HK Inactive Report Fee Breakdown Essential Info Key Points to Note

Unveiling the Costs of Hong Kong Inactive Company Reporting Everything You Need to Know

As the global business environment continues to evolve, many companies are shifting their focus to more dynamic and growth-oriented markets. At the same time, some businesses registered in Hong Kong have either suspended operations or never commenced substantial business activities, entering a state of inactivity. According to Hong Kong’s Companies Ordinance, even inactive companies must fulfill certain legal obligations, including the submission of an Inactive Company Report.

Recently, many small and medium enterprise SME owners and overseas investors have shown increasing interest in this topic, particularly regarding the associated costs, procedures, and important considerations. This article provides a comprehensive breakdown of the fee structure for Hong Kong inactive company reporting, incorporating the latest policy updates to help readers better understand the system.

1. What Is an Inactive Company?

According to the Companies Registry of Hong Kong, a company is considered inactive if it has no accounting transactions and has not conducted any business activities during a given financial year. Such companies may submit simplified financial statements and annual returns.

However, even in an inactive status, companies are still required by law to file relevant documents with both the Companies Registry and the Inland Revenue Department IRD. One of the most important of these documents is the Inactive Company Report, also known as the Declaration of Non-Operation.

2. Why Submit an Inactive Report?

Despite being temporarily non-operational, a company remains a legal entity under Hong Kong law. All companies are required to make annual compliance filings to maintain transparency and regulatory effectiveness.

Failing to submit the inactive report on time may lead to

Fines and Penalties Late or missing filings can result in significant fines.

Reputational Risk Abnormal records in the business registry may affect future resumption of operations or partnerships.

Bank Account Freezing Banks may freeze accounts due to prolonged inactivity or request account closure.

Even if your company is not currently operating, it is advisable to promptly file the inactive status declaration.

3. Key Cost Components of the Inactive Report

While the process of submitting an inactive report is relatively straightforward, it does involve several mandatory fees. Below are the typical expenses applicable from 2025 onwards

1. Annual Return Filing Fee Form NAR1 HKD 105

Every local limited company must submit Form NAR1 annually to the Companies Registry. For inactive companies, a special option can be selected. The filing fee is HKD 105 per company, regardless of its operational status.

2. Business Registration Certificate Renewal HKD 250

Even for inactive companies, the Business Registration Certificate must be renewed annually at a cost of HKD 250. Failure to do so results in daily penalties.

3. Professional Service Fees HKD 800 - HKD 2,500

Many companies outsource the reporting process to professional service providers such as accounting firms or corporate secretarial services. These fees typically range from HKD 800 to HKD 2,500, depending on the scope of service e.g., whether tax filing or audit preparation is included and the provider's expertise.

4. Tax Filing Agent Fee if applicable HKD 500 - HKD 1,500

Although inactive companies generally do not need to submit full audited financial statements, they are still required to file a Profits Tax Return with the IRD. Engaging a licensed accountant for this task usually costs between HKD 500 and HKD 1,500.

4. How to Determine If Your Company Qualifies as Inactive?

To qualify for the simplified reporting process, your company must meet the following criteria

No income was generated during the financial year.

No purchase or sale of assets occurred.

No employee salaries were paid.

No bank account activity took place.

No commercial transactions were carried out.

If your company had minor transactions-such as bank interest income or rent payments for the registered office-it may not qualify as inactive and will need to submit full financial statements and an audit report.

5. Overview of the Reporting Process

1. Confirm Company Status Review past financial records and transaction logs.

2. Prepare Documents Include Form NAR1, Business Registration renewal application, and Profits Tax Return.

3. Submit Applications File online via the Companies Registry portal or through an agent.

4. Pay Fees Settle all applicable charges after submission and await confirmation.

5. Keep Records Retain all submitted documents for future reference.

6. Recent News and Trends

According to the Hong Kong Companies Registry Annual Report published at the end of 2025, as of June 30, 2025, there were over 1.4 million registered companies in Hong Kong, approximately 12% of which were classified as inactive-an increase from the previous year. This trend reflects growing economic uncertainty affecting business operations.

In early 2025, the Hong Kong Special Administrative Region announced plans to streamline compliance procedures for SMEs, including simplifying documentation requirements for inactive companies. These reforms aim to reduce administrative burdens and improve business efficiency.

At the same time, media reports have highlighted cases where companies faced penalties due to incorrect inactive status declarations, signaling a tightening of regulatory oversight. Business owners should therefore prioritize compliance, especially in the current climate.

7. Important Tips and Practical Advice

Regularly Review Company Status Assess your company’s activity level each year to determine eligibility for inactive status.

File Early Avoid last-minute submissions to prevent delays.

Seek Professional Advice If unsure about qualification, consult a certified public accountant or company secretary.

Maintain Proper Records Even inactive companies should keep basic financial and operational records.

Consider Deregistration If the company is no longer needed, consider voluntary winding-up or deregistration to avoid ongoing compliance costs.

Conclusion

While the submission of an Inactive Company Report may seem like a routine obligation, it plays a crucial role in maintaining legal standing and avoiding potential risks. Understanding the correct fee structure and reporting procedures not only helps reduce costs but also minimizes exposure to unnecessary legal issues.

In today’s volatile global economy, staying compliant is an essential skill for every business owner.