Despite the latest waves of the coronavirus pandemic and the tightened quarantine measures, Hong Kong’s economy showed signs of recovery in 2021, with an estimated annual GDP growth rate of 6.4%. The notably positive performance was attributed to the city’s robust export performance and improved private consumption.
Although uncertainties remain as we enter the Chinese New Year of the Tiger, companies in Hong Kong must find different ways to stay financially and operationally on track. Fortunately, emerging technologies are rapidly changing the way businesses strategize their survival. Here are some helpful digitalization tools and trends to help you boost the efficiency of managing a Hong Kong company.
Hong Kong is home to many globally renowned financial institutions and has put in place adequate regulations in line with international standards. In recent years, Hong Kong has made tremendous efforts to attract FinTech start-ups to foster the city’s financial innovation. On 8 June 2021, the Hong Kong Monetary Authority (“HKMA”) released the “Fintech 2025” Strategy to promote the provision of efficient financial services that would benefit Hong Kong citizens and the economy. Under the Fintech 2025 strategy, the HKMA determines that all Hong Kong banks should go fintech in digitalizing their operations from front-end to back-end.
Meanwhile, a rising number of non-traditional tech start-ups appear as “challenger banks” and offer apps, software and other technologies to streamline mobile and online banking experiences. Instead of dealing with the hassle of making bank appointments, these platforms provide a much more efficient way to manage your cash flows.
Besides, under the current anti-pandemic control and travel restrictions, many businesses, especially SMEs, find it difficult to open corporate accounts with a traditional bank. Therefore, identifying a digital bank or a payment solution provider may be an excellent temporary solution so that you can kick-start your business immediately.
Digitalization in accounting is not a new concept, thanks to the sophisticated cloud computing and automation technology that has already been developed. Today, cloud computing and automation technologies are commonly used to resolve problems such as lack of robust reporting, high administrative overhead, and inefficient team collaboration.
In the accounting industry, automation and cloud computing help transform work processes. For example, instead of spending unnecessary administrative time on collecting business records at the financial year-end, cloud accounting platforms “perform the accounting functions” while you are running your business.
Even if you are outsourcing the accounting work to an external CPA firm, the chances are that you save costs with a cloud accounting platform and use your accounting advisors for more strategic purposes. In the past, accounting aspirants were expected to possess strong mathematical skills and a deep understanding of accounting and finance regulations. However, accountants today are increasingly involved in helping clients make critical business decisions beyond compliance services.
Here are some practical cloud-based accounting platforms for your reference: Xero, Quickbooks, MYOB, Kingdee. A cloud-based accounting application can handle payroll, purchase orders, expense claims, asset management and multi-currency accounting. Moreover, thanks to cloud technology, employees can access information related to information exchange and collaboration. Cloud-based accounting firms offer various services to plan, store, manage and analyze data. Data processing, machine learning, and artificial intelligence tools are part of their database kit.
Digital Tax Filing
Today, many jurisdictions around the world have already digitized their financial and tax reporting mechanisms. However, in Hong Kong, the Profits Tax Returns are filed physically. Hong Kong plans to keep pace with the global trend and implement the mandatory e-filing for Profits Tax Return by 2030.
The city will implement the “e-Filing Project” in two phases. The first phase, which will be launched in April 2023, will enable more businesses to voluntarily file their Profits Tax Returns digitally together with financial statements and tax computations in inline eXtensible Business Reporting Language (“iXBRL”) format. After that, in the second phase, the newly developed Business Tax Portal will be launched for the mandatory e-filing of Profits Tax Returns starting from 2025.
2022 is a critical year of going digital for your Hong Kong company. The pandemic may end sooner or later, but its effect on shifting the way we conduct business is longstanding. A digital transformation may sound intimidating for small and micro-businesses. In fact, many new digital tools emerge precisely to assist small companies in tackling their bottlenecks and enhancing their competitiveness. Rather than staying comfortable with the status quo, exploring, experiencing, and adopting new technologies should be the headline of your business objectives this year.