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Accounting and Finance Reporting Authority Calls for Careful Auditor Appointment and Audit Fee Determination to Preserve Public Trust
accounting
Featured
2025-08-13
Accounting and Finance Reporting Authority Calls for Careful Auditor Appointment and Audit Fee Determination to Preserve Public Trust
Accounting and Finance Reporting Authority Calls for Careful Auditor Appointment and Audit Fee Determination to Preserve Public Trust
The Accounting and Finance Reporting Authority (AFRA) released an article titled "Maintaining Capital Market Credibility: Carefully Appointing Auditors and Determining Audit Fees," emphasizing the importance of improving audit quality. It notes that the recent rapid resignation problem among auditors has markedly improved, dropping from 70 % in 2021 to 30 % in 2024. To further enhance audit quality, AFRA offers the following observations and recommendations: **Challenges of Hasty Auditor Appointment** Between 2020 and 2024, 45 % of auditor resignations occurred within a month before or after the fiscal year-end, tightening audit timelines and increasing the risk of first‑year audit misstatements. **Competitive Underpricing** Seventy‑three percent of auditor changes accompanied a reduction in audit fees, potentially leading auditors to cut back on audit procedures, reduce sample sizes, or rely on less‑experienced staff, thereby compromising audit quality and heightening the risk of non‑compliance. **Delayed Audit Fee Payments** As of 31 March 2025, at least ten listed companies had not fully paid their 2023 and/or 2024 audit fees, with some delays extending up to 30 months. This could erode auditor independence and increase the risk of biased audit opinions. **AFRA’s Recommendations** • **Audit Committees** should appoint auditors early, carefully evaluate low‑bid proposals, and ensure timely fee payment to preserve independence. • **Auditors** should set reasonable fees, decline rushed engagements due to resource constraints, and establish fair payment terms. **Goal** AFRA stresses that audits are a professional service essential for maintaining trust in capital markets. Fees should reflect service quality and be paid on time, supporting accounting firms’ investment in talent and technology to promote Hong Kong’s resilience as an international financial centre.
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Tax Department Launches Three New Websites Under 'TaxEasy'
tax
2025-07-23
Tax Department Launches Three New Websites Under 'TaxEasy'
The Inland Revenue Department (IRD) launched three new tax portals under eTAX today
The Inland Revenue Department (IRD) launched three new tax portals under eTAX today (July 22), namely the Individual Tax Portal (ITP), Business Tax Portal (BTP) and Tax Representative Portal (TRP), to further enhance the efficiency and user experience of electronic tax services. An IRD spokesman said, "The IRD is committed to promoting tax digitalisation and has been upgrading electronic tax services to provide convenience to taxpayers and enhance the efficiency, reliability and accuracy of return filing. The three new tax portals provide electronic tax services to individuals, businesses, and tax service agents respectively, allowing them to handle tax matters conveniently and efficiently." The ITP offers a centralised platform for users to manage their personal tax matters, providing functions such as tax return filing, personal particulars updates and viewing of tax positions. Individual users may also use the ITP on their mobile devices anytime, anywhere via the "eTAX" mobile application launched by the IRD today. The BTP is specifically designed for businesses to handle tax matters and compliance obligations electronically, including tax return filing and business registration. The TRP caters to tax service agents (tax representatives, company secretaries and other tax service providers) to facilitate them in managing clients' tax matters, including tax return filing and compliance tracking. "Profiles of existing eTAX users have been migrated to the ITP. They can use their registered information to log into the ITP. Businesses and service agents are encouraged to open an eTAX account as early as possible to handle tax matters electronically through the BTP and TRP in a safe, convenient and environmentally friendly way," the spokesman said.
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Hong Kong Launches Company Re-Domiciliation Regime
company
2025-05-29
Hong Kong Launches Company Re-Domiciliation Regime
Hong Kong Launches Company Re-Domiciliation Regime
The Hong Kong Government will officially launch the 'Company Re-Domiciliation Regime' on May 23, 2025. This allows companies registered outside of Hong Kong to transfer their place of registration to Hong Kong while preserving their legal identity and business continuity, and re-register as Hong Kong companies under the Companies Ordinance (Chapter 622). **Purpose and Background** This regime aims to consolidate Hong Kong's position as an international business and financial center, providing companies with a flexible re-domiciliation pathway, particularly attracting multinational enterprises seeking to relocate from low or no-tax jurisdictions in response to the global minimum tax (BEPS 2.0). **Tax Arrangements and Impact** * **Tax Residency**: Re-domiciled companies will be considered corporations established in Hong Kong, meeting the definition of a Hong Kong tax resident, and can enjoy the benefits of double taxation agreements signed between Hong Kong and other jurisdictions. * **Profits Tax Liability**: * If a company was already operating in Hong Kong and generating taxable profits before re-domiciliation, it must pay profits tax on those profits. Re-domiciliation will not exempt this tax liability. * If a company was not operating in Hong Kong before re-domiciliation, it will not be subject to profits tax for the period before re-domiciliation. * **Transitional Tax Arrangements**: Schedule 17L has been added to the Inland Revenue Ordinance, stipulating that expenses incurred by re-domiciled companies before re-domiciliation may be deductible when calculating profits tax after re-domiciliation, provided certain conditions are met. **Other Key Points** * **Legal Amendments**: The 2025 Companies (Revision) (No. 2) Ordinance amended the Companies Ordinance and related legislation, including the Inland Revenue Ordinance, to implement the company re-domiciliation regime. * **Handling of Inventory**: Inventory acquired by re-domiciled companies before re-domiciliation and used in Hong Kong business after re-domiciliation, its cost or value on the date of re-domiciliation (whichever is lower) may be treated as a deductible item. For further information or to consult detailed information, please refer to the relevant pages on the Hong Kong Inland Revenue Department's official website.
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