Over 1.5 million legal entities are registered in Hong Kong. All these companies are required to conduct their commercial (or other) activities in accordance with applicable law. If any violations are detected, penalties are imposed on the company, and responsible persons have the risk of being investigated and sent to prison. In our article today, we will look at the most common mistakes for which sanctions can be applied to a legal entity in Hong Kong.
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Company name registration
One of the most common mistakes entrepreneurs make when registering a new company is the incorrect name of the legal entity.
The name must be approved by the Registrar of Companies before starting the incorporation process. It must be unique, comply with the legislation. If the rules are violated, the Registrar of Companies will send a written request for correction. Failure to comply with it will result in a fine of up to 100 thousand Hong Kong dollars (HKD), imprisonment for up to 6 months. In addition, the company will pay penalties in the amount of HKD 700 for each day of delay in filing information.
Offshore company status confirmation
Hong Kong has a territorial-type taxation system. This means that all profits earned outside of Hong Kong are tax-free. The tax service has the right to carry out a verification of the origin of profits. To do this, it will request the necessary information about her origin, documented, indicate the date by which it must be provided. Ignoring this request will result in the accrual of income tax at a rate of 16.5% and penalties. The measure of punishment is set individually in accordance with the specific situation.
