Hong Kong is one of the most attractive business hubs in the world due to its business-friendly environment, low tax rates, and ease of company incorporation. However, company owners must remain compliant with various regulatory obligations, including the Annual Return filing and the Business Registration Fee payment.
While both are essential compliance requirements, they serve different purposes, have distinct deadlines, and entail separate fees. Understanding these differences is crucial to avoiding penalties and ensuring your business remains in good standing with the Hong Kong Companies Registry (CR) and the Inland Revenue Department (IRD).
In this article, we will provide a comprehensive comparison between the Annual Return Fee and the Business Registration Fee, covering their definitions, purposes, deadlines, fees, penalties, and key differences.
1. What Is an Annual Return?
The Annual Return is a statutory document that every company incorporated in Hong Kong must file with the Companies Registry (CR). This document provides up-to-date details about the company’s structure, directors, shareholders, registered office address, and company secretary.
Purpose of the Annual Return
The purpose of the Annual Return is to ensure transparency by keeping company information current and accessible to the public. It allows regulatory bodies, investors, and other stakeholders to verify company details.
Who Needs to File an Annual Return?
- Private companies limited by shares
- Public companies
- Guarantee companies
Sole proprietorships and partnerships are not required to file an Annual Return.
Annual Return Filing Deadlines
The deadline for filing an Annual Return depends on the type of company:
- Private Companies (Limited by Shares) – Must file within 42 days from the anniversary of their incorporation date.
- Public Companies and Companies Limited by Guarantee – Must file within 42 days after the company’s financial year-end.
Annual Return Filing Fees
As of 2024, the Annual Return filing fees are:
Company Type | On-Time Filing Fee | Late Filing Penalty |
Private Limited Company | HKD 105 | Up to HKD 3,480 (varies by delay period) |
Public Company | HKD 140 | Up to HKD 3,480 |
Guarantee Company | HKD 105 | Up to HKD 3,480 |
Failure to file on time will result in financial penalties and may lead to legal consequences, including potential deregistration by the Companies Registry.
2. What Is a Business Registration Fee?
The Business Registration Fee (BRF) is an annual government fee imposed by the Inland Revenue Department (IRD). It is a requirement for all businesses, including limited companies, sole proprietorships, and partnerships.
Purpose of the Business Registration Fee
The BRF serves as a business license fee and provides businesses with an official Business Registration Certificate (BRC). The BRC acts as proof that a company is legally registered to conduct business in Hong Kong.
Who Needs to Pay the Business Registration Fee?
- Limited companies (both private and public)
- Sole proprietorships
- Partnerships
- Branches of overseas companies operating in Hong Kong
Business Registration Fee Payment Deadlines
The BRF must be renewed annually or every three years, depending on the company’s selected registration period.
- If the business chooses a 1-year registration, the BRF must be renewed every year.
- If the business opts for a 3-year registration, the BRF must be renewed every three years.
The renewal application should be submitted at least one month before the expiry date of the current Business Registration Certificate.
Business Registration Fee Amount
The Business Registration Fee is determined by the Hong Kong government and may be subject to adjustments based on the Government Waiver Scheme.
Registration Period | Standard BRF (2023-2024) | Government Waiver (If Any) |
1-Year Certificate | HKD 2,150 | HKD 150 (Reduced Fee) |
3-Year Certificate | HKD 5,650 | HKD 3,950 (Reduced Fee) |
These fees may change annually based on the Hong Kong Government’s budget policies.
Penalties for Late Payment
If a company fails to renew its Business Registration Certificate on time, the Inland Revenue Department imposes a HKD 300 surcharge on top of the original fee. Additionally, businesses may face prosecution if the delay persists.
3. Key Differences Between the Annual Return and Business Registration Fee
Many business owners confuse the Annual Return filing with the Business Registration Fee payment. However, these two requirements serve different regulatory purposes. Here is a clear comparison:
Aspect | Annual Return | Business Registration Fee |
Regulating Body | Companies Registry (CR) | Inland Revenue Department (IRD) |
Purpose | To update the company’s structure and details | To obtain and renew the Business Registration Certificate |
Applicable To | Private and public limited companies | All businesses, including sole proprietors and partnerships |
Deadline | Within 42 days after the incorporation anniversary | Before the expiry of the Business Registration Certificate |
Filing Method | Online via e-Registry or hard copy submission | Online via GovHK or in person |
Fees | HKD 105 – HKD 180 (depending on company type) | HKD 2,200 (1 year) / HKD 5,870 (3 years) |
Penalties | Late penalties up to HKD 3,480 | Late surcharge of HKD 300 and possible prosecution |
4. Common Mistakes and How to Avoid Them
Many business owners unintentionally fail to differentiate between these two obligations, leading to unnecessary penalties. Here are some common mistakes and ways to avoid them:
Mistake #1: Confusing the Two Fees
- The Annual Return is a statutory document that must be filed with the Companies Registry.
- The Business Registration Fee is a license fee paid to the Inland Revenue Department.
How to Avoid It: Mark the respective deadlines on your business compliance calendar and ensure timely submission.
Mistake #2: Late Submission
- Missing the Annual Return deadline can lead to penalties of up to HKD 3,480.
- Forgetting to renew the Business Registration Certificate results in a HKD 300 surcharge.
How to Avoid It: Set automated reminders or hire a corporate services provider to handle compliance.
Mistake #3: Assuming Government Waivers Are Permanent
- The Business Registration Fee waiver is not always guaranteed.
- Always check the latest government announcements regarding fee adjustments.
How to Avoid It: Regularly review updates from the Companies Registry and Inland Revenue Department.
5. Conclusion
Both the Annual Return filing and the Business Registration Fee payment are essential compliance requirements for Hong Kong businesses, but they serve distinct purposes. The Annual Return maintains transparency in a company’s structure, while the Business Registration Fee ensures legal authorization to operate.
Failing to comply with either obligation can result in severe penalties, potential prosecution, or even company deregistration. Therefore, business owners must understand the differences and meet their respective deadlines accordingly.
By staying compliant, businesses in Hong Kong can continue to operate smoothly and take full advantage of the city’s thriving business environment.
If you need assistance with Annual Return filing or Business Registration Fee renewal, consult a professional corporate service provider to avoid compliance risks.
