Fiscal year
Learn what a fiscal year is and how it works for Hong Kong businesses, including how to choose your year-end.
Published Thursday 6 August 2026
Table of contents
Key takeaways
- A fiscal year, also called a financial year, is the 12-month period your business uses for accounting and tax reporting.
- In Hong Kong the government fiscal year and the tax year of assessment both run from 1 April to 31 March.
- A Hong Kong company can set its own financial year-end, and most choose 31 December or 31 March.
- The Inland Revenue Department assesses profits tax on your accounting period, so your year-end shapes when your Profits Tax Return is due.
What is a fiscal year?
A fiscal year is the 12-month period a business, government or organisation uses for accounting and tax purposes. It sets the timeframe for tracking your income, expenses and financial performance.
Your fiscal year does not have to match the calendar year. The term is often used interchangeably with financial year, and both mean the same 12-month accounting period. In Hong Kong the government uses a fixed fiscal year, but your own company can choose a year-end that suits how it trades, which is a core part of small business accounting.
Fiscal years are usually named by their end year. A fiscal year running from 1 April 2025 to 31 March 2026 is commonly referred to as FY26.
The Hong Kong government fiscal year
The Hong Kong government fiscal year runs from 1 April to 31 March. This is the cycle the government uses for its budget and public accounts, and it is also the tax year of assessment set by the Inland Revenue Department for salaries tax and property tax.
So the 2026/27 year of assessment runs from 1 April 2026 to 31 March 2027. Your company does not have to follow this cycle for its own accounts, but the government year is the reference point many businesses align to.
Fiscal year vs financial year vs calendar year vs accounting year
These terms are closely related, and in Hong Kong some are used interchangeably. Knowing the distinctions helps you stay clear about your reporting obligations.
- Fiscal year: the 12-month period used for financial reporting. For the Hong Kong government it is 1 April to 31 March; for your company it is whatever year-end you set
- Financial year: used interchangeably with fiscal year, referring to the same 12-month accounting period
- Calendar year: runs from 1 January to 31 December, and many Hong Kong companies use this as their year-end
- Accounting year: another name for the 12-month period covered by your accounts, defined by your accounting period
The key point is that the government fiscal year is fixed, while your company's financial year is a choice you make when you set your accounting reference date.
Can companies choose their own year-end?
Yes. A Hong Kong company can choose any 12-month financial year-end, and the directors decide the date. In practice most companies pick one of two dates.
- 31 December: matches the calendar year, which suits businesses that report alongside an overseas parent or group
- 31 March: aligns with the Hong Kong government fiscal year and the tax year of assessment
Both dates are popular because they line up with common reporting and tax cycles, but the choice is yours to make based on how your business runs.
Setting your first financial year-end
When you incorporate a company with the Companies Registry, its directors set the primary accounting reference date, which fixes the company's financial year-end. This is governed by the Companies Ordinance (Cap. 622).
Your first financial year runs from the date of incorporation to that first year-end. It can be longer than 12 months, but under the Companies Ordinance it should end within 18 months of incorporation. Setting this up correctly is part of registering your business and getting your records in order from day one.
How to choose your fiscal year-end
Choosing the right year-end can make your accounting simpler and your reports more useful. Weigh up the main factors below before you decide.
- Revenue cycle: ending your year after your busiest season gives you a complete picture of your peak trading period
- Cash flow: avoid a year-end when cash is tight, since closing the books and paying tax can add extra costs
- Group alignment: if you report to an overseas parent, matching its year-end makes consolidation easier
- Audit timing: choosing an off-peak year-end can make it easier to work with your accountant and manage audit costs
Once your business is established, you can review whether your year-end still fits, and change it if your circumstances shift.
Why your fiscal year matters
Your fiscal year is more than a formality. It shapes how you report, plan and stay compliant across the year.
- Financial reporting: your year-end determines when you prepare annual accounts, financial statements and your balance sheet
- Profits tax filing: your Profits Tax Return deadline with the Inland Revenue Department is tied to your company's accounting year-end
- Budget planning: setting budgets and forecasts around your fiscal year helps you allocate resources and manage cash flow
- Performance tracking: comparing results year on year only works when you measure the same 12-month period each time
- Record keeping: the Inland Revenue Ordinance requires you to keep your business records for at least 7 years
Getting your fiscal year right from the start saves time and reduces the risk of missed deadlines or messy reporting.
Profits tax, the year of assessment and key filing dates
Hong Kong has a simple tax system with no VAT or general sales tax, so your main annual obligation is profits tax. The Inland Revenue Department assesses profits tax on your company's accounting period, which is why your year-end matters for filing.
The Inland Revenue Department issues Profits Tax Returns in early April each year, and the normal filing deadline is within 1 month of the date of issue. Represented taxpayers can get more time under the Block Extension Scheme, which groups businesses by their accounting date code.
- Code N: accounting date between 1 April and 30 November, with little or no extension
- Code D: accounting date between 1 and 31 December, with an extended deadline later in the year
- Code M: accounting date between 1 January and 31 March, with the longest standard extension
You can confirm the current-year deadlines with the Inland Revenue Department. Filing late can lead to penalties and estimated assessments, so it pays to diarise your dates early.
How to change your financial year-end
Your year-end is not fixed forever. You can change it if your business circumstances shift, for example after joining a group or changing your trading pattern.
In Hong Kong, changing your financial year-end is permitted under the Companies Ordinance when you have valid reasons. The Inland Revenue Department may review the change for its tax implications, so it is worth planning ahead and speaking to your accountant before you move the date.
Manage your year-end reporting with Xero
Managing your fiscal year does not have to be stressful. Xero's cloud-based accounting software keeps your financial data up to date in real time, with bank feeds that pull in transactions automatically so you can reconcile faster.
Customisable financial reports let you track performance across any period, and you can share everything with your accountant or bookkeeper when it is time to close the books. Whether you are preparing year-end accounts or getting ready for your Profits Tax Return, you can see where your business stands and get one month free when you sign up.
FAQs on fiscal year
Here are answers to frequently asked questions about fiscal years in Hong Kong.
What is the difference between a fiscal year and a financial year?
In Hong Kong the two terms mean the same thing: a 12-month period used for accounting and tax reporting. Both can refer to the government year of 1 April to 31 March or to your company's own chosen year-end.
Is the government fiscal year the same as my company's fiscal year?
Not necessarily. The government fiscal year is fixed at 1 April to 31 March, but your company can set its own financial year-end, with many choosing 31 December or 31 March.
Can I change my company's fiscal year?
Yes, you can change your financial year-end under the Companies Ordinance when you have valid reasons. The Inland Revenue Department may review the change for its tax implications.
What happens if I miss the Profits Tax Return deadline?
The Inland Revenue Department can charge penalties and raise an estimated assessment if you file late or not at all. Filing on time, or using the Block Extension Scheme through a tax representative, helps you avoid this.
When does my first financial year-end fall?
Your directors set it when you incorporate, and under the Companies Ordinance it should fall within 18 months of incorporation. Your first set of accounts then covers the period from incorporation to that date.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.