Audit of cross-border e-commerce enterprises in Hong Kong

Cross-border e-commerce has been a hot industry in recent years. Many customers sell their products all over the world through the platform. However, sometimes foreign exchange payment is a difficult problem for the friends of sellers, so they need to help their business development through offshore accounts, among which the registration of Hong Kong companies is the choice of many friends of sellers. However, after the establishment of a Hong Kong company, the follow-up management issues such as audit will be different from those of other industries. Then, let's take a look at the trading companies of cross-border e-commerce platforms. What should we pay attention to when handling the audit of a Hong Kong company?

Matters needing attention in the audit of cross-border e-commerce companies in Hong Kong
  • 01 Account confirmationBecause of the transnational e-commerce platform, the company needs the bank and the third-party platform to receive and pay together. In the audit process, the company needs to confirm the bank account as other companies do, but also need to confirm the third-party payment platform used, otherwise there will be reservations.
  • 02.In stockBecause many cross-border e-commerce platform trading companies use third-party e-commerce platforms to sell goods, the audit of cross-border e-commerce Hong Kong companies needs to negotiate with the warehouse, so that the warehouse can accept the auditor’s letter of confirmation for the inventory. After confirming the result, the audit can be continued, but if the result cannot be confirmed by letter, an audit report with qualified opinions will be issued.
  • 03.Purchase and sale matchingMost of the cross-border e-commerce platform trading companies directly face individual sellers through third-party e-commerce platforms, resulting in a large variety of goods sold. According to the audit requirements, the income recognized by such companies this year needs to have corresponding carry-forward costs out of the warehouse.
  • 04.Large costMost of the sales of cross-border e-commerce platform trading companies are sold through third-party e-commerce platforms, so auditors will focus on the expenses incurred by the company, especially sensitive expenses such as advertising promotions and commissions incurred by the company. Importantly, auditors will review the authenticity and reasonableness of such expenses.
  • 05.Distinguish between onshore and offshore tradeTraditional international trading companies generally trade with companies, with a relatively small number of transactions, large amounts, and fixed customers. However, cross-border e-commerce platform trading companies generally trade with individuals, the number of transactions is huge, the amount is small, the number of customers is large, and the scope is wide.
  • 06.Points to Note for Applying for Offshore ExemptionThe platform on which the goods are sold has nothing to do with Hong Kong.The purchaser and the intermediary involved in the purchase need to be independent of Hong Kong.The goods were transported without passing through Hong Kong.The sales platform or sales mailing address needs to be divided into Hong Kong and non-Hong Kong.
Cross-border e-commerce platform trading companies that do the above points will have a higher chance of success in the face of the defense of non-taxation of offshore profits by Hong Kong Taxation Bureau.ring As an audit service agency in Hong Kong, we will remind our clients to make preparations for inventory and certification in advance.
To sum up, there are still a lot of knowledge and details worth further investigation in the aspect of corporate auditing in Hong Kong. Different industries have different doorways. Only by clearly mastering and applying relevant policies can the company reasonably reduce tax costs and avoid tax risks.

HUANZE focus on Hong Kong company audit accounting tax17years
Experience in auditing Hong Kong companies in various industries,
Has served many private enterprises, listed companies, multinational groups and state-owned enterprises,
Can be combined with the industry customer situation, tailored to overseas company service solutions,
For enterprises to avoid overseas risks, to obtain more corporate interests.

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