8. The gross income of my sole-proprietorship business during the year was below $2,000,000. Do I need to retain this year's business records, and if so, for how long? Do I need to attach the Balance Sheet and Profit & Loss Accounts to my Tax Return?

8. The gross income of my sole-proprietorship business during the year was below $2,000,000. Do I need to retain this year's business records, and if so, for how long? Do I need to attach the Balance Sheet and Profit & Loss Accounts to my Tax Return?

Starting from 1 April 2023, small corporations and businesses with gross income not exceeding HK$2,000,000 will no longer be permitted to file their Profits Tax Returns without supporting documents (including financial statements and tax computation), regardless of whether the tax returns are filed in paper form or electronically. 

According to section 51C of the Inland Revenue Ordinance, any person carrying on a business in Hong Kong must keep sufficient business records of income, expenditure, assets and liabilities, in English or in Chinese, to enable his/her assessable profits to be readily ascertained. Records relating to any business transaction must be retained for at least 7 years after the completion of the transactions, acts or operations to which they relate.

Failure to keep sufficient records may result in a fine of up to $100,000, and estimated assessments being raised on your business.