Two laws, one number
| Rule | Who it binds | How long |
|---|---|---|
| Inland Revenue Ordinance, section 51C | Every person carrying on a trade, profession or business in Hong Kong | Not less than 7 years |
| IRD guide to keeping business records | The same businesses | At least 7 years after the date of the transactions |
| Companies Ordinance, section 377 | Every company | 7 years after the end of the financial year to which the last entry relates |
The company rule counts from the end of the financial year, so it can run a little longer than a count from the transaction date. A company that keeps each record for 7 years after the end of its financial year satisfies both.
What has to be kept
Section 51C covers books of account recording receipts and payments or income and expenditure; vouchers, bank statements, invoices and receipts; records of assets and liabilities; and day to day entries of all money received and spent[1]. A business dealing in goods also keeps records of goods bought and sold, with stock statements and stocktake records, and a service business keeps records of the services provided[1]. Records are kept in English or Chinese[1].
After you stop trading
The IRD's guide says that even after you cease trading, the record keeping obligation continues until the 7 year period has expired[2]. Before closing a business, decide who will hold the records, where, and how they can be produced.
Losses carried forward
If losses from earlier years have been set off against later profits, the IRD suggests keeping all the records until 7 years after the end of the year in which the losses were fully set off[2]. For a business with losses, that can be much longer than 7 years from the original transaction.
Paper or electronic
Records may be kept on a computer, but source documents such as cheque butts, invoices, deposit slips and bank statements still have to be kept to support the entries[2]. A company's electronic records must be capable of being reproduced in hard copy[3], and records not kept in a bound book need adequate precautions against falsification[3]. The IRD also publishes a pamphlet on the admissibility of business records kept in electronic form for tax purposes[1].
Where a company keeps them
A company keeps its accounting records at its registered office or another place the directors think fit, open to inspection by the directors at all times[3]. If they are kept outside Hong Kong, accounts and returns showing the financial position at intervals of not more than 6 months must be sent to, and kept at, a place in Hong Kong[3].
The fines
| Failure | Maximum |
|---|---|
| Not complying with section 51C without reasonable excuse | Fine of HK$100,000 |
| A director failing to take all reasonable steps to preserve company records for 7 years | Fine of HK$300,000 |
| A director wilfully failing to do so | Fine of HK$300,000 and imprisonment for 12 months |
Rules, forms and figures can change, and the official pages listed below are the authority wherever this summary differs from them.