Owners of Douyin and Taobao stores have recently been asking the same question: Has the fixed-rate taxation system been eliminated, and will all businesses now be subject to audit-based taxation? The answer isn’t that straightforward, but regulations have indeed tightened in 2026, with e-commerce businesses being the primary focus. Today, we’ll thoroughly explain the differences between ”audit-based taxation” and ”fixed-rate taxation” so you’ll know exactly how to pay your taxes and which tax incentives you can still take advantage of.

In 2026, the Hong Kong Stock Exchange was buzzing with activity. In the first half of the year, 84 new listings raised HK$208 billion—double the amount from the same period the previous year—ranking second globally, trailing only the Nasdaq; on July 9, seven companies went public simultaneously, setting a peak for the year. It’s not uncommon to see posts on social media saying, ”I got three IPOs today.” But this wave is different from the ”close-your-eyes-and-subscribe” frenzy of 2020–2021.

Mr. Chen, who runs an international trade business in Shenzhen, ran into a snag last year: the auditor asked him to provide bank monthly statements, and he had to dig through emails from half a year ago just to gather them all. As a result, the filing of his annual report was delayed, and he nearly faced a fine. Auditing a Hong Kong company isn’t just a matter of submitting a form—the completeness of the documentation directly determines efficiency and risk. In 2026, the tax authorities will enforce stricter scrutiny of the ”three-way matching” requirement (where contracts, invoices, and bank statements correspond one-to-one).

“If the company has no revenue, just file a zero return”—this is one of the most dangerous ideas of 2026. The Hong Kong Inland Revenue Department’s 2026 Operational Guidelines on Zero-Declaration Filings make it very clear: zero-declaration filings are only applicable to dormant companies that have ”no business operations, no bank transactions, and no changes in assets or liabilities,” and must be accompanied by an audit report; otherwise, they will be considered false declarations, subject to a maximum fine of 100,000 Hong Kong dollars…

“No address, no capital, no industry restrictions”—in 2026, this phrase is half a boon and half a pitfall. Many entrepreneurs in foreign trade and cross-border e-commerce took it at face value, only to have their business name applications rejected and face obstacles when opening bank accounts. Before registering, be sure to understand the three most common misconceptions.