Hong Kong is recognized as one of the world’s most business-friendly cities attracting entrepreneurs and companies globally. In 2023 132,246 new companies were registered in Hong Kong according to the Companies Registry compared to 70,402 in Singapore.
With its favorable tax policies strategic position in Asia and highly skilled workforce setting up a company in Hong Kong is a logical choice for many businesses.
This article will guide you through the essential steps requirements costs and practical tips for establishing a company in Hong Kong.
If you’re short on time to manage the process on your own, you might want to consider Statrys company registration in Hong Kong which can efficiently help you establish a company and open a business account with ease.
Why Establish a Company in Hong Kong in 2024?
Hong Kong offers more than just a rich cultural experience exceptional infrastructure, and high quality of life. It is also a global hub for international trade and investment. Here are four reasons why setting up a company in Hong Kong could benefit your business:
- Ease and Low Cost of Setup
Registering a company in Hong Kong is quick and cost-effective. You can obtain a business registration certificate from the Hong Kong Companies Registry in just a few days with reasonable and transparent government fees for incorporation. The city provides a business-friendly environment with minimal bureaucratic hurdles; there is no requirement for minimum registered capital a local director or restrictions on foreign investment. - A Dynamic Business Environment
Home to over 360,000 SME Hong Kong is a thriving center for start-up growth and innovation offering an adaptable and supportive environment. According to the 2023 report by IMD World Competitiveness Center Hong Kong ranks among the top ten most competitive economies globally.
The Hong Kong Government actively promotes innovation and technological advancement having allocated HKD 500 million in 2023 for a Digital Transformation Support Pilot Programme to equip SMEs with vital digital tools. This makes Hong Kong an ideal base for entrepreneurs looking to expand their businesses across the region.
Business-Friendly Tax System
Hong Kong offers a favorable tax structure for business featuring a two-tiered profit tax rate. The first HKD 3,000 of profit is exempt from tax. For incorporated companies profits up to HKD 2 million are taxed at 8.25% while any profits exceeding this threshold are taxed at 16.5%. This makes Hong Kong corporate tax rates some of the lowest in Asia and worldwide.
Hong Kong territorial tax system companies that conduct their business activities outside of Hong Kong are not subject to corporate tax on their earnings.
No VAT or Capital Gains Tax
One of the key advantages of registering a company in Hong Kong is the absence of taxes such as Value-Added Tax (VAT) or Goods and Services Tax (GST). There is no capital gains tax on profits from the sale of assets such as property or shares.
Get Acquainted with Key Local Authorities
To register a company in Hong Kong you will need to interact mainly with two government departments:
- The Companies Registry:
This office handles business registrations and is responsible for the incorporation of companies in Hong Kong. It ensures compliance with corporate laws as outlined in the Companies Ordinance. - The Inland Revenue Department (IRD):
The IRD oversees tax administration in Hong Kong. Your company must file an annual tax return with the IRD to determine the tax payable.
Choose a Company Name
The company registration process begins with selecting a name. The name can be in Chinese, English, or both, but it must not combine both languages. An English company name must end with Limited while a Chinese name must use traditional characters and end with “有限公司.”
To ensure your chosen name is approved follow these tips:
- Tip #1: Check name availability on the Hong Kong Company Registry’s website or through your company secretary.
- Tip #2: Confirm that the name is not trademarked by using the Intellectual Property Department’s Online Search System.
- Tip #3: Consider trademarking your company name with the Hong Kong Intellectual Property Department for protection.
Select the Legal Structure
Once you have a company name decide on the legal structure for your business. The choice of structure affects tax responsibilities operational flexibilityand legal liability. The main types of entities in Hong Kong are:
- Public and Private Limited Company
- Sole Proprietorship
- Partnership
A limited company is the most popular choice due to its limited liability, share-based structure and ease of transferring shares making it attractive for investors and expansion.
Appoint a Company Secretary
Every company in Hong Kong must have a local company secretary who serves as the main contact with authorities and ensures compliance with regulations. A company secretary can be a Hong Kong resident or a licensed corporate entity.
A qualified company secretary will handle tasks such as maintaining company records organizing meetings managing filings and monitoring regulatory changes.
Select a Registered Address
Your company registered address is where official correspondence from government departments will be sent. It’s common to use your company secretary’s address if you do not have a physical office in Hong Kong. If you change addresses you must update the authorities using the NR1 Form.
Prepare the Incorporation Documents
Hong Kong incorporation process is relatively straightforward requiring minimal documentation:
- NNC1 and IRBR1 forms for companies limited by shares.
- Identification documents for directors and shareholders.
- A copy of the company Articles of Association usually prepared by the company secretary.
Submit Documents to the Companies Registry
Submit the incorporation documents either online via the e-Registry Portal by mail or in person at the Companies Registry. Within 2 to 6 business days you will receive a Certificate of Incorporation and a Business Registration Certificate.
Pay the Government Fees
When submitting the incorporation documents, you will need to pay the required government fees. For the most up-to-date fee schedule check the Companies Registry’s official website.
Obtain Necessary Permits and Licenses
While most businesses in Hong Kong do not require additional permits certain industries, like restaurants or financial services do. Verify the necessary licenses with the Trade and Industry Department’s website.
Maintain Tax Compliance and Financial Reporting
The Companies Registry automatically notifies the IRD of your company’s existence. It’s your responsibility to maintain proper financial reporting and comply with tax regulations a task typically managed by your company secretary.
