Deciding on the firm's financial year-end (FYE) is necessary when forming a business in Hong Kong. If you select an appropriate Hong Kong fiscal year for your business, you can take advantage of lower accounting and auditing fees, as well as a longer period of tax filing.
What Is A Financial Year Or Fiscal Year?
A Hong Kong fiscal year, often referred to as a company’s financial year, is a period of 12 consecutive months that businesses use to generate their financial statements and for other accounting-related purposes. The financial year begins on the day the firm is incorporated and concludes on a day chosen by its directors.
What is Financial Year End (FYE) in Hong Kong?
A financial year end (or FYE) is the date when a business's fiscal year ends. The majority of businesses decide to have their fiscal years end on either March 31 in order to coincide with the Hong Kong government's FYE or December 31 in order to follow the calendar year end. Note that the initial fiscal year-end date of your business cannot be later than 18 months after the date of establishment.
Top 3 Tips to Consider in Determining the Financial Year End Date for Your Hong Kong Company
Listed below are the three key recommendations to consider while selecting your Hong Kong fiscal year.
1. Consider the accounting factor
If your company is a subsidiary, it is customary to align the FYE with affiliated companies or the parent organization. For auditors and accountants, this will make it easier for them to prepare both individual and consolidated financial statements.
2. Consider the taxation factor
Within 18 months of the company's establishment, the Inland Revenue Department will release the profits tax return. The FYE date must be included in the tax return form when filing the returns, and the initial tax return needs to be turned in within three months.
Your firm's FYE date determines your annual profits tax return deadline, which is listed in the table below.
Company’s financial year end dates | Profits tax return deadline |
1 January to 31 March | Mid-November of the calendar year that the FYE ended |
1 April to 30 November | End of April of the next calendar year that the FYE ended |
1 December to 31 December | Mid-August of the next calendar year that the FYE ended. |
3. Consider the business nature
Most businesses decide on a fiscal year end date as the end of any quarter to coincide with the business cycle. This is due to the fluctuation of business activities and revenues up to the end of the quarter. For example, a retail company may select December 31 as its FYE date as a result of significant sales during the Christmas shopping season.
Is It Allowed for a Company in Hong Kong to Change Its Financial Year End?
Companies in Hong Kong are permitted to modify their FYE under the Hong Kong Companies Ordinance and Accounting Standards. One common cause for changing the FYE date is that the firm becomes a member of a group. Although the FYE date can be changed whenever you wish, there are still some limitations to be aware of.
Why Select SJH GlobalAdvisory As Your Company Secretary?
Here at SJH Global, we can take the pressure off you, get you back to work, and make sure your books are always accurate. We provide honest, punctual, and reliable Company Secretarial Service. We are able to take on the paperwork of filing Annual Returns, renewal of Business Registration Certificates, provision of address, and signing the company documents on time.
Need Advice in Choosing Your Ideal Hong Kong Fiscal Year?
It’s a tedious and complicated process to know your tax obligations in Hong Kong. Let our expert help you to submit the forms so that you can run your business smoothly. Contact SJH Global to discuss your Hong Kong accounting and taxation needs. Our team of professionals will be ready to serve you.