How should I keep the books when a Hong Kong company deals in HKD, USD and RMB?
Pick a functional currency, usually the one in which most of your business is done, and record each foreign-currency transaction at the exchange rate on the transaction date. Revalue foreign-currency balances at year end and record the exchange differences. Reconcile each foreign-currency bank account in its own currency.
This answer follows HKAS 21 and Section 30 of HKFRS for Private Entities, which set the rules on exchange rates. Under the SME-FRS there is no separate functional currency: the company uses one reporting currency, that of its primary economic environment.
Core approach
- Choose a functional currency: the main currency of your business environment, often HKD for local trade, or USD if sales and costs are mainly in USD.
- Record each transaction in the functional currency at the spot rate on the transaction date (or a close average rate if reasonable), keeping the original-currency amount as well.
- Bank accounts: hold and reconcile each currency account in its own currency, then translate.
- At each period end, translate foreign-currency monetary items (cash, receivables, payables, loans) at the closing rate. Exchange differences go to profit or loss.
- Document your rate source (for example a bank or central-bank rate) and use it consistently.
Practical tips
- Set up separate ledger accounts per currency.
- Keep invoices showing the currency.
- Use software with multi-currency and revaluation functions.
The legal requirement is that the records must explain transactions and allow financial statements to comply with the Ordinance and applicable standards (ss.373, 380).
Legal basis
- Companies Ordinance (Cap. 622), ss.373, 380
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
- What is the difference between bookkeeping and accounting in Hong Kong?Bookkeeping is the day-to-day recording of transactions: sales, purchases, payments and receipts. Accounting uses those records to prepare financial statements, interpret results and support tax and audit work. In Hong Kong the law cares about both: the company must keep adequate records, and its directors must prepare financial statements from them.
- 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.
- What must a Hong Kong company's accounting records contain?The law names two things: daily entries of all money received and spent, with what each was for, and a record of the company's assets and liabilities. Beyond that, the records must be sufficient to explain transactions and show the financial position accurately at any time.
- 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.
- 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.