10 July 2021
Internet Business under Hong Kong Business Registration Ordinance (“BRO”)
To assess whether the activities carried out by a person through the internet constitute the carrying on a business in Hong Kong, the Inland Revenue Department (“IRD”) will collect the details of the relevant activities including procurement of goods and promotion of goods, solicitation of buyers, delivery of goods, settlement of sales proceeds, etc., scale of operation and location at which the activities are carried out.
If a person conducts activities through internet which constitute the carrying on business in Hong Kong, the IRD would advise and assist such person to apply for business registration.
In this connection, if a person conducts trading activities or provides services through the internet, and the relevant activities are carried out or the services are provided in Hong Kong, the person is required to apply for business registration.
A person who carries on a business, whether through a brick-and-mortar presence or the internet is required to apply for business registration within one month of the commencement of business under the BRO.
Failure to comply with the business registration requirement may result in prosecutions. For instance：
- Any person fails to apply for business registration shall be liable to a fine of HK$5,000 and to imprisonment for 1 year.
- Any person who applies for business registration more than 12 months after the commencement of business has to pay business registration fee and levy for the current year and any business registration fee and levy for back years.
Internet Business under Inland Revenue Ordinance (“IRO”)
A person who carries on an internet business is also required to comply with the requirements under the IRO including:
- Inform chargeability to profits tax
If a person carries on internet business and is liable to profits tax in Hong Kong, he is required to inform the Commissioner in writing not later than 4 months after the end of the basis period for that year of assessment unless he has already received a profits tax return from the IRD.
- Keep sufficient business records for at least 7 years
A person who carries on internet business is required to keep sufficient business records, in English or Chinese, of their income and expenditure for at least 7 years.
Failure to comply with the requirements under IRO may result in prosecutions. For example:
- Any person fails to inform chargeability to tax shall be liable to a fine of HK$10,000 and a further fine of treble the amount of the tax undercharged.
- Any person fails to comply with the record-keeping requirement of business records shall be liable to a fine of HK$100,000 and the court may order the person convicted to do within a specified time the act which he has failed to do.
A person who carries on internet business is required to keep sufficient business records, in English or Chinese, of their income and expenditure for at least 7 years.
Please feel free to contact us for more detailed discussion.
CONTACT INFORMATION
info@alcpa.com.hk
(852) 2574 8289
Note that any information, publication, design, product, process, idea or know-how described in this website may be the subject of other rights, including other intellectual property rights, which are owned by ALCPA or other interested parties and are not licensed to you hereunder. ALCPA does not warrant the website to be error-free and will not be liable for any damages whatsoever, whether in an action of contract or otherwise relating to the use of the information contained in the website. Certain links in this website may connect you to website maintained by third parties, ALCPA has not verified the contents on these websites and will not be liable for any damages as a result of the use of these information contained in these links.