Do Limited Companies Need an Audit for Zero Tax Return? Is Audit Required for Zero Tax Return?

Do Limited Companies Need an Audit for Zero Tax Return?
Is Audit Required for Zero Tax Return?

Zero Tax Return

Every tax season, many business owners inquire whether their company can file a "zero tax return" without the need for an audit if the company hasn't conducted any business activities during the fiscal year. In this article, we will provide updated insights into the concept of a "zero tax return."

First, let's understand what a "zero tax return" is.

According to the Hong Kong Companies Ordinance, all limited companies registered and operating in Hong Kong are required to submit their company's financial records to an accountant for auditing before completing and filing tax returns for each fiscal year.

In the past, if a company had applied to become a "dormant company" following the statutory procedures, they could apply to the Inland Revenue Department for exemptions from bookkeeping, auditing, and tax payments. They only needed to submit a zero-tax return for profit tax.

However, starting from 2023, the Inland Revenue Department began enforcing strict requirements for submitting audit reports. Regardless of whether a company has actual business operations, they are now required to submit audit reports and profit tax computation alongside their tax returns. (Please note that the content and information provided in this article are based on the situation at the time of publication, and the Hong Kong government may make changes in the future.)

This means that limited companies now need to undergo an audit, even if they meet the criteria for a zero tax return.

If a limited company does not meet the requirements for a zero tax return, what is the tax filing process like?

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