Atrium and Associates Corporate and Legal Services

Hong Kong is strategically positioned in the heart of Asia, making it a gateway to the vast Chinese market and other Asian economies.

Its well-developed infrastructure, transportation networks, and international connections make it an ideal location to do business in China, which has made Hong Kong companies very popular, and suitable to conduct a wide range of international businesses.

Once Hong Kong is a relevant trading economy, a Hong Kong company does not have a tax haven or offshore image.

Setting up a Business Company in Hong Kong

Key Advantages

Incorporating a company in Hong Kong can offer several advantages that make it an attractive destination for entrepreneurs and businesses.

Here are some of the key advantages of incorporating a business in Hong Kong:

Business-Friendly Environment:

Hong Kong has a well-established reputation as a business-friendly jurisdiction with a straightforward and efficient company incorporation process. The government is keen on promoting entrepreneurship and foreign investment.

Tax Benefits:

Hong Kong offers a highly favorable tax regime. The corporate tax rate is low, with a simple and transparent system. There is no capital gains tax, dividend tax, or value-added tax (VAT). This can lead to significant tax savings for businesses.

Global Financial Center:

Hong Kong is a major global financial hub with a sophisticated banking system, making it easier for businesses to access a wide range of financial services, including banking, financing, and investment opportunities.

Strategic Location:

Situated at the crossroads of Asia, Hong Kong provides easy access to the booming Chinese market and other economies in the Asia-Pacific region. Its well-connected transportation infrastructure further facilitates trade and business operations.

Political Stability and Rule of Law:

Hong Kong has a stable political environment and a legal system based on English common law. The rule of law is well-respected, providing a secure environment for businesses to operate and resolve disputes.

Intellectual Property Protection:

Hong Kong has strong intellectual property protection laws and regulations, safeguarding your company's trademarks, copyrights, and patents.

Gateway to China:

For businesses interested in tapping into the Chinese market, Hong Kong serves as a gateway due to its proximity, cultural familiarity, and business connections with mainland China.

Free Trade Agreements:

Hong Kong has a network of free trade agreements with various economies, enhancing trade opportunities and reducing barriers for businesses engaging in international trade.

Privacy and Confidentiality:

Company ownership information in Hong Kong can be kept confidential, adding a layer of privacy protection for business owners.

Skilled Workforce:

Hong Kong has a highly educated and skilled workforce with proficiency in English and Chinese. This makes it easier for businesses to hire talent across various industries.

Networking Opportunities:

Hong Kong hosts a multitude of business events, seminars, and trade exhibitions, providing ample opportunities for networking, connecting with potential clients, partners, and investors.

Flexible Corporate Structure:

Hong Kong allows for a wide range of corporate structures, including limited liability companies, partnerships, and sole proprietorships, catering to different business needs.

Respected Business Image:

Having a Hong Kong-based company can enhance your business's credibility and reputation on the international stage, due to the region's reputable business environment.

Company Registration in Hong Kong General Information

Key Corporate Features

When setting up a company in Hong Kong, there are several key corporate features that you should be aware of. As of my last update in September 2021, here are some of the essential aspects of a Hong Kong company:

Company Types:

Hong Kong offers various types of business entities, including private limited companies (most common), sole proprietorships, partnerships, and branches of foreign companies. Private limited companies are the most popular choice due to their separate legal identity and limited liability for shareholders.

Company Name:

Choose a unique company name that is not already registered. The name must also be compliant with legal and regulatory requirements and should not be misleading or offensive.

Registered Office Address:

A Hong Kong company must have a registered office address located in Hong Kong. This is the official address where legal documents and correspondence will be sent.

Shareholders:

A Hong Kong company can have one or more shareholders. Shareholders can be individuals or corporate entities, and there is no restriction on foreign ownership.

Directors:

A minimum of one natural person (director) is required. Directors can be residents of any nationality, and corporate directors are also allowed. There is no requirement for directors to be Hong Kong residents.

Company Secretary:

Every Hong Kong company must appoint a company secretary, who can be an individual or a corporate entity. The company secretary ensures compliance with legal and regulatory requirements.

Share Capital:

Hong Kong companies have the flexibility to set their authorized share capital. There is no requirement to pay up the entire authorized capital at the time of incorporation. The concept of par value is not applicable in Hong Kong.

Annual General Meeting (AGM):

While AGMs are not mandatory for private companies, they are recommended for reporting to shareholders and discussing company matters. Meetings can be held anywhere, including outside Hong Kong.

Annual Return:

Companies are required to file an annual return with the Companies Registry within 42 days of the company's anniversary of incorporation. The annual return includes information about directors, shareholders, and company officers.

Financial Statements:

Companies are required to maintain proper financial records and prepare audited financial statements annually. However, small companies meeting specific criteria are exempt from audit requirements.

Business Registration Certificate:

All businesses operating in Hong Kong must obtain a Business Registration Certificate from the Business Registration Office. This certificate needs to be renewed annually.

Taxes:

Hong Kong has a simple and attractive tax regime. Companies are subject to profits tax on income derived from Hong Kong. There are also tax incentives and exemptions for specific business activities and industries.

Bank Account:

Opening a bank account is a standard step after incorporating a Hong Kong company. You'll need to provide the necessary corporate documents and fulfill the bank's requirements.

Annual Filing Requirements:

In addition to the annual return, companies must also submit financial statements and tax returns to the Inland Revenue Department.

Privacy Protection:

While company details are available for public inspection, the personal details of directors, shareholders, and the company secretary are not disclosed to the public.

Compliance

Type of Company for International Trade and Investment

Private Company Limited by Shares.

Procedure to incorporate

Submission of Memorandum and Articles of Association and a Declaration of Compliance. A Notice of Situation of Registered Office must also be filed within two weeks after the date of incorporation.

Restrictions on Trading

Following activities are not permitted: banking or insurance activities or solicit funds from or sell its shares to the Public.

Powers of Company

A Hong Kong Company has all the powers as a natural person.

Language of Legislation and Corporate Documents

Chinese and English.

Registered Office Required

Yes, and it must be maintained in Hong Kong.

Name Approval Required

Although name reservation is not available, it is essential to search name availability and that it is not similar or identical to any other name on the register, which would not allow the company to be incorporated.

Shelf Companies Available

Yes.

Time to incorporate

Up to approximately 8 working days from the date documents have been submitted.

Names Requiring Consent or License

Building society, co-operative, imperial, Kaifong, municipal, royal, savings, tourist association, trust, trustee, bank, insurance, assurance, reinsurance, fund management, investment fund, amongst others.

Suffixes to Denote Limited Liability

Limited.

Disclosure of Beneficial Ownership to Authorities

No.

Authorised and Issued Share Capital

The standard authorized share capital is HK$ 1,000, while a minimum issued capital is 2 shares of par value.

Classes of Shares Permitted

Ordinary shares, preference shares, redeemable shares and shares with or without voting rights.

Bearer Shares Permitted

Not permitted

Other Shares Permitted

Deferred, founders and management shares.

Taxation

Hong Kong is known for its simple and favorable corporate tax regime. Here are the key points regarding corporate taxation in Hong Kong:

• Corporate profits tax is levied on the net profits derived from a trade, profession, or business carried out in Hong Kong.
• The tax rate for corporations is relatively low and is applied on a territorial basis. Currently, the standard corporate profits tax rate is 16.5%.
• Tax is only imposed on profits that have a Hong Kong source. Profits earned outside Hong Kong are generally not subject to Hong Kong corporate profits tax.

Hong Kong follows a territorial tax system. This means that only profits sourced within Hong Kong are subject to corporate taxation. Profits earned outside of Hong Kong are generally exempt from taxation in Hong Kong, regardless of whether they are remitted to the territory.

No Capital Gains Tax:

Hong Kong does not impose capital gains tax on the sale of assets, including shares and properties.

No Withholding Tax:

There is no withholding tax on dividends, interest, or royalties paid to non-residents of Hong Kong.

Double Taxation Agreements (DTAs):

Hong Kong has entered into a network of comprehensive double taxation agreements with various jurisdictions. These agreements provide relief from double taxation and allocate taxing rights between Hong Kong and its treaty partners.

License Fees

The Business Registration Fee is currently HK$250 on the date of incorporation and then annually on the anniversary of the incorporation.

Financial Statement Requirements

A Hong Kong company must keep accounting records for at least 7 years, which may be kept at the registered office address or elsewhere at the discretion of the directors. Every company must appoint an auditor who must be a member of the Hong Kong Institute of Certified Public Accountants and hold a practicing certificate. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the Hong Kong Inland Revenue Department.

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