This is an ultimate guide to the financial year-end in Hong Kong.
When incorporating a company in Hong Kong, it is a requirement that you decide on a financial year-end for the company. It is important that companies choose a suitable date for both tax and accounting reasons.
Continue for more information.
What is the financial year?
The financial year is a period of 12 consecutive months that companies use to prepare their financial statements and for other accounting reasons. The period in which the company’s account is closed is known as the financial year-end (FYE).
The financial year starts on the date of the company’s incorporation and ends on a date decided by the company directors. Most companies choose their financial year to end on either 31 March to align with the Hong Kong government’s FYE or 31 December, the end of the calendar year.
However, the first FYE cannot exceed 18 months after the date of incorporation.
The first financial-year end of a company
Once the company is incorporated, the board of directors must choose a date as the company’s FYE before the first anniversary.
If the board of directors fail to choose a date, the last day of the month of the company’s first anniversary will be the company’s FYE.
Determining the financial year-end
When choosing the FYE, two main factors should be considered: the accounting and tax perspectives.
It is common to align the company’s FYE with related companies or the parent company if your company is a subsidiary. This will make the preparation of individual and consolidated financial statements easier for the accountants and auditors.
Adopting the same FYE will also save auditor fees as auditors will only need to audit the financial statements once instead of doing it multiple times.
If the company is a standalone company, the popular FYE dates are 31 March, 30 June and 30 December. The dates have no difference in terms of the accounting perspective; however, there is a difference in the tax aspect.
The Inland Revenue Department will issue the profits tax return within 18 months after the company’s incorporation. When you file the returns, you must state the FYE date in the tax return form and submit the first tax return within three months.
The annual profits tax return deadline is determined by your company’s FYE date. The following table shows the profits tax return deadline.
|Financial year-end||Profits tax return deadline|
|Between 1 January and 31 March||In mid-November of the calendar year the FYE ended.|
|Between 1 April and 30 November||End of April of the following calendar year the FYE ended|
|Between 1 December and 31 December||In mid-August of the following calendar year the FYE ended.|
Changing the company’s financial year-end
The Hong Kong Companies Ordinance and Accounting Standards allow companies in Hong Kong to change their FYE.
A common reason why companies choose to change the year-end date is when it becomes a member company of a group.
Even though you can change the FYE date as you like, there are certain restrictions to keep in mind:
- After making a change in the FYE, the subsequent financial period must not exceed 18 months
- The company cannot change its FYE to a date that will result in submitting the audited financial statements and other related documents in the annual general meeting in the same financial year
- If it is not the first time changing the FYE, you will need the shareholder’s approval unless you change the FYE to meet the holding company’s FYE
- A company limited by guarantee or a public company must report any change in the FYE within 15 days and inform the Companies Registry
Companies in Hong Kong can choose their financial year-end, and the most common dates are 31 March and 31 December. Companies can change the year-end date, but there are specific limitations to take into account. If you have further enquiries, please contact Acclime.
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