Accounting for Foreign Companies: Duties, Deadlines and Practice

Which duties apply everywhere

Every company must record its transactions in a traceable way, retain documents and usually file something annually, whether a tax return, annual accounts or an information report. That applies even when the company pays no tax in its jurisdiction, because the filing duty is separate from the tax liability. Without books you cannot substantiate an offshore position and therefore lose it.

US LLC: Form 5472, state filings and FBAR

A single member LLC owned by a non US person is treated as a separate entity for reporting purposes and must file Form 5472 annually together with a pro forma return disclosing transactions with its owner. The IRS penalty for failure to file is USD 25,000. On top come the annual report or franchise tax of the relevant state and the FBAR filing where the LLC's foreign accounts exceed USD 10,000 in aggregate.

UAE: corporate tax and ongoing duties

The United Arab Emirates introduced corporate tax for financial years beginning from June 2023, combined with mandatory registration with the tax authority and an annual return after the financial year ends. Free zone companies fall under specific rules tied to qualifying activities and substance. Bookkeeping is therefore mandatory even where it used to be treated as optional.

Hong Kong, Singapore and EU companies

Hong Kong requires every company to produce financial statements audited by a locally licensed accountant and file them with the profits tax return. Singapore has annual filings with the registrar and the tax authority, with size based simplifications. EU companies must prepare annual accounts and, depending on the country, publish them, with deadlines and penalties enforced more strictly than many expect.

What you actually need operationally

You need complete sales and purchase invoices, statements from every bank account and payment provider, contracts with clients and suppliers, and a clean separation between private and business spending. Accounting software connected to your accounts and payment providers helps, since manual catch up entry is the most common source of errors. Foreign currency should be translated consistently using a documented rate method.

When it gets expensive

Cost usually comes from missed deadlines rather than tax: late filing surcharges, penalties, enforcement fines and in extreme cases removal of the company from the register. Knock on effects follow, since banks request current financial statements and register extracts and freeze accounts without them. Reconstructing several years of records typically costs a multiple of ongoing support.

Common mistakes

The most frequent mistake is assuming that no tax means no filings. The second is collecting documents only at year end, which turns exchange rates, allocation and missing invoices into a problem. The third is mixing private and business payments, which ultimately calls the separation between company and owner into question.

Bookkeeping, tax return and audit are not the same

Bookkeeping is the ongoing recording, the tax return is the annual filing with the authorities and the audit is an independent review of the accounts. Not every country requires all three: Hong Kong requires an audit without exception, while many EU states grant size based exemptions. Cost planning should cover all three levels rather than just formation fees.

Next steps

Build an overview of every entity with its financial year, deadlines, responsible authorities and required documents, and assign clear ownership for each. Setting that up once significantly reduces ongoing effort. Implementation belongs with licensed accountants and tax advisers in each jurisdiction.

Frequently asked questions

Does a US LLC with no tax due still have to file?

Yes. A single member LLC owned by a non US person must file Form 5472 with a pro forma return every year regardless of whether tax is due. State level filings apply on top.

What is the penalty for not filing Form 5472?

The IRS penalty is USD 25,000. It can increase if the failure continues after notice, so the deadline should be monitored consistently.

When do I have to file an FBAR?

When the aggregate value of all foreign financial accounts exceeds USD 10,000 at any point during the year. The duty applies to US persons, which can include US formed entities such as an LLC.

Does a Dubai free zone company need bookkeeping?

Yes. Since corporate tax was introduced for financial years starting from June 2023, registration, bookkeeping and filing duties apply. Specific free zone rules depend on qualifying activities and substance.

Which records must I keep for a foreign company?

Sales and purchase invoices, statements from all bank accounts and payment providers, contracts and evidence of payment flows. Retention periods differ by jurisdiction and should be checked locally.

Can I do the accounting for my foreign company myself?

Technically yes, but it usually fails on deadlines, forms and local specifics. A split model works better, with ongoing recording in house and the annual accounts and filings handled by licensed professionals.

What happens if I miss a filing deadline?

Depending on the country you face late filing surcharges, penalties, enforcement fines and in extreme cases strike off of the company. Banks also request current documents, so missing accounts can lead to account problems.

Does every entity need its own accounting?

Yes. Each company is a separate legal entity with its own records, accounts and financial statements. Combining several entities into one set of books is not permitted.