Hong Kong has long been considered a financial Mecca of Asia and it’s actually the place I would recommend to register an offshore company. Their banking system is excellent and it’s a very entrepreneurial country. The process is getting a bit more difficult, however, with the proper guidance, the incorporation process is fairly straightforward.
The most common type of business entity registered in Hong Kong is a private limited liability company. Limited liability companies are a separate legal entity for its owners compared to structures such as sole proprietorship. Anyone above the age of 18 can set up a company in Hong Kong.
I will list all the process and requirements for registering a HK Limited Company. Due to the complexity of the process and tighter regulations, it is recommended you engage a professional firm to handle the process.
Requirements for HK Companies
- Company Name – The name must be unique and needs to be approved before proceeding with incorporation.
- Directors – Unlike Singapore, directors can be from anywhere in the world. You must appoint at least 1 company director and there is no requirement for the director to be a nominee shareholder in the company. Directors must be of at least 18 years of age and board meetings can be held anywhere in the world.
- Shareholders – HK Limited companies allow a minimum of 1 and a maximum of 50 shareholders. There is no residency requirement of the shareholders and a single individual can own 100% of the business. Nominee shareholders can also be appointed and shares can easily be redistributed and sold.
- Company Secretary – The appointment of a company secretary is mandatory. The company secretary must be a resident in Hong Kong or have it’s official office/place of business in HK. The company secretary must be a different person in the case of a sole director or shareholder. The role of a company secretary is to maintain the company books and ensure compliance with the laws of Hong Kong.
- Share Capital – The general norm is to have 1 share per owner, the currency of shares can be in any major currency and if transferring shares they are subject to a stamp duty.
- Registered Address – To be able to register the company, you need to have a registered Hong Kong address. This must be an actual address and not a P.O. Box.
- Public Information – Information about the company and it’s members is available to the public in compliance with Government laws. If you wish to keep details and names hidden, you can consult with a professional firm.
- Taxation – Profits tax is set at 16.5% for profits made in Hong Kong. Only profits and income earned in Hong Kong are subject to the tax as HK has a territorial taxation policy(Meaning profits made outside Hong Kong aren’t subject to tax. There is no capital gains tax & withholding dividend taxation.)
- Compliance – It is mandatory for companies to maintain accounts. Accounts must be audited annually by a Certified Public Accountant in Hong Kong. Companies must also file an annual renewal fee and must hold an Annual General Meeting, 18 months from the date of formation. The subsequent years, the AGM must be held every 15 months.
- Time-frame – It usually takes between 5 to 7 days to incorporate in Hong Kong.
NB: Although there is no official requirement to be physically present in Hong Kong for incorporation, you must be present in order to get a Business Bank Account. It’s difficult(if not impossible) to get a bank account remotely.
Documents Required
To set up a company in Hong Kong, the following documents are required:
- Articles of Association of the company. A copy is normally provided by the firm assisting the incorporation process.
- Incorporation Form that includes all of the following:
- Company name
- Registered address
- Description of your business & sectors you will be operating in.
- Personal Details of shareholders, directors and company secretary
- Member Liability
- Share capital – Amount & No. of shares
- Copy of passport
- Overseas proof of address
- Bank Reference Letter
- Copy of Hong Kong identity card
- Proof of address
- Copy of parent company registration documents such as Certificate of Incorporation and Articles of Association
- Incorporation Documents - Company seal, stamp, etc. - About 2,070 HKD
- The Company Registration (Government fee): 1,730 HKD.
- The Business Registration Certificate (Government fee): 250 HKD.
- The Provision for the Company Secretary: 3,500 HKD.
- The Provision for the Registered Office Address: 2,000 HKD.
- The Assistance For Bank Account Opening - 1,000 HKD
- The Business Registration Certificate (Government fee): 250 HKD.
- Annual Return (Government fee): 105 HKD.
- The Provision for the Company Secretary: 3,500 HKD.
- The Provision for the Registered Office Address: 2,000 HKD.
- Territorial system of taxation - Incomes earned outside of HK don’t get taxed.
- Extensive treaties with other countries which makes it attractive for business.
- No Goods & Services Tax.
- Very low or no withholding taxes.
- No resident director required for company incorporation.
- Since Hong Kong is still a part of China, there has been a slower process of signing cross-border treaties.
- Hong Kong is becoming less open. Permanent Resident schemes and bank account opening is becoming harder as a foreigner(particularly for American citizens).
- Hong Kong is trying to become a member of the Organization for Economic Co-operation and Development(OECD) and financial regulations/requirements are stricter.
- Lack of incentives for businesses or startups.
- Recent political unrest and protests.
- 16.5% flat rate tax on corporations.
- No Goods & Services Tax.
- No Capital Gains Taxation.
- No Withholding Tax on dividend distribution.
- 16.5% Withholding Tax on 30-100% of the gross royalty. Percentage varies depending on qualifying conditions.
- Tax Treaties with 30 countries.
- Purely territorial taxation system.
If directors or shareholders are non-residents of Hong Kong, these additional documents are needed:
For resident shareholders and directors:
For corporate shareholders and directors who are registering a subsidiary in Hong Kong:
NB: If your documents are not in the English language, they must be professionally translated.
Costs of Incorporating In Hong Kong
Here are the general costs of registering and maintaining a Hong Kong company, these figures are based assuming you hire an agency/firm to incorporate on your behalf.
Note: The fees largely depend on which agency or firm you use, however, the fees listed are pretty much accurate.
Starting from the second year you’ll need to pay:
Hong Kong Incorporation Advantages
Hong Kong Incorporation Disadvantages
Hong Kong Taxation Guide
Here are the tax rates for Hong Kong companies:
Conclusion
Hong Kong is without a doubt one of the best places to incorporate due to the financial strength of the country and it’s position as a hub for business. However, restrictions are becoming tighter and many are reporting harder requirements to get a bank account. I always recommend using a law firm or agent to complete the process on your behalf.
Keep in mind that while incorporation can be done remotely, you need to visit Hong Kong personally to open a business bank account.
Nice information
Thank you :)
Good info, I've always wondered about starting a business in Hong Kong
Thank you! The only issue is the bank account, however, if you are willing to fly there it shouldn't be much of a problem.
awesome post. thanks for writing it down!
You're welcome! :)