November 20, 2024
WHY CONSIDER SETTING UP A COMPANY IN HONG KONG
When it comes to establishing a company in a foreign jurisdiction, Hong Kong consistently ranks as one of the most attractive business destinations. This global financial hub offers numerous advantages to entrepreneurs and investors looking to set up operations. In this blog, we will explore why Hong Kong is such a sought-after location for company incorporation.
Hong Kong has long been regarded as one of the best cities worldwide to launch a business. Below are the key reasons why you should consider setting up a company in this dynamic city.
STRATEGIC LOCATION AT THE HEART OF ASIA
Location plays a critical role in the success of any business. Hong Kong enjoys a prime geographical position in Asia, making it an ideal gateway for international trade. Positioned just five to eight hours away from key markets in Mainland China and the Asia-Pacific region, it offers unparalleled connectivity and access to one of the world’s largest consumer bases.
WORLD-CLASS INTERNATIONAL AIRPORT
Hong Kong International Airport is the fifth busiest in the world, handling millions of passengers and cargo annually. With over 100 airlines servicing more than 180 destinations, including major cities across Asia, Europe, and North America, the airport serves as a key hub for global business and logistics. This easy access to international markets makes it a prime location for global entrepreneurs.
EASE OF DOING BUSINESS
One of the standout benefits of setting up a company in Hong Kong is the efficiency of the incorporation process. Known for its simple regulatory environment, the city ranks as one of the easiest places to do business globally. With minimal bureaucracy, a well-established legal framework, and modern infrastructure, setting up a company in Hong Kong is quick and straightforward.
GOVERNMENT SUPPORT AND INCENTIVES
Hong Kong’s government is highly supportive of businesses, offering various programs to help companies grow and thrive. There are numerous initiatives aimed at enhancing business development, including financial incentives and grants for small and medium-sized enterprises (SMEs). These programs make Hong Kong an attractive destination for businesses at all stages of growth.
ATTRACTIVE TAX SYSTEM
Hong Kong is famous for its low and simple tax regime, which makes it a preferred destination for investors. Corporate tax is set at a competitive 16.5% on assessable profits, while unincorporated businesses face a slightly lower rate of 15%. Personal income tax rates are equally favorable, starting as low as 2%. Additionally, Hong Kong does not impose taxes on capital gains, dividends, or sales, further enhancing its appeal to investors.
A FREE AND OPEN ECONOMY
Hong Kong’s economy operates on principles of free trade and open markets, which encourages investment and business growth. There are no foreign ownership restrictions, no exchange controls, and no limits on inward or outward investments. This level of economic freedom, combined with a stable financial system, allows businesses to operate without the constraints often found in other regions. Furthermore, Hong Kong-based companies enjoy preferential access to Mainland China’s market through the Closer Economic Partnership Arrangement (CEPA).
STRONG LEGAL SYSTEM
Hong Kong maintains a transparent and stable legal system, based on the English common law, which is separate from that of Mainland China. This independent legal framework provides businesses with strong protection for intellectual property and contract enforcement. Investors can rely on a predictable legal environment that fosters trust and stability.
LIBERAL IMMIGRATION POLICY
Hong Kong’s liberal immigration policies are another reason why it’s an attractive destination for international investors. Citizens from 170 countries and territories can visit Hong Kong visa-free for durations ranging from 7 to 180 days. Business owners, investors, and entrepreneurs can also easily obtain visas or entry permits for longer stays to conduct business activities or attend meetings.
HIGHLY SKILLED WORKFORCE
Hong Kong boasts a well-educated, multilingual, and highly skilled workforce. Many employees are fluent in both English and Cantonese, while Mandarin is also commonly spoken. The city’s talent pool is known for being hardworking and adaptable, providing businesses with the human capital needed to thrive in a competitive global environment.
HIGH QUALITY OF LIFE
Beyond its business advantages, Hong Kong also offers a high quality of life for expatriates and their families. The city is modern, clean, and well-connected, with a world-class public transport system. International schools, healthcare facilities, and a range of recreational options make it a desirable location for both professionals and their families to settle.
HOW WE MAY HELP?
Hong Kong continues to be a premier destination for entrepreneurs looking to expand into the Asian market. Its strategic location, favorable tax system, free-market economy, and government support make it an ideal place to set up a company. If you are considering incorporating a business in Hong Kong, reach out to our team today for more information on how we can assist with your company setup.
FAQs
- Choose a legal entity.
- Submit the necessary application documents.
- Obtain the required business certificates.
- Acquire any relevant permits and licenses.
Yes. According to the Inland Revenue Department (IRD), any form of trade, commerce, or profession that generates revenue must be registered.
Yes. The requirement to register applies to home-based businesses as well, as long as they are involved in trade, commerce, or any profession for profit, they must be registered with the Companies Registry.
Yes, foreigners can register a company in Hong Kong. However, they are required to appoint a local Company Secretary (CS) who will handle document filing and ensure compliance with statutory requirements at the Company Registry. It is advisable for foreigners to consult corporate service providers to assist with the process.
- A company name and its legal framework.
- Identification documents for the company secretary, directors, and shareholders.
- Share capital details.
- Proof of a business address.
- Public disclosure of company information.
- Signed incorporation documents by the authorized partners.
- A company account.
Anyone over the age of 18, whether local or foreign, can register a company in accordance with the Companies Ordinance in Hong Kong.
Business registration can be done through the e-Registry platform or the CR eFiling mobile app, both of which are electronic filing services provided by the Companies Registry.
No, these two are different. A business or company must first be incorporated before it can be officially registered. Company registration is a legal process that businesses must follow to operate.
Eligible persons can apply for an exemption if their monthly sales do not exceed a specific limit:
|
Service-based businesses |
$10,000 |
|
Others |
$30,000 |
Application is prescribed to be filed on Form 3 and can be submitted either in person, via post, or GovHK. However, this does not apply to companies required to register under the Companies Ordinance. Business owners who also own two or more businesses in this section are not eligible to apply.
Yes. Sole proprietors must follow the requirements set by the Inland Revenue Department’s Business Registration Office and obtain a Business Registration Certificate.
- Select a company name (subject to approval).
- Appoint a Designated Representative (DR).
- Appoint directors, shareholders, and a company secretary.
- Prepare share capital details.
- Register a physical business address.
- Submit company details to the Companies Registry in Hong Kong.
The board of directors and shareholders can be of any nationality and reside anywhere globally. However, the company secretary must be a resident of Hong Kong. If a corporate body serves as the secretary, it must have a registered office in Hong Kong.
Yes. If there are changes or the business ceases, you must notify the Commissioner of Inland Revenue within one month. Appropriate forms must be filed with the Business Registration Office, such as:
- IRC3110A: Change of Business Name
- IRC3111A: Change of Business Address
- IRC3113: Cessation of Business
- IRBR64: Change of Partners
- IRBR193: Change of Business Nature
- IRBR200: Commencement of Business by Corporation
At least one director is required for registering a company in Hong Kong, with no maximum limit. Directors must be over 18 years of age and must not have any legal restrictions.
Yes. In accordance with Hong Kong’s company laws, information about directors, shareholders, and the company secretary is publicly accessible.
A business name must not be identical to an existing or reserved name. It should include the suffix “Limited” (not “Ltd”). You can check name availability at the Registry’s Cyber Search Center.
The fastest company registration can be completed within one day if all legal requirements are met. On average, it takes about 5-7 business days for foreigners to incorporate a company in Hong Kong.
You can renew your registration by scheduling an appointment with the Business Registration Office and providing your previous registration documents and certificate. Alternatively, you can mail the necessary documents along with a crossed cheque for renewal fees.
The Company Registration Number (CRN) is an identification number for your company, used for legal and governmental purposes. It can be found on the top left corner of your Certificate of Incorporation.
The Hong Kong Inland Revenue Department issues a Business Registration Number (BRN), which serves as your Tax Identification Number (TIN). It is required for filing annual returns and fulfilling tax obligations in Hong Kong.
The most common business entity in Hong Kong is a Private Company Limited by Shares. This type of entity is separate from its members and is often recommended for startups looking to protect personal assets from business liabilities.
The Business Registration Office will issue the certificate upon registration. Once obtained, it must be displayed in your business premises for inspection by relevant authorities.
Yes. The company secretary ensures legal compliance and manages auditing responsibilities. Shareholders or directors cannot act as the company secretary.
You can check company registration details through the Company Search Mobile Service (CSMS) offered by the Integrated Companies Registry Information System (ICRIS). This service provides access to business documents and officer information.
Yes. A single person can register a company in Hong Kong as long as he meet all statutory requirements. The minimum number of shareholders and directors is one, with the secretary required to be a Hong Kong resident.
Once registered, your business may enjoy government support, tax benefits, and legal protection. You can operate your business globally, access the Mainland China market, and benefit from streamlined tax systems and various government programs.
A company must have at least one shareholder, with a maximum of 50. Shareholders can be of any nationality, and 100% foreign ownership is allowed.
No. You do not need to be physically present in Hong Kong if you work with a corporate service provider. However, if you plan to open a corporate bank account, physical presence may be required.
No, foreign owners can operate their Hong Kong company from anywhere in the world. There are no legal requirements for them to relocate to Hong Kong.
The Business Registration Ordinance (Chapter 310, Laws of Hong Kong) governs the registration of businesses operated by individuals, partnerships, or local companies in Hong Kong. It also applies to non-Hong Kong businesses.
Some banks allow the opening of a corporate account without physical presence in Hong Kong, provided signed documents are submitted at overseas branches. However, new accounts cannot be opened entirely online due to Hong Kong’s anti-money laundering regulations.
After registration, you will receive a Certificate of Incorporation. This certificate is accepted by both local and international authorities as proof of your company’s legal existence.
Yes, a local address is required for registering a business in Hong Kong. This address does not need to be a commercial property; it can be the residential address of a director or shareholder.
Registered capital represents the maximum financial liability of the company, as per legal requirements. The issue of shares must not exceed this registered capital.
No. Registered capital does not require verification, regardless of the amount.
Yes, a fee must be paid when increasing registered capital, along with the completed form, to the Companies Registry. A shareholders’ general meeting must be held before submitting a resolution.
Yes, Hong Kong law allows a single person to serve as both a shareholder and director, provided they meet.
Hong Kong, one of the important economic powerhouses in the world for company setup, attract investors to do business in the country due to many reasons. From its strategic location to access the huge Mainland China markets to its vibrant investment environment for business registration, Hong Kong makes the top choice for many foreign investors for company registration.
Author: Chandrawat & Partners
Topic: Setting up a company in Hong Kong
For more information or queries, please email us at
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Key Contact
Surendra Singh Chandrawat
Managing Partner
