Hong Kong offshore accounts used to be the best choice for foreign trade companies because of their advantages of the funds can be allocated freely and no foreign exchange controls. But nowadays, after the CRS implementation, asset allocation in Hong Kong will be open and transparent, it is difficult for companies to use offshore accounts to pay less taxes.
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All information will be exchanged
by Sep. at the latest
2018, Hong Kong will inform to more than 140 countries, about 2017 Information on all accounts of tax residents and enterprises in Hong Kong. This means that Hong Kong Tax Bureau declare to Hong Kong Corporation tax has been upgraded from the original spot check to 100% check.
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The companies that do not submit audit reports and make Zero declaration, may be will imposed by the Hong Kong government as follow:
Frozen settlement of assets in Hong Kong
Frozen bank accounts
Three times the penalty
Even go to jail
Penalty Notice ↓↓↓
Exchange information includes
Tax record
Account name
Taxpayer identification number
Address
Account
Bank balance
Interest
The dividend
Income from selling financial assets
What can Hong Kong companies do?
1.To complete the auditing timely
According to the relevant tax laws of Hong Kong, companies in Hong Kong are required to do auditing.
2.Make up the audit report for years
With the advent of CRS, a lot of people are hesitant to make up for years of auditing reports. And just to be clear, the audit report must be supplemented.
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The serious consequences of not supplementing the audit report
① The Tax Bureau will evaluate the tax on its own at 16.5% of income multiplied by three times the penalty, the fines will increase over time.
② At the same time,may be will received court summons from Hong Kong. The court will prosecute the directors and shareholders of the company under the relevant regulations of the company law.
③ If the tax is not paid, the company will be blocked by the Tax Bureau of blacklisted ,or forced to cancellation.
④ Influent the credibility of directors and shareholders, it will have an impact on conducting business in Hong Kong, or going abroad in the future. For example, if you apply for opening account in Hong Kong again, these records will affect the success rate of account opening.
Tax evasion is a criminal offence. The Hong Kong government has a very strict supplementary tax and fine ordinance, the maximum penalty is a fine of $50,000. Equivalent to a fine equivalent to three times less tax and three years' imprisonment on arrival.
3.Keep the documents
In order to avoid money laundering, the company should keep all kinds of transaction documents, which is the actual business certificate of the company, that’s very important maintain the company's bank account in Hong Kong.
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In the age of global anti-tax avoidance, please make compliance tax planning, reasonable financial tax declaration and proactive tax planning, that are particularly important in an age of tax transparency. The immediate priority is imperative to understand the international situation as soon as possible and make preparations for prevention.
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HACOS,Business Services Solutions Master