If you want to do business in Asia or with Asia, Hong Kong is simply the best place.
Fast and inexpensive
Setting up a company in Hong Kong is easy and inexpensive. There is very limited bureaucracy, no foreign exchange control system. It takes a few hours only to set up a new company. Business owners enjoy maximum freedom (no minimum share capital, no mandatory local director, no restrictions for foreigners, no need to visit Hong Kong).
Attractive tax system
Hong Kong has a very competitive tax regime, with no VAT or consumption tax.
There is a 0% profit tax for offshore companies registered in Hong Kong, and a maximum of 16.5% profit tax for local companies.
Competitive business environment
The government is also doing a lot to support entrepreneurs and startups. It will invest HKD 100 billion in innovation and technology in 2020.
It is therefore no surprise that Hong Kong is the 3rd most competitive economy according to the World Economic Forum’s Competitiveness Index 2019 and 5th according to IMD World Competitiveness Center.
In this guide, we take you through the main steps of setting up a company in Hong Kong.
When you set up your company, and after it is set up, your main contacts will be:
What is a Company Secretary?
It is mandatory for any company in Hong Kong to appoint a Company Secretary. The main roles of your Company Secretary are:
Who can be appointed as your Company Secretary?
If your Company Secretary is an individual, it must reside in Hong Kong. This means that you can appoint a friend in Hong Kong as your Company Secretary. But you should make sure this friend is familiar with the regulatory obligations of Company Secretaries.
In order to save time and avoid problems, we recommend that you select a professional services firm as your Company Secretary. You can find a list of qualified professional services firms from the Registry for Trust and Company Service Providers.
The next step is to decide the legal structure for your business.
The main types of entities available in Hong Kong are:
To keep things simple, we recommend that you set up a company limited by shares, also known as a “limited liability company“.
You enjoy maximum freedom for your company name when setting up a company in Hong Kong. You can select a name in Chinese (simplified characters), in English, or both.
Here are a few practical tips regarding the name of your company:
If you have difficulties finding a name for your business, our friends at Shopify have created this easy-to-use name generator. Give it a try!
For more information on company names, you may also check our guide to selecting a company name in Hong Kong.
You do not need to rent an actual office in order to set up your company. Instead, you may just use a registered address provided by your Company Secretary.
If you prefer to have your own office, please note that you may not be able to use your apartment as a registered address for your company. You can only set up a company at an office building, a commercial building, or a mixed building (both residential and office).
All correspondence from the Hong Kong government authorities will be sent to your registered address. It is therefore important to make sure that someone (usually your Company Secretary) will receive and email you any correspondence.
Please check our post on registered address for more information.
Share capital – There is no minimum amount of share capital required. You are free to decide the currency and amount for your share capital of your company. The general practice is to have at least one shareholder with one ordinary share issued at the formation of the company.
Shareholders – A Hong Kong private limited company can have from one (1) to fifty (50) of shareholders. Shareholders do not need to reside in Hong Kong. Shareholders can consist of natural persons or companies. Local or foreign shareholding is allowed. Appointment of nominee shareholders is permitted. Shareholders meetings can be held anywhere in the world.
Directors – A minimum of one individual director is required. The other directors can be persons or companies, local or foreigners. There is no need the directors to reside in Hong Kong. Directors Board meetings can be held anywhere in the world. Board meetings can be held anywhere in the world.
If you set up a limited liability company, the documents that you need to prepare and present are as follows:
After the incorporation is complete, you will receive the following documents confirming that your company is ready for business:
Setting up a company in Hong Kong is straightforward. The application must be filed with the Companies Registry. It can be done:
Upon successful incorporation of your company, the Companies Registry will issue the following documents:
The Certificate of Incorporation is issued by the Companies Registry. Its purpose is to confirm the name and date of incorporation of your company. This document does not expire.
The Business Registration Certificate is issued by the Inland Revenue Department and confirm that your company is enrolled with the tax authorities in Hong Kong. The unique number indicated in this document is also known as the Tax Identification Number of your company. This document is normally valid for 12 months (unless you have opted for and paid for 3 years at the time of incorporation). It must be renewed in time in order to allow your company to remain in good standing.
If you incorporate with Air Corporate, we guarantee that you will get your Hong Kong company and Statrys business account within 24 hours.
Hong Kong is a very open and free economy. Most companies do not require a license or permit to conduct their business.
Certain companies still need to apply for a license or permit before they can start their business. Such application is done after your company is set up.
Examples of sectors where a license or permit is required include banking, insurance, medical services, dealing with securities, operating a food and beverage outlet.
Please refer to the HK government website or contact us in case you need guidance about the permits and licenses required to conduct your business.
Your company will need a company bank account to start doing business.
You can apply with traditional banks such as HSBC, DBS, or Bank of China. But the process will be difficult if your company directors and shareholders live outside of Hong Kong. If you are a young start-up, SME, or entrepreneur with no proof of existing business, the traditional banks will most likely reject your application.
If you want are looking for an alternative, Statrys is offering SMEs and entrepreneurs banking services without dealing with a bank. You can apply entirely online. You do not need to visit Hong Kong. The application process is smooth. All you need to onboard is your company’s Business Registration and a copy of your passport, even if you are a foreigner and do not reside in Hong Kong.
Your company is automatically registered with Hong Kong’s Inland Revenue Department when it is incorporated.
Hong Kong offers a very attractive territorial tax regime.
Let’s keep it simple. If your company does business outside Hong Kong (offshore limited liability company), it is not subject to profit tax in Hong Kong. This is commonly known as the offshore tax system.
If your company conducts business in Hong Kong (onshore limited liability company), the profit tax rate is 8.25% on the first HK$2 million of profits, and 16.5% on everything thereafter. In addition, your business can enjoy many tax deductions that will reduce your profit tax.
There is no VAT or capital gains tax in Hong Kong.
For more information on Hong Kong taxes, you may refer to our Complete Guide to Hong Kong Profits Tax for more information.
You need to be aware that your company has some ongoing reporting and filing obligations during the course of its business life. It essential that you comply with the obligations to ensure that your company remains in good standing.
Some of the annual filing obligations include:
You must also report to the Companies Registry certain changes regarding your company as soon as they occur.
This includes changes of directors, registered address, amount of share capital. Please refer to the leaflet of the Companies Registry for more information or simply consult with your company secretary.
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