Selecting the perfect company structure for your firm is just as crucial as any other strategic move. The right business structure will help your company function effectively and fulfil its ambitions.
Hong Kong is placed fourth in the world’s easiest place to do business. Here’s a step-by-step guide to registering your business in Hong Kong in less than a month and know the complete details of Hong Kong Company Registration.
Let’s take a look at the benefits that make Hong Kong a popular business destination.
1. Why should you establish your business in Hong Kong?
For the past 25 years, Hong Kong has had the world’s most liberal economy. It continues to be a great example of how to conduct free and open business, coming in second only to Singapore in 2020. Hong Kong is a shining example of how to live free and start a business.
2. What are the benefits of Registering in Hong Kong?
There are several advantages to starting a company in Hong Kong. Listed below are a couple of them:
Demography
Hong Kong has a population of almost 7.5 million people living on a land area of 1,106 square kilometres. Hong Kong has the world’s second-largest economy, with a GDP/Capita of US $48,755.80.
Being close to China, Hong Kong acts as the main gateway and is one of the most convenient business hubs for many international entrepreneurs.
Lower tax rates and low red tape
Hong Kong has created a safe and transparent ecosystem in which businesses can operate without fear. Entrepreneurs have the easy option of forming a Hong Kong corporation online due to low red tape.
What’s more impressive is that corporation taxes are as low as 16.5 per cent, which is a significant draw for many overseas companies considering doing business in Hong Kong.
Supportive Government
Do you need a little additional motivation to get your business off the ground? We’ve got some exciting news for you. During the course of doing business, Hong Kong has provided a great deal of assistance to both local and foreign enterprises.
The government also makes little attempt to promote a variety of funding programmes for businesses in various areas such as innovation, design, and technology, all of which will assist you in launching your business plan in Hong Kong.
If you’re a small firm or SME, we’ve put together some recommendations on how to get the most out of the grants available in Hong Kong.
3. What does it require to establish a business in Hong Kong?
Although the incorporation process takes between 5-7 business days, it is not overly difficult. To incorporate your business, you only need to follow four easy steps.
- Company Name
- Right Business Structure
- Registration of Company
- Open Corporate Bank Account
Company Name
Choose a distinctive name that distinguishes your business. Simply
Choose a distinctive name that distinguishes your business. Simply make sure the name isn’t already taken by another Hong Kong company, doesn’t infringe on any existing intellectual property, and isn’t indecent or offensive.
Right Business Structure
While there are many different sorts of businesses you can establish in Hong Kong, you must first decide whether you want to operate your business operations from Hong Kong or from wherever you are. This decision will also assist you in a variety of areas, including tax compliance.
Hong Kong Company Registration
The process of forming a business in Hong Kong is quite simple. With all of the necessary documentation in hand, your firm can be incorporated in as little as 5-7 business days.
Open Corporate Bank Account
To have a seamless process when opening a bank account in Hong Kong, you must ensure that your business concept is in good form and feasible. You should seek the support of a business service provider who can assist you with the process fast.
You’re all set and ready to start running your business in Hong Kong if you’ve completed all of these steps without any issues.
4. Which business structures are available for you to Hong Kong company registration?
While there are many different businesses you can establish in Hong Kong, you must first decide whether you want to operate your business operations from Hong Kong or from wherever you are. This choice will also benefit you in other areas, such as taxation.
Below, we’ve broken down each business structure to help you decide which is best for you:
Sole Proprietorship
In a sole proprietorship, just one owner is liable for the company’s assets and liabilities.
Business Partnership
A minimum of 2 to a maximum of 20 partners join forces to share profits. A general partnership is an arrangement in which participants are personally liable for profits and obligations. There is also the possibility of forming a limited partnership, in which limited partners are solely liable for their initial investment and general partners are liable for their entire investment.
Private Limited By Shares Company
A Private Limited by Shares Company is a separate legal entity from its owners/shareholders with a maximum of 50 shareholders. This is the most typical form entrepreneurs choose since it allows them to take advantage of all of Hong Kong’s tax perks.
Public Limited by Shares Company
Suitable for major enterprises looking to go public in order to raise funds. This firm is generally listed on the SEHK and its shares can be subscribed by the public if it has more than 50 shareholders.
Company Limited by Guarantee
Suitable for non-profit or charitable organisations. Members in this structure are required to promise to pay an agreed amount as indicated in the company’s article of association if the firm terminates, instead of shareholders who spend money.
Branch Office
An extension of a foreign corporation that allows it to conduct business in Hong Kong and benefit from it. Additionally, in Hong Kong, it does not have its own legal entity.
Representative Office
An extension of a foreign corporation that is unable to engage in commercial activities for profit. It’s appropriate for non-commercial operations like marketing and human resources.
What are the essential requirements to start Hong Kong Company Registration?
The following are the basic conditions for company formation Hong Kong’s most popular business entity – a Private Limited by Shares Company:
- Min. 1 Shareholder
- Min. 1 Individual Director
- Min. 1 Local Corporate Secretary
- Min. HKD 1.00 Paid-up Capital
- Local Registered Address
You’ll also need to provide documents such as firm incorporation forms, director/shareholder identity copies, and evidence of residence address.
Choosing the right business structure while starting a company in Hong Kong could be a smart move. Further, thousands of Indian businesses, including yours, created a Hong Kong corporation and entered a new market with limitless prospects for growth.
Why Choose Us for Hong Kong Company Registration?
We can help you navigate these complex rules in incorporating your dream company in Hong Kong. InCorp has a specialised team of experts in India and in Hong Kong. They have substantial knowledge and experience in a wide range of sectors, from entity formation to dissolution. Further, we also offer post-incorporation services including FEMA, taxation, transfer pricing and other regulatory services.
FAQs
Q1. What are the costs associated with forming a business in Hong Kong?
The current costs are as follows: » Company secretarial fee for incorporation — approx.HK$2,000 » Acting as Company Secretary — approx. HK$4,000 » Provision of registered office address — approx. HK$2,000 » Preparation and maintenance of significant controllers register and acting as designated representative — HK$2,000 » Business Registration Certificate — HK$250 (waived by $2,000 HKD in 2021) » Miscellaneous (including but not limited to the government application fee, company kit, seal and chop) — approx. HK$3,500
Q2. In Hong Kong, how much tax do I have to pay on my business profits?
Hong Kong has no sales tax, withholding tax, capital gains tax, dividend taxes, and estate tax, making it one of the most tax-friendly jurisdictions in the world for businesses. Moreover, the Hong Kong government imposes only three direct taxes with relatively low rates and are further reduced by substantial allowances and deductions. »Companies must pay an 8.25 percent profit tax on their first HK$2 million in profits. Profits over HK$2 million are taxed at a rate of 16.5 percent. The corresponding two-tiered tax rates for unincorporated businesses (i.e. partnerships and sole proprietorships) are 7.5 percent and 15 percent. » Salaries are subject to 15% tax. » Property tax is subject to 15%.
Q3. Who is eligible to form a company in Hong Kong?
Any person (foreign or local) over the age of 18 can form a Hong Kong company, which the Companies Ordinance of Hong Kong governs.
Q4. Is it possible for a foreigner to own shares in a Hong Kong company?
In Hong Kong, a foreigner has complete authority to serve as an individual director and shareholder of a corporation. It is not mandatory for a local resident to do so.
About InCorp Advisory
InCorp Global is one of APAC’s leading professional services firms headquartered in Singapore. InCorp Global is spread across 8 countries – Singapore (HQ), Malaysia, Indonesia, India, Vietnam, Australia, and the Philippines. InCorp Advisory India is a part of Incorp Group, with a legacy of 30+ years, operating with 450+ professionals across 5 cities. Our team enables clients across key practice areas such as Advisory, Tax, Compliance, Sustainability, and Managed Services, partnering with them in their entire business lifecycle.
