We all know that according to the Hong Kong Companies Ordinance, newly established  companies should promptly conduct accounting and tax reporting for Hong Kong  companies after receiving tax forms after 18 months of registration. Companies  with business operations that apply for zero declaration for a long time have  risks. Many investors still have doubts about zero declaration of Hong Kong  companies. Here, we have compiled a few of the most concerning issues for entrepreneurs  regarding zero declaration of Hong Kong companies.

Question 1: Under what circumstances can Hong Kong companies declare zero?
 In Hong Kong, companies without operations can directly file zero returns,    while companies with operations must do accounting and auditing before filing    taxes. If the following conditions are met, it can be determined that there    is no business operation and zero declaration can be applied for:

① Not allowed or authorized to use movable property in Hong Kong to collect  rent, lease fees, and other payments

② There are no records left in customs records, import and export companies,  and logistics companies;

③ There are no employees in Hong Kong;

④ Not allowing or authorizing the use of patent and trademark related materials;

⑤ No purchase and sales relationship with Hong Kong merchants;

⑥ No other profits from or generated in Hong Kong;

⑦ I have not purchased any properties in Hong Kong;

⑧ No bank account or accounting records have been opened, and there are no  records of monthly bank statements.

Question 2: What are the risks of Hong Kong companies making zero declarations  for a long time
 If Hong Kong companies that do not meet the zero declaration criteria make  zero declarations for a long time, they are likely to be spot checked by the  tax bureau. Non compliant zero declarations will be considered as non compliant  tax avoidance and will face high fines. In the CRS environment, the tax bureau's  spot checks will be stricter, and in severe cases, offshore bank accounts will  be forcibly shut down, Hong Kong companies will be unable to operate normally,  and important controllers of Hong Kong companies will be blacklisted.

Question 3: Hong Kong companies have been reporting zero, do they need to  do a previous audit, and when should we start?
 If a Hong Kong company that has been doing zero declaration before wants to  make up for the tax payment, it first needs to make up for the previous accounting  and tax reporting work. Starting from the year the company is established,  accountants need to supplement the accounts for all accounting years. Only  by using accounting materials and other vouchers can accountants issue more  high-quality audit reports. Otherwise, it is impossible to issue audit reports.

Question 4: What are the risks for Hong Kong, which does not comply with zero  declaration requirements, to start conducting accounting audits now?
 Previously, Hong Kong, which had zero declaration, had to proactively conduct  accounting audits to avoid affecting its operations. Proactive remediation  and being caught are different in nature and risk, and the punishment for proactive  remediation is lighter.

Question 5: Can Hong Kong companies that have been non compliant with zero  declarations for a long time be directly deregistered and re registered as  new companies?
 The correct approach for Hong Kong companies that have been engaged in non  compliant zero declaration operations for a long time should be to make up  for tax payments and tax reporting. Directly canceling the company cannot fundamentally  solve the problem. It should be noted that the Hong Kong Inland Revenue Department  has the right to access the accounts of Hong Kong companies for a period of  7 years. Even if a Hong Kong company is deregistered, it is still possible  to be discovered, and the important controllers of the original company still  have to bear corresponding legal responsibilities. If the situation is serious,  it is not possible to register a new company.

Question 6: What is the fine amount for Hong Kong companies that have been  investigated for non compliant zero declaration?
 If Hong Kong companies that do not comply with zero declaration regulations  are found, they face penalties ranging from 10000 to 50000 yuan and fines of  at least three times the tax amount. In more serious cases, they may be sentenced  to three years in prison.