Exchange gains and losses are a common occurrence for companies engaged in international trade. In mainland China, the foreign exchange generated by enterprises is directly included in the financial expenses, but the foreign exchange only occurred in Hong Kong is included in the foreign exchange profit and loss.

So from this point of view, there are some differences between the accounting systems of mainland China and Hong Kong.

In the inland region, not all enterprises are required to do audit reports, but in Hong Kong, all enterprises with actual operations are required to do audit reports.

The exchange gains and losses will be shown in the Hong Kong audit report.

In mainland China, if the exchange gain or loss is income, tax will be generated, and the loss can be deducted from tax. However, when audited in Hong Kong, exchange gains and losses are differentiated according to the situation. If the loss of exchange revenue arising from business operations can be deducted from tax, if it is not generated from business operations, it cannot be deducted from tax. The reason is that the income of the enterprise capital is exempt from tax in Hong Kong. This is a consistent tax principle.

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