Trade scenario
A trade structure that runs through a Hong Kong company as reseller or intermediary. Profit attribution is judged by source, offshore claims require an application with proof, and trade records must be kept for seven years.
The points below have official standing and can be verified. (as of September 2026)
A Hong Kong limited company must prepare financial statements for each financial year (Companies Ordinance s.379) and have them audited (s.405). The reporting exemption for small private companies waives disclosure detail, not the audit itself. A nil return applies only to a company that has formally declared dormant status, which ends the moment any accounting transaction occurs.
Corporate profits tax is two-tier: the first HK$2 million at 8.25% and the rest at 16.5%. But if you have several companies under common control (generally shareholding above 50%), only the nominated company uses the two-tier rate; the rest pay 16.5%.
Hong Kong taxes only profits sourced in Hong Kong. Offshore is not automatic: the authority looks at what you did and where. If your main place of business is in Hong Kong and you have no overseas operation, profits will most likely still be taxed in Hong Kong. An offshore claim must be applied for and proved.
Hiring staff (including a paid director) means registering them in a retirement-fund scheme within the first 60 days of employment, counted in calendar days. A director must be reported whatever the pay amount.
Filing an annual return late is itself a criminal offence, up to HK$50,000 per occasion; the late fee runs from HK$105 up to HK$3,480. The heaviest penalty is retirement funding: failing to enrol, up to HK$350,000 and three years in prison. These are legal maxima, not typical results.
Business carried on in Hong Kong requires sufficient income-and-expense records kept in English or Chinese for at least 7 years (Inland Revenue Ordinance s.51C). Where goods are bought and sold, the records must include the purchase and sale details and the relevant invoices.
For contract (processing) trade, profits are generally split 50:50; import (buy-and-sell) processing does not qualify for that split.
Open each one to see what that category covers.