Overview

Hong Kong serves as an ideal business venue for entrepreneurs globally. It fosters strategic location, reliable governance, simplified FDI norms, and a nominal tax structure, allowing for more growth and opportunity. Almost every industrial and corporate setting is suitable for starting a new venture. Establishing an entity in this country requires adherence to some legal requirements, which also involve obtaining company registration. Let’s explore the legal settings around Company Registration in Hong Kong.

Is it profitable to start a new venture in Hong Kong?

Yes! Indeed, - Hong Kong adheres to immense growth potential because of the liberalized trade policies, robust governance, world-class infrastructure, and relaxed FDI norms.

It ranks among the top nations for rendering a business-friendly environment to overseas entrepreneurs. Its corporation tax is as low as 16.5%, ensuring an improved profit margin for entities. The robust legal structure ensures full-fledged protection of IPR assets. The labor laws aren’t stringent either. 

The credit availability for business setup or expansion is easily accessible from top lenders at a nominal interest rate. The government runs various growth-oriented schemes to attract overseas entities and advocate innovation.

Hong Kong renders a complete write-off for expenses arising from IT equipment purchases. A timeline of five years is also available to write off expenses for refurbishing or renovating a business place.

Corporate Tax System in Hong Kong

Hong Kong's corporate tax system is widely recognized as profit tax and adheres to the territorial and standard rate principle. The profit tax applicable to notified entities has been capped at 16.5%.

In 2018, the nation came up with a two-tier tax system, enabling a preferential tax rate applicable to a specific profit threshold.

The interest income from active operations attracts profit tax. The VAT applicability or sale tax is zero for most products and services. The concept of Capital Gain Tax does not exist here either.

Dividends do not attract withholding taxes, no matter the geolocation. A property tax rate of 15% applies to individuals reaping profit from owning property in Hong Kong. The property’s accessible value is considered to estimate the property tax.

Legal Structures available for Company registration in Hong Kong

The most common types of legal structures available for company registration in Hong Kong are given below:

Limited Liability Company

Limited Liability Company is among the most widely-used legal structures in Hong Kong. A limited liability company ensures zero risk to the member’s assets by rendering them a distinct legal identity.      

Sole Proprietorship

As the name suggests, sole proprietorship is an ideal legal structure for businesses with smaller footprints. It ensures comprehensive control for the owner over the entity, giving them more control and rights. However, the scope for limited liability is quite narrow here, which means the owner’s assets might be at stake in a crisis.

Partnership

This is a stable legal structure preferred mainly by those seeking partnership-based control. It is because it offers better control over expenses and management activities. And since only a binding document can bring such structure into effect, the chances of being acquired illegally no longer exist here.

Foreign Company Office

Foreign companies eager to start a venture in Hong Kong can choose structures like subsidiaries, ROs, and branches.

Documentation: Company Registration in Hong Kong

The following paperwork shall be required for Company Registration in Hong Kong:

• Articles of Association reflecting the company's operation and overall structure
• Copy of passport and address proof of the overseas directors and shareholders
• Copy of Hong Kong ID card as well as address evidence for local directors and shareholders
• Charter documents
• Establishment proof

A Guide to Secure Company Registration in Hong Kong

The process to secure Company Registration in Hong Kong entails critical steps, as shown below:

Step 1: Select Company Structure

The first step is to opt for an apt legal structure. The selected structure must best suit your requirements and ability to address compliance. Factors like taxes and regulations are generally considered to select a particular business structure. The managerial structure is another factor that can affect your decision to pick an apt structure.

Step 2: Company Name Reservation

The company name must be distinct and unique. Also, it should be free from any legal coverage provided under the IPRs. Take care of the offending elements that can lead to disputes due to wrongful name selection. The applicant seeking name reservation can dig into the Hong Kong Cyber Search Centre to verify the name's authenticity.

Step 3: Application Filing

The application can be filed offline and online. For online mode, use the mobile app called CR eFiling, and for offline mode, share the application along with the document with the Shroff of the Queensway Government Office. The successful vetting of the application shall lead to the grant of incorporation certification.

You can either download the certification or get it delivered to your address. It will depend on the option you have chosen for application submission. Either way, the legal effect of the certification shall remain intact.

Step 4: Secure the Business License

As such, apart from entity registration, you do not require any specific approval to perform business activities. However, some businesses require industry-specific licenses to stay legalized and operational.

You can head to the Trade and Industry Department to determine which license applies to your business. Or, you can talk to Adviso experts for comprehensive business consulting.

Step 4: Open Bank Account

A corporate bank account paves the foundation of your business transactions. It is mandatory to open a corporate account. Standard paperwork for bank account opening includes proof of business, application form, and incorporation registration.

Compliances around Company registration in Hong Kong

• As such, entities seeking Hong Kong status and registration are not required to arrange minimum share capital. However, the entity must have one shareholder holding one ordinary share. The currency for holding share capital is not limited to HK dollars.
• Regardless of nationality, a person of legal age can be a director in any entity residing in Hong Kong.
• Some legal structures do not define a shareholder or director as separate persons.
• A public company must have at least two directors and one shareholder.
• The appointment of a company secretary is mandatory in notified companies. Such a person should be from the local origin.
• The company representative should be a local resident in case of a foreign entity.

Adviso: Now Go Global with no Compliance Hassles

Adviso has been a commendable player in the licensing and business consulting realm. Our expertise and in-depth acumen concerning global incorporation and dispute resolution are unprecedented. We empower clients to go global without worrying about complicated regulations and time-consuming paperwork.

Why Us?

• Phenomenal command over overseas regulations concerning business establishment.
• Proven track record of ensuring a 100% success rate relating to global incorporation.
• Facilitate tailored support no matter where you are in the process
• Ensure timely delivery of services no matter the complications
• Remarkable ability in understanding the business environment, target customer, regulations, and so on