Hong Kong vs. Delaware: Where to Incorporate Your Company?

Hong Kong vs. Delaware is one of the most common comparisons for founders planning to expand globally. If you’re thinking of starting a company in either place, the best choice depends on your business goals, structure, and where your customers are.

Hong Kong offers low taxes and strong international banking. Delaware is trusted by U.S. investors and is known for its business-friendly legal system.

This guide compares both to help you decide where to incorporate.

Business Environment in Hong Kong and Delaware

Both Hong Kong and Delaware follow the common law system, which makes them easier to understand for international founders.

Delaware has the Chancery Court, a court that only handles business cases. It’s known for being fast and experienced in corporate law. This gives Delaware an edge in legal protection and investor trust.

Hong Kong’s legal system is part of the “One Country, Two Systems” model. It stays separate from Mainland China and uses English in contracts, legal filings, and court cases.

Business Reputation and Investor Trust

Delaware is a top choice in the U.S. for a reason. Over 2 million companies are registered there, including 67% of Fortune 500 firms. Investors trust its legal structure, and most U.S. venture capitalists expect startups to be registered in Delaware.

Hong Kong also ranks high. It’s known as the world’s freest economy (Fraser Institute, 2024) and is among the top 5 most competitive economies (IMD, 2024). It has open markets, low taxes, and pro-business laws, making it ideal for companies that want to access the Asian market.

If your goal is to raise money from U.S. investors, Delaware is the better fit. But if your focus is Asia or China access, Hong Kong is the smarter choice.

Regulatory Stability

Delaware offers a stable setup: no sales tax, no VAT, no inventory tax, and rare rule changes.

Hong Kong also scores high on stability. It allows 100% foreign ownership, has no capital controls, and supports the free flow of funds, goods, and data. It also ranks in the top 3 for government efficiency.

Both are stable. The difference lies in where you want to grow your business. Delaware offers U.S. simplicity, while Hong Kong offers Asia access.

How to Register a Company in Hong Kong or Delaware

How to Register a Company in Hong Kong

Step 1: Prepare Required Documents

• Form NNC1 (for private companies) or Form NNC1G (for companies limited by guarantee)
• Articles of Association
• Business Registration Form (IRBR1)

Step 2: Submit Application Online or by Paper

• File electronically through the Companies Registry’s e-Registry portal for approval within 1 hour
• Or submit paper documents for approval within 4 working days

Step 3: Appoint Required Roles

• A local company secretary
• A registered office address in Hong Kong
• No local director is required

Step 4: Pay Government Fees

• HK$1,720 for company incorporation
• HK$2,250 for a 1-year Business Registration Certificate

Step 5: Maintain a Significant Controllers Register (SCR)

• Keep this internal document at the registered office
• Not submitted to the government but must be available for inspection by authorities

How to Register a Company in Delaware (U.S.)

Step 1: Choose Entity Type

• LLC: File a Certificate of Formation
• Corporation: File a Certificate of Incorporation

Step 2: Prepare Supporting Materials

• Include a cover letter with contact details
• Pay the state filing fee

Step 3: File with the Delaware Division of Corporations

• Submit documents online or by mail
• Processing time is usually fast

Step 4: Appoint a Registered Agent

• Must have a physical address in Delaware
• Can be a service provider

Step 5: File the Beneficial Ownership Information (BOI) Report

• Required under the Corporate Transparency Act from January 1, 2024
• Must be submitted to FinCEN (unless exempt)

Step 6: Pay State Filing Fees

• $90 for LLCs
• $89–$200+ for corporations depending on share structure

Tax Benefits in Hong Kong vs. Delaware

Delaware doesn’t tax income earned outside the state, but foreign founders must still file Form 5472 and 1120 with the IRS, even with no U.S. income. Missing this can lead to $25,000+ in penalties.

Hong Kong uses a territorial tax system. You don’t pay profits tax on income earned outside Hong Kong, as long as you can prove it. No federal forms, no extra filings.

Hong Kong tax rates:

• 8.25% on the first HK$2 million (~USD 255,000)
• 16.5% on anything above
• No VAT, no capital gains tax, and deductions for R&D, IP, and equipment

Delaware’s corporate tax is 8.7%, but U.S. companies also face federal income tax and franchise tax. These add up fast if you grow or operate in multiple states.

Note: Hong Kong now has Foreign Source Income Exemption (FSIE) rules. For passive income (dividends, interest, etc.) from outside Hong Kong, you need to show real business activity in Hong Kong to avoid tax.

Annual Compliance in Hong Kong vs. Delaware

Delaware

• Annual Report and Franchise Tax due by March 1
• Penalty: $200+ interest for late filing

Hong Kong

• Annual Return due within 42 days after your company's incorporation anniversary
• Penalty: Up to HK$50,000 + HK$1,000/day if late
• Requires an annual audit, even for small businesses

Legal System in Hong Kong vs. Delaware for Businesses

Delaware’s Chancery Court is fast, predictable, and uses judges with corporate law expertise. If you're dealing with disputes between shareholders, this setup can save time and risk.

Hong Kong’s courts support international contracts, arbitration, and cross-border enforcement. It's ideal for global companies with partners in Asia.

CFC Rules and Tax Reporting for Foreign Company Owners

Forming a company in Hong Kong or Delaware doesn’t mean you can avoid taxes.

If your home country has Controlled Foreign Corporation (CFC) rules, your company’s income may be taxed as your own. This is common in places like the UK, Canada, Germany, and Australia.

To stay compliant, you’ll need to show real business operations in the place where your company is registered, not just a legal setup.

Hong Kong or Delaware: Best Choice by Business Type

Now, here’s a comparison to help you decide whether Hong Kong or Delaware is the better fit for your business type:

Final Thoughts

When comparing Hong Kong vs. Delaware, there’s no one-size-fits-all answer. 

Delaware works if you're raising U.S. venture capital or targeting the American market.

Choose Hong Kong if you want global access, lower taxes, and a strong base in Asia.

If Hong Kong fits your goals, Air Corporate makes it simple. From company setup to banking and compliance, we handle it fast, online, and hassle-free!