The handover of Hong Kong from the United Kingdom to the People’s Republic of China happened in 1997. “One country, two systems” is a constitutional principle of the People’s Republic of China which grants Hong Kong autonomy until 2047 on a wide range of issues, from the police and financial system to legislation.
Hongkongers are very critical of any changes to the existing system of relations between the local authorities and China. Therefore, the PRC authorities have only taken over defence and foreign policy issues.
Hong Kong could keep its status as one of the largest financial centres. Moreover, the jurisdiction remains a significant seaport and logistics centre. All these advantages, combined with Hong Kong’s mild tax regime, attract foreign investors and entrepreneurs to the region.
A foreign entrepreneur choosing Hong Kong as the place to register an international company will get the following benefits:
Running a business in a jurisdiction with an excellent business reputation;
Opportunities for optimising taxes as in an offshore zone.
There are no foreign exchange controls, so companies registered there can make payments not only in Hong Kong Dollars but also in any other foreign currency.
A developed banking system in Hong Kong, represented by both traditional banks and electronic payment systems and online banks, also contributes to this.
Opening a new company in Hong Kong is much easier than in other parts of China. The registration process is not time-consuming and can be done online with the help of a specialist.
Hong Kong authorities do not require directors or shareholders of a company to be citizens. If you value privacy and do not want your name to appear on a public register, nominee service is available in Hong Kong.
Running a Hong Kong company is not expensive, especially if all of its activities take place abroad. Foreign companies are not burdened with excessive reporting.
The second official language in Hong Kong is English, which also makes it easier to conduct business and hire new employees.
There is also local corporate law which is based on the same principles as in the UK and is more favourable for the defence of the economic interests of private companies.
Hong Kong is not only one of the largest financial centres in the world, with a strong economy and its own currency, but also a huge logistics centre, with tax benefits for importers. Therefore, foreign businesspeople often register trading companies here in order to sell goods from the PRC.
As we have already mentioned, local corporate legislation is based on the same principles as in the UK. Therefore, it offers a variety of companies, just as in the UK. However, the most common legal forms are the following:
Sole Trader;
Partnerships;
Private Limited Companies.
We will focus more on the third option, as this form of business organisation is most often used by foreign entrepreneurs.
A Hong Kong limited company (Ltd) is convenient because the law does not regulate the amount of share capital, the number and amount of par value of issued shares, as well as the currency in which their value is calculated. There are also no significant restrictions on the shareholders and directors. They can be either Hong Kong or foreign legal entities or individuals.
At the same time, there are a few restrictions for a Hong Kong Private Limited Company:
A private limited company must have at least one director who is a natural person;
An Ltd cannot have more than 50 shareholders;
It must have a company secretary who can be an individual or legal entity, such as an agency;
It is not possible for the same person or organisation to be director and company secretary;
A Hong Kong Ltd may not issue bearer shares;
A limited company must have a physical address and not a PO Box in Hong Kong.
If you want to open a Hong Kong company in the quickest possible manner and without additional expenses, it is better to use the services of competent legal advisors. Imperial & Legal’s specialists will help you solve this issue promptly and without extra expenses.
Our experienced advisors will help you open a company in Hong Kong in 5 steps.
You can use both official languages of the jurisdiction, English or Chinese, in your name, or a combination of them. In English names, an abbreviation is added at the end to indicate a type of company.
The name should be approved by the Hong Kong authorities before you can proceed with a company registration.
The structure of your business in Hong Kong, name, area of activity, information on the number of issued shares and their nominal value are included in the company registration form.
Professional legal advice will make the whole registration process much easier, so you will receive your certificate of incorporation in the shortest possible time.
If your future activities fall under regulation by the Hong Kong authorities, you will need to obtain an official licence in order to carry out your business successfully.
All five steps will take no more than two weeks. The Hong Kong authorities take only five working days to process the registration application. The rest of the time is usually spent on preparation.
You will manage to open a company within the given time frame if you do the following:
Book a consultation with our experienced advisors who are highly qualified in the specifics of corporate law;
You and your partners agree on all such matters as the name of the company, its corporate structure, future activities in Hong Kong, etc.
To open a company, you must pay the following:
Government registration fee;
The cost of a certificate of company incorporation.
Share capital (for this, we have taken the minimum recommended amount).
In addition to the cost of company registration, you may also need to pay for an advisor, accountant, nominee service, a government licence, as well as the rent of a physical office and wages (for those companies that will be active in Hong Kong).
The main thing that every foreign entrepreneur should remember is that Hong Kong uses a territorial principle of taxation. It is possible to register an offshore company in Hong Kong and pay no tax on income generated abroad. As this territory has a special legal status, China is also considered “abroad”.
If your company earns its income in Hong Kong, it is considered a local company. Businesses whose profits are only partially derived from foreign sources are classified as mixed-type companies.
No matter the local or mixed type of corporate structure, any income generated within Hong Kong will be subject to tax.
The jurisdiction has the following corporate income tax rates:
8.25% —on assessable profits up to HK$2,000,000;
16.5% — on any part of assessable profits over HK$2,000,000.
Zero tax rates on capital gains and dividends are considered an important advantage of Hong Kong. There is no VAT (Value Added Tax), which helps Hong Kong trade companies to significantly reduce costs.
Hong Kong inherited from the UK not only business-friendly legislation but also a reliable banking system.
Even if you do not need to go there to register a company, opening a current bank account in a local financial institution will require the personal presence of the founder of the company and a lot of additional documents. Employees of Hong Kong banks are not in a hurry to execute an agreement with offshore companies. Even if you have registered a local company, it will still take at least 4 weeks to open an account.
If an entrepreneur cannot do without opening a local bank account in Hong Kong, they will have to be persistent and be ready to write off costs.
Those companies who do not need a Hong Kong bank account use internet banking and electronic payment systems, and open accounts in reliable European banks.
Although Hong Kong companies are not subject to too much reporting, they are required to confirm the accuracy of the filed data each year through an audit. The requirement applies to all three types of companies: local, mixed and offshore. This characteristic of doing business is one of the reasons why the region has a good business reputation. However, the need to conduct audits increases the costs of running a business.
Hong Kong retains its status as a major business centre of Southeast Asia until 2047. After that, business requirements will be reviewed.
For example, China will no longer be considered “overseas”, and therefore, some offshore companies will become local. Be sure to consider this if you plan your business abroad for years to come.
As you can see, opening a company in Hong Kong has many benefits. It is a relatively low-cost solution in a region with many opportunities for tax optimisation and business development.
You will need qualified legal support not only in the process of company registration but also to reduce the tax burden on your business, obtain a government licence, etc. Whatever challenge your Hong Kong company might face, Imperial & Legal’s experience will help you solve them promptly and cost-effectively.
You can nominate directors in Hong Kong, as in the UK, and even shareholders in company documents. This option is especially convenient for start-up entrepreneurs and those who, for whatever reason, do not want their information to be made public.
A nominee director is legally responsible for the activities of a company. However, as a rule, the authorities do not tend to impose penalties on nominees, even if their foreign employers do not keep a company financially successful.
Most often foreigners register a company in Hong Kong to carry out international trade supplying products from China to other countries.
Consulting and business services and the IT industry are also quite popular. Hong Kong companies are often used to effectively manage intellectual property.
The jurisdiction does not have any special procedure or a separate type for offshore business. If the company is a newly registered business, the tax authorities will send you a tax return form 18 months after the date of incorporation. Based on the received revenue data, as well as several other requirements, you are eventually granted the status of a local or offshore company.
If all of your business income is generated abroad and you do not have any suppliers or a physical office with employees in Hong Kong, you are an offshore company.
A Hong Kong mixed company will be able to save on and avoid paying tax on overseas income if it keeps separate records of such income. For more information on tax optimisation for a Hong Kong mixed company, please contact one of our advisors.
Registering a company in Hong Kong with the help of Imperial & Legal's advisors. Over 20 years of experience. Legal support in various matters. Book a free consultation.
Register Company in Hong Kong
Offshore companies
Open a bank account
Tax optimisation
Tax solutions
Accounting services