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FAQs

Accounting & Audit

Get absolute clarity on your financial obligations, whether you’re switching auditors mid-year, handling lost receipts, or closing your business.

How do I temporarily freeze my business operations—should I apply for official dormancy or fully deregister the company?

If you plan to restart the business later, apply for official dormancy to freeze operations and exempt the company from annual audits and Annual Returns (NAR1). If you will never use the entity again, fully deregister it to permanently dissolve the company and stop all future maintenance fees.

If I apply to deregister my Hong Kong company, do I still need to submit a final financial audit and tax filing?

Yes. Before the Companies Registry approves your deregistration, you need a “Notice of No Objection” (NNO) from the Inland Revenue Department. To obtain this NNO, you must close your accounting books, submit a final financial audit up to your cessation date, and clear all outstanding tax liabilities.

Do dormant companies in Hong Kong still need to renew their Business Registration Certificate (BRC) every year?

Yes. Official dormancy only exempts you from Companies Registry filings, not from Inland Revenue Department rules. You must still legally renew your Business Registration Certificate (BRC) annually and pay the associated government fee to avoid statutory penalties.

Can I legally change my auditor mid-year if my current auditor is taking too long to finish the report?

Yes. You can transfer auditors mid-year, but your current auditor must either voluntarily resign and issue a professional clearance letter, or be forcibly removed via an Ordinary Resolution at a General Meeting. Your new auditor must also communicate with the outgoing one to comply with professional ethics guidelines.

If I lose my original expense receipts, can I still claim them as deductions during the statutory audit?

Yes, provided you retain clear digital copies or alternative proof of the transaction, such as bank statements matching your supplier invoices. However, if you lack adequate supporting documentation, auditors cannot verify the expense, and the Inland Revenue Department may fully disallow your tax deduction.

How do I declare cryptocurrency assets or Web3 token income in my Hong Kong financial audit?

You must declare cryptocurrency as either intangible assets or inventory on your balance sheet, depending on whether you hold it for long-term investment or active trading. You must provide your auditor with full transaction histories, year-end wallet balances, and fiat conversion rates to accurately calculate your taxable profits.

What happens if my company holds multiple foreign currency bank accounts, which specific exchange rate must I use for my annual audit?

You must convert all foreign currency transactions into your functional currency (usually HKD or USD) using the exchange rate on the exact transaction date. For year-end bank balances, you must apply the closing exchange rate on the final day of your financial year to record unrealized exchange gains or losses.
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