it's not possible or very hard to do. But i might be wrong, do you othink it's worth investigating that road even if i'm not in hong kong (and unable to move there)


  5. #5

    Join Date
    Jun 2013
    Posts
    53

    After some research, I think it is a legal requirement to get an annual audit for a HK incorporated company. If it is set up as a branch office of a foreign company, then there is no audit requirment.

    Last edited by eastside; 06-08-2020 at 12:10 AM.

  6. #6

    Join Date
    Jul 2011
    Posts
    1,015

    I had a registered company in HK a few years ago. I learned that if you totally forget to notify or deal with the govt in any way regarding the company, eventually the Companies Registry will grab all the money from the bank account and close the company.
    That's what happened to me. Becoz i had more money in the account than i wanted to forfeit i had to pay all back fees and penalties, the govt then reinstated my company and got a refund, minus the fees etc.
    The most important factor is to keep only a very small amount of $$ in the company bank account. Then the govt will do as they like and you will hardly suffer.
    And do not respond to the govt. I do not think you, as an individual, is responsible for any penalties, etc but the company is dissolved by the govt.


  7. #7

    Join Date
    Jun 2013
    Posts
    53

    Can a company distribute a capital dividend to draw down the company bank account and then let the govt to dissolve the entity?


  8. #8
    Quote Originally Posted by eastside:
    Can a company distribute a capital dividend to draw down the company bank account and then let the govt to dissolve the entity?
    Not without consequences. See question 5 and 10 from the Companies Registry FAQ:

    https://www.cr.gov.hk/en/faq/faq-compliance.htm
    Coolboy and shri like this.

  9. #9

    Here's an example of a director being prosecuted for failing to ensure a company files it's annual returns:

    https://www.cr.gov.hk/en/compliance/...20181212-1.htm

    Coolboy and Paxbritannia like this.

  10. #10

    what default fine do i risk ?
    it seems like the potential fine might be less expensive than all the fees they make me go through anyway

    (i potentially gonna have to pay around HK$ 21.000 for all of this, when the tax i owe to the governement (8% of my revenues) are only around $HK 4000


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