What does section 51C of the Inland Revenue Ordinance require from my business?
Anyone carrying on a trade, profession or business in Hong Kong must keep enough records, in English or Chinese, to work out assessable profits, and keep them for at least 7 years. Failing to do so without reasonable excuse can lead to a fine of up to HK$100,000.
Section 51C applies to every business in Hong Kong, whether it is a company, a partnership or a sole proprietorship. You must keep sufficient records of income and expenditure so that assessable profits can be readily ascertained.
The IRD lists the kinds of records it expects:
- books of account showing receipts and payments, or income and expenditure;
- vouchers, bank statements, invoices and receipts;
- records of business assets and liabilities;
- if you deal in goods, records of what you bought and sold, who the suppliers and customers were, and enough detail to check quantities and values, plus year-end stock statements and the stocktake records behind them;
- if you provide services, records of the services in enough detail to verify the entries.
Language: English or Chinese. Retention: at least 7 years after the completion of the transactions. Penalty: a fine of up to HK$100,000 where there is no reasonable excuse.
The IRD's brief guide notes that the duty does not apply to a corporation that has been dissolved.
Legal basis
- Inland Revenue Ordinance (Cap. 112), s.51C
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Is a Hong Kong company legally required to keep accounting records?Yes. Section 373 of the Companies Ordinance (Cap. 622) requires every company to keep accounting records that explain its transactions and show its financial position and performance at any time. Directors who fail to take all reasonable steps risk a fine of HK$300,000, and up to 12 months' jail if the failure is wilful.
- How long must a Hong Kong company keep its accounting records?Seven years. Under section 377 of the Companies Ordinance, a company must keep its accounting records for 7 years after the end of the financial year to which the last entry relates. The Inland Revenue Department separately requires business records to be kept at least 7 years after the transactions they relate to.
- Which documents should a Hong Kong business keep for its books?Keep every document that supports an entry in your books: sales and purchase invoices, receipts, bank statements, contracts, payroll and MPF records, asset purchase papers, loan agreements, and stocktake sheets. The test is whether someone else could trace any figure back to its source.
- Can a Hong Kong company keep its accounting records digitally or scan paper originals?Yes. The Companies Ordinance allows records in hard copy or electronic form, provided they stay available for reference and can be reproduced on paper. The IRD also accepts electronic books and scanned source documents if integrity, legibility and origin details are preserved, and no prior approval is needed.
- What are the penalties for failing to keep proper accounting records in Hong Kong?Under the Companies Ordinance, a director who fails to take all reasonable steps faces a fine of HK$300,000, and a fine plus up to 12 months' imprisonment if wilful. Under the Inland Revenue Ordinance, failing to keep business records without reasonable excuse can bring a fine of up to HK$100,000.