Illegal Operation! His Offshore Account Was Charged by the Court

However, there were countless problems in opening or using an HK bank account recently. For serious consequences, you'll be charged.

1

Zero declaration

Recently, a mainland businessman Mr. Huang received a monition from the court, which showed his HK company and bank account had been charged.

OMG!!! What the hell?? 

In the past 2 years, his HK company that used to pay or receive money but did zero declaration has been the key objective of HK tax audit and campaign against tax evasion.

In Hong Kong, companies that do not operate can do zero declaration, and companies that operate must be accounted for and audited before reporting tax. Obviously, as long as you conduct a business transaction or activity in the name of the company, it means that you have already started the business.

From the written record, it can be judged by the following aspects.

• Transaction records in the bank account;

• Import and export records from government customs and logistics companies;

• Purchase and sales relationship with Hong Kong merchants;

• Hire an employee in Hong Kong;

• Allow or authorize the use of patents, trademark designs and other information in Hong Kong;

• Allow or authorize the use of movable property in Hong Kong to collect rent, rental fees, etc.;

• Entrust someone to do business in Hong Kong;

• Other profits derived from or arising in Hong Kong.

Delay in reporting tax

If the tax return is delayed, the Hong Kong Inland Revenue Department(HKIRD) will impose a fine according to the length of the delay.

The minimum fine is HK$1,200. If the delay is too long, HKIRD will take you to court. When you received the monition, you'll be required to appear in court at the appointed time.

2

Severe penalty

Since 2016, all banks in Hong Kong are checking and clearing offshore accounts due to the implementation of the CRS and Global Anti-Money Laundering Policy.

Opening an account in Hong Kong has not been as easy as it is in the past five years, as the city's banking industry has stepped up its supervision of accounts and improved its supervision system. Even accounts that were opened earlier will be closed, frozen and downgraded.

However, there are no clear standards for how it checks and cleans up offshore accounts.

However, if the account was closed under the following special circumstances, it’s almost impossible to reopen the account with the original bank

• Complex shareholding structure and business model

• Shareholders are of sensitive

• Improper account maintenance

  
  

However, HK bank account is still one of the main ways to settle the foreign payment. For a normal businessman, your account won't be affected by this as long as you use it legally.

Therefore, proper account maintenance is necessary!

Report tax in time if there is a business

According to the company law of Hong Kong, all companies registered in Hong Kong must properly keep relevant business information and account books. The company's books must be kept for more than 7 years so that they can be checked at any time.

In other words, as long as your Hong Kong company has a business, even if you have canceled your Hong Kong company, the Hong Kong Taxation Office can check your past seven years bank account.

If you have any questions, please seek advice and assistance from a professional institution!

Real account background and normal transaction amounts

Customers are preferred to have domestic and foreign companies and have normal trade and payment transactions.

If you only have a single offshore company and account, without actual related companies and transactions, but have relatively large foreign exchange transactions, you need to take the initiative to communicate with the bank, otherwise, your account may be frozen.

The transaction with risky locations

Clients should not deal with sanctioned countries or countries with very unstable economies and politics (such as Iran, Syria, North Korea and, more recently, Venezuela and Russia).

Because these countries are often unable to directly remit foreign exchange, usually through third countries or offshore accounts, which is difficult to explain the source and purpose of funds, and even can cause account freezing and cancellation.

The transaction with a personal account

In the past few years, the offshore account could remit to an individual, the limit for an individual to settle or buy foreign exchange is 50,000USD, no matter how many times, which was later restricted to direct family members, and a monthly limit and frequency were set.

Now transactions with individuals can easily affect the stability of their accounts and face greater scrutiny, such as income statements, employment statements and so on.

In fact, a personal account is different from the company account, the company account can only receive payment and capital injection from shareholders, pay wages, dividends and others.

Idle or no business contact for a long time

1 After the account is set up, if you rarely use or not use it, it may be closed because the bank will think you have no need to use the account.

2 Have no business contact or rarely!

To maintain a regular account, one or two transactions must be made in or out of the account within three months. Accounts that are inactive for more than three months may be closed; Therefore, please log in the company's e-bank once a month; A company deposit account shall maintain at least the minimum amount required by the bank.

Involve in money laundering transaction

If the bank finds that your account involves the transfer of foreign exchange, money laundering, etc., your account will be frozen for the first time, and affect personal credibility.

In addition, it’s very difficult for banks to supervise the collection of exchange. 

Which is the payment? Which are the unknown funds? Banks have had to close all relevant accounts.

Reply to bank’s notice or investigation in time

Please ensure that your address, mobile phone number, and email are valid. If you receive the bank's investigation form, such as the compliance investigation form, provide and respond to the bank in time, and cooperate with all relevant investigations of the bank to avoid any bank failure.

If you have changed your address mobile phone number, and email, you should contact the bank in time to update your information.

When opening or annually auditing account, the bank will conduct due diligence on the client and file the company background and business model, which should be taken seriously. If there is any inconsistency between the account exchange area, the current account industry, the size of the collection funds, and if there is no reasonable explanation, then there is a risk of closing the account.

Try to avoid these

1 Unhealthy balance

Received a fund, then transfer the money out of the account in a short period.

2 Transactions with personal accounts

There is an obvious difference between the personal account and company account.

3 Cross-industry transactions

Have transactions with these uncorrelated industries.

4 Abnormal cash deposit and withdraw

It’s suggested that the cash amount you withdraw is 10%-30% of the monthly collection.

In short, opening an HK bank account is becoming increasingly difficult, and even being sued by the court if we don’t maintain good status with your accounts.

Don’t worry about that!

We can handle all for you! HACOS, focus on serving foreign-trade enterprises, help you own an HK company, lead your business to the world, and provide you with HK company registration, annual audit, tax and audit services.

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Follow-up support

Provide you with follow-up support and remind you of the process in time.

Timely notification

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Approved operation

Member of CCPIT, Member of GZAEFI and so on.

Any questions, please contact us!