DOING BUSINESS IN HONG KONG
Since 2003, Healy Consultants has assisted our Clients with starting business in Hong Kong. Our services include i) Hong Kong company registration services ii) corporate bank account opening services in Hong Kong and abroad iii) assistance to open merchant accounts and secure corporate finance iv) employee recruitment and relocation strategies and vi) office rental solutions in Hong Kong.
|Summary||Tax resident LLC||Zero tax LLC||Branch||Representative office||China offshore company|
|Best use of company?||Local sales||Global Trading||Projects and assignments||Marketing and promotion||Doing business in China|
|Legally tax exempt if properly structured?||No||Yes||Yes||Yes||Yes|
|Corporate bank account location?||HSBC Hong Kong||HSBC Hong Kong||HSBC Hong Kong||HSBC Hong Kong||HSBC Hong Kong|
|Client must travel to Hong Kong?||Yes||Yes||Yes||Yes||Yes|
|Can open an account overseas to avoid to travel?||Yes||Yes||Yes||Yes||Yes|
|Can secure trade finance?||Yes||Yes||Yes||No||Yes|
|Limited liability entity?||Yes||Yes||No||No||Yes|
|VAT payable on sales to local customers?||None||None||None||Not sales allowed||No|
|Withholding tax on payments to shareholders?||None||None||None||None||None|
|Average total engagement costs?||US$6,255||US$6,655||US$7,455||US$8,155||US$6,655|
|Average total engagement period?||2 months||2 months||2 months||2 months||2 months|
|Accounting and tax considerations||Tax resident LLC||Zero tax LLC||Branch||Representative office||China offshore company|
|Statutory corporate tax payable? (non HK sales)||0%||0%||0%||No sales allowed||0%|
|Must file an annual Hong Kong tax return?||Yes||Yes||Yes||Yes||Yes|
|Effective corporate tax rate on net profits of US$250,000?||0%||0%||0%||0%||0%|
|Must file annual financial statements?||Yes||Yes||Yes||Yes||Yes|
|Investment income is legally tax exempt in HK?||Yes||Yes||Yes||Yes||Yes|
|Access to double taxation treaties?||Yes||Yes||Yes||No||No|
|This entity enjoys Government incentives?||Yes||Yes||Yes||Yes||Yes|
|Monthly VAT reporting to the Government?||No||No||No||No||No|
|Legally tax exempt entity?||Yes||Yes||Yes||Yes||Yes|
|Dividends received are legally tax exempt?||Yes||Yes||Yes||Yes||Yes|
|Company registration||Tax resident LLC||Zero tax LLC||Branch||Representative office||China offshore company|
|Resident director\partner\manager required?||No||No||No||No||No|
|Minimum number of shareholders\partners?||1||1||Parent company||Parent company||1|
|Minimum number of directors/managers?||1||1||1||1||1|
|Minimum paid up share capital?||US$1||US$1||None||None||US$1|
|Shelf companies available?||Yes||Yes||No||No||Yes|
|Time to incorporate a new entity?||1 week||1 week||2 weeks||2 weeks||1 week|
|Can easily convert to a local PLC company?||Yes||Yes||No||No||Yes|
|Can have preference shareholders?||Yes||Yes||No||No||Yes|
|Company secretary required?||Yes||Yes||Yes||Yes||Yes|
|Business considerations||Tax resident LLC||Zero tax LLC||Branch||Representative office||China offshore company|
|Can invoice local customers?||Yes||Yes||Yes||No||Yes|
|Can hire local staff?||Yes||Yes||Yes||Yes||Yes|
|Can rent local office space?||Yes||Yes||Yes||Yes||Yes|
|Secures a residence visa for business owner?||Yes||Yes||Yes||Yes||Yes|
|Good entity for trademark registration?||Yes||Yes||Yes||No||No|
|Other useful information||Tax resident LLC||Zero tax LLC||Branch||Representative office||China offshore company|
|Hong Kong has signed free trade agreements?||Yes|
|This country is a member of WIPO and TRIPS?||Yes (China)|
|The country is a member of the ICSID?||Yes (China)|
|Average customs duties suffered?||0%|
|Government foreign investment approval is required?||No|
|Average monthly office rental? (US$ per sq m)||US$41|
|Minimum statutory monthly salary?||US$670|
|Average monthly US$ salary for local employees?||US$2,000|
|HK$ deposit interest rate? (1 year average)||0.05%|
|US$ deposit interest rate? (1 year average)||0%|
|Overseas remittance currency controls?||No|
|Public register of shareholders and directors?||Yes|
|Multi-currency bank accounts available?||Yes|
|Corporate visa debit cards available?||Yes|
|Quality of e-banking platform?||Yes|
|Crowd funding available in this country?||Yes|
Press the link headings below to read detailed, relevant, up to date information.
Benefits and problems of registering a company in Hong Kong(Back to Top)
Hong Kong business setup summary
- Healy Consultants can assist our Clients to register Hong Kong companies to trade with their international customers and hold their assets. Properly structured, such companies are legally tax exempt in Hong Kong;
- We will also introduce our Clients to one of the world’s best corporate bank accounts: ten currencies under one account number and funds transfer transaction fees of only US$ 15. Contact us for more details on this banking solution;
- While travel to Hong Kong is usually required to open a local account, we have found a way to legally circumvent this requirement;
- Hong Kong is also the gateway to invest and trade with China. Refer to this page for further details;
- Hong Kong is a reputable business hub, compliant with OECD’s AML/CFT standards. There is a Companies Registrar available to the general public and the local banks comply with FATCA regulations and the incoming Common Reporting Standard.
Benefits and problems
Benefits of Hong Kong company registration
The Heritage Foundation has ranked Hong Kong as the world’s freest economy. The World Bank takes a similar view, having listed Hong Kong as the 5th best place in the world for doing business. This has essentially been as a result of the strength of its liberal economic policies and the potential access to the massive Chinese market. Examples of these business-friendly policies include:
- It is extremely easy to register a company in Hong Kong because:
- Healy Consultants can incorporate a new company in 1 week with a share capital of only US$1. Also, the capital can be maintained in any currency including USD, Euro or GBP;
- A Hong Kong company only requires 1 director and 1 shareholder, who can be non-resident foreigners. Furthermore, Healy Consultants can complete the incorporation procedures without them having to travel to the city;
- There is no requirement for a physical office space to be complete the company registration. A registered address is sufficient and this service will be provided to our Clients by Healy Consultants;
- Ready-made companies are also permitted in Hong Kong, so our Clients can commence operations without having to wait for company setup and bank account opening procedures to be completed. Buy a Hong Kong shelf company that already has a bank account with one of our turnkey solutions;
- Consequently, the World Bank ranked Hong Kong as the 4th best jurisdiction in the world to start to a new business, exemplified by the fact that more than 100,000 companies were setup in Hong Kong in 2016;
- Our Clients will also enjoy certain tax advantages in Hong Kong including:
- A Hong Kong company is legally tax exempt if it has no operations in Hong Kong. This legitimate tax advantage makes the city attractive to entrepreneurs and established businesses;
- Setting up a Hong Kong offshore company is an excellent way to boost global profits as there is no withholding tax, sales tax, VAT, import and export tax or capital gains tax;
- For companies with operations in Hong Kong, the corporate tax rate is among the lowest in Asia at 16.5%. Furthermore, such a company will benefit from the 37 international double tax treaties signed by the Hong Kong government to minimize withholding tax on payments abroad;
- Being a founding member of the World Trade Organization, Hong Kong promotes free trade and does not charge tariffs on imports and exports. Furthermore, bureaucratic procedures like licensing and government registration are kept to a minimum.
- Hong Kong offers entrepreneurs an excellent business environment to conduct operations because:
- English is the official business language in Hong Kong; all formal company documents are written in both English and Chinese. As a result, a foreign entrepreneur is likely to find working in the city easy;
- Obtaining bank credit is relatively simple in Hong Kong. Consequently, the city is ranked as 19th best jurisdiction in the world for securing business credit;
- Along with Singapore, Hong Kong is the leading financial centre in Asia. The city’s International Financial Centre hosts many global financial firms, insurance companies, banks and asset management firms;
- A Hong Kong company benefits from the absence of exchange controls to restrict FDIs or income repatriation. This coupled with city’s status as a financial centre make it an excellent location for treasury accounts, cash management accounts and other corporate banking services;
- Hong Kong is itself a free economic zone (it is officially a part of China known as the Hong Kong Special Administrative Region). Therefore, a resident company is a great business vehicle for foreign investors who need a regional distribution base or headquarters;
- The local government is also ranked as the 17th least corrupt place in the world. This makes it easier for foreign investors to depend on the local laws to protect their assets.
Problems with Hong Kong company registration
- In Hong Kong, our Clients will be required to abide by certain cumbersome regulations including:
- Our Clients must submit annual audited financial statements to the Inland Revenue Department. Healy Consultants’ accounting team will assist with fulfilling this obligation;
- All Hong Kong banks require the directors, shareholders and bank account signatories to travel to Hong Kong for an account opening interview, no exceptions;
- Citizens of certain nationalities are not eligible for a Hong Kong investment visa. Foreign investors from Afghanistan, Albania, Cambodia, Cuba, Laos, North Korea, Nepal and Vietnam cannot register their businesses in Hong Kong;
- Following company formation in Hong Kong, obtaining an employment visa will be complicated due to high skill and experience thresholds. Foreign entrepreneurs must provide education and work experience credentials;
- Effective from March 2014, at least one of the directors of a Hong Kong company must be a natural person. As long as one individual is appointed as a director, corporate directors are still permitted.
- Our Clients may also face problems in Hong Kong due to the following issues:
- Hong Kong banks have become very selective of their customers due to the very high global demand for their services. Consequently, opening a corporate bank account in the city can be a cumbersome process;
- Hong Kong has relatively weak intellectual property laws and protection, especially when compared to Singapore. However, looser protection of ideas has led to a proliferation of innovation in Hong Kong and wider China, particularly the nearby Shenzhen;
- The quality of conversational English for an average local employee is relatively poor when compared to the other investment hotspots like Singapore, Malaysia, Dubai and Indonesia.
- It is extremely easy to register a company in Hong Kong because:
Best uses for a Hong Kong company
- Healy Consultants recommends our Clients to use the Hong Kong company as the headquarters for their Asia Pacific operations because:
- Hong Kong is Asia’s 6th most liveable city, with a blossoming multinational population. Also, the city provides well-developed infrastructure for residential accommodation, tourism, banking, entertainment and business;
- It also boasts highly-skilled labour with a literacy rate of 96% and computer literacy around 95%. Furthermore, most skilled employees are bilingual in English and either Cantonese or Mandarin. As a result, many multi-national companies set up subsidiaries in Hong Kong;
- Employees in Hong Kong understand the corporate culture in mainland China. Therefore, trading and doing business with Chinese businesses becomes very easy for a resident company;
- Setting up a Hong Kong business allows foreign investors to take advantage of legal tax exemption, while at the same time being able to extract funds from regional subsidiaries in the form of dividends, management fees and royalties;
- Hong Kong is a paradise for high net worth individuals. The city currently hosts many wealthy Chinese and foreign entrepreneurs and is consequently synonymous with luxury, housing some of the biggest brands in the world.
- A Hong Kong company is an excellent gateway for our Clients wishing to deal with China because:
- As a Special Administrative Region (SAR) of China, Hong Kong enjoys a special relationship with the world’s 2nd largest economy. It is estimated that the SAR has access to almost 450 million consumers across nine provinces in southern China, which has led many businesses to view a Hong Kong company as the optimum way to serve the mainland Chinese market;
- According to the Hong Kong Trade Development Council, the city is one of the largest sources of investment into China. Furthermore, Hong Kong has excellent air, rail and road links to the booming southern provinces of China;
- On June 29, 2003, Hong Kong and China signed the Closer Economic Partnership Arrangement (CEPA), a free trade agreement granting the city’s manufacturers and service suppliers preferential access to the Chinese market. The agreement is now in its seventh phase, in which China agrees to abolish tariffs on all products of Hong Kong origin (to date there are more than 1,600 products). For more details on how the CEPA can benefit your company, visit the CEPA Website.
- Broadly, a Hong Kong company is an excellent gateway for our Clients wishing to reach consumers and businesses in the Asian continent because:
- Hong Kong is the top choice for product distribution within Asia. The city has the world’s 2nd best infrastructure in the form of a natural deep sea port, the world’s busiest cargo airport, and a well-developed rail and road system;
- The city’s strategic location makes it an ideal business gateway to Asia. A Hong Kong corporate entity allows foreign entrepreneurs easy access to the massive Chinese, Indian and Australian consumer markets;
- The city is the historic import and export hub of the Asian continent. A large number of international trading companies and banks are based here, which has resulted in the availability of excellent trade finance facilities. Furthermore, the strength of the city’s shipping and transportation sector attracts the world’s leading freight forwarders, shipping companies and insurers;
- The city is deemed as the most business friendly city in Asia. The city’s liberal policies, vibrant business environment and low taxes attract both foreign investors and qualified labour from across Asia;
- Hong Kong will soon have a Free Trade Agreement with ASEAN, which will help Hong Kong based businesses trade without tariffs with a market of 600 million people.
- Healy Consultants recommends our Clients to use the Hong Kong company as the headquarters for their Asia Pacific operations because:
Similar low tax jurisdictions
Choose a suitable business entity type(Back to Top)Choosing the right vehicle and strategy for starting a business in a new jurisdiction is an important decision to make. Healy Consultants has the expertise and experience to advise our Clients on the optimum corporate structure for Hong Kong business setup. There are several ways of doing business in the city, most popular being through a limited company. It is however also possible to register a local branch of a foreign company and a representative office.
The Hong Kong offshore company (Hong Kong non-resident limited company)
- Foreigners can register a Hong Kong offshore company (locally known as a non-resident company) with i) only one shareholder and ii) one director, who both can be foreigners and do not need to reside in Hong Kong. The incorporation process is straightforward, with no minimum share capital requirement and no government approval required. While corporate shareholders are common, corporate directors are not allowed under the Hong Kong Companies Ordinance;
- Hong Kong has an attractive corporate tax system allowing companies to be exempt from local corporate income tax, provided that they do not trade with resident customers. Unlike Singapore, the location of the corporate bank account has however no impact on the taxation of the business. Refer to this page for a comparison between legally tax exempt entities in Hong Kong and Singapore;
- After incorporation, all Hong Kong companies must appoint a Hong Kong resident company secretary and file i) an annual return including up to date information on their owners and directors and ii) their annual financial statements with the Hong Kong Companies Registrar. Hong Kong does not provide an audit exemption for SMEs so the financial statements must always be audited;
- Best uses: being unrestricted in the activities it may perform, a limited company in Hong Kong is the best option for our Clients in a majority of cases. The exemption from tax on corporate income received from overseas operations makes Hong Kong an ideal jurisdiction for both holding companies and international trading companies.
The Hong Kong trust
- It is possible to register a trust in Hong Kong by appointing a corporate or individual trustee, ordinarily residing in Hong Kong and properly licensed. The assets put under trust, the settlor(s) and beneficiary(ies) can otherwise all be non-resident foreigners. The trust is tax transparent, meaning that income channelled through a trust will not be subject to tax in Hong Kong;
- Best uses: the recent modernization of the Hong Kong Trust regulations (dating from 1934) have made Hong Kong a popular jurisdiction for the registration of corporate and private trusts. They have notably reinforced the protection given to settlors and beneficiaries against mismanagement by the trustee.
The Hong Kong resident company (Hong Kong resident limited company)
- A company registered in Hong Kong is deemed Hong Kong resident if a majority of its directors are residing in the country. Tax residency is however only a consideration for access for some (but not all) of the double taxation avoidance treaties signed by Hong Kong. It does not impact whether the company will have to pay corporate income tax in Hong Kong, which is only due for income sourced from Hong Kong;
- Best uses: Structuring a Hong Kong company as resident only makes sense when our Client i) lives in Hong Kong or ii) has a need to access a DTAA restricting its benefits to Hong Kong resident companies only. In such case, it will be necessary to appoint a majority of directors living in Hong Kong, before the Hong Kong tax authority will agree to issue a certificate of residence.
The Hong Kong public limited company (Hong Kong resident limited company)
- Hong Kong public limited companies are allowed to offer shares to the general public, but are required before they do so to file a prospectus with the Hong Kong Companies Registrar. Unlike private limited companies, they can have more than fifty shareholders;
- Best uses: Hong Kong public limited companies are usually registered by owners willing to list their business on the Hong Kong Stock Exchange (HKEx) or another stock exchange. Additional listing requirements will apply according to the exchange’s rules.
The Hong Kong branch office
- Branches are only extensions of their “parent” overseas company, without a separate legal personality. Because of this, any positive or negative financial impact is directly attributable to the parent company. If you need to start doing business in Hong Kong immediately, a branch is a good solution because there may be a month-long gap between commencing operations and branch registration. Like companies, registration of a Hong Kong branch just requires the appointment of a company secretary resident in Hong Kong, with no need to appoint a resident director or country representative. Branches in Hong Kong do not need to submit audited accounts with their annual returns or tax filings;
- Best uses: If you plan only to serve the Hong Kong market with your new operations, a branch may suffice. A company is better for trading outside of Hong Kong, as they will have access to its network of tax treaties. Money can be saved on branch accounting since there is no audit requirement, but you must weigh this against the branch’s unlimited liability.
The Hong Kong representative office
- Unlike a branch office, a representative office is not permitted to make direct sales within Hong Kong. It can only engage in activities such as i) promoting the business of the parent company and ii) market research. If your company’s only presence in Hong Kong is a representative office, you must appoint local agent or distributor to sell goods and provide services to local customers;
- Best uses: If your business is considering a move into Hong Kong, establishing a representative office is a good way to station staff in the city to explore the opportunities available. Since representative offices cannot engage in any revenue-generating activities, most of our Clients are better off incorporating a company.
Table of comparison between different entity types
Operations and logistics Resident company Offshore company Offshore trust PLC Branch RO Bank signatory must travel? Yes Yes Yes Yes Yes Yes Doing business in HK permitted? Yes Yes Yes Yes Yes No Allowed to sign contracts with local Clients? Yes Yes Yes Yes Yes No Allowed to invoice local Clients? Yes Yes Yes Yes Yes No Can rent local office premises? Yes Yes N/A Yes Yes Yes Allowed to import raw materials? Yes Yes No Yes Yes No Allowed to export goods? Yes Yes No Yes Yes No Accounting and tax Corporate tax on local income? 16.5% 16.5% 16.5% 16.5% 16.5% Not allowed Corporate tax on foreign income? 0% 0% 0% 0% 0% Not allowed Corporate bank account HSBC HK HSBC HK HSBC HK HSBC HK HSBC HK HSBC HK Statutory audit required Yes Yes No Yes No No Annual tax return to be submitted? Yes Yes No Yes Yes Yes Access to DTAAs? Yes Not all No Yes Yes No Company law Issued share capital required? US$1 US$1 US$1 US$1 None None Resident director required? No No Resident trustee No No No HK shareholder required? No No No No No No Minimum number of directors? 1 1 1 1 1 1 Minimum number of shareholders? 1 1 1 settlor 1 Parent company Parent company Individual shareholders allowed? Yes Yes Yes Yes No No Corporate director(s) allowed No No Yes Yes Yes Yes Corporate shareholders allowed? Yes Yes Yes Yes Yes Yes Public register of shareholders and directors Yes Yes No Yes Yes Yes Immigration Can the entity hire expatriate staff? Yes Yes No Yes Yes Yes How long to get work permit approved 3 months 3 months N/A 3 months 3 months 3 months Fees and timelines How long to set the entity up? 1 week 1 week 4 weeks 3 weeks 2 weeks 2 weeks How long to open corporate bank account? 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks 4 weeks Estimate of engagement costs US$6,255 US$6,655 US$14,000 US$6,255 US$7,455 US$8,155 Draft invoice
Register a company in 10 steps(Back to Top)
- Consultation phase: Healy Consultants discusses our Client’s requirements and highlights any potential licensing requirements. Additionally, Healy Consultants will assist Client determine the optimum corporate structure for their business;
- Client due diligence and commitment: Our Client then i) settles Healy Consultants’ Hong Kong engagement fees ii) signs and returns our Client engagement letter and iii) provides us all the required due diligence documents;
- Planning phase: Healy Consultants drafts a detailed engagement project plan including i) incorporation procedures, ii) corporate bank account opening and iii) license registration. This project plan maps out by week each step to engagement completion, optimizing transparency and setting Client expectations;
- Document preparation: Healy Consultants prepares documents and confirms information required for incorporation including:
- Company name: Healy Consultants will confirm if Client’s preferred company name is available on ICRIS;
- Articles of association: Most of our Client’s use the model articles of association. If required, Healy Consultants will be happy to assist Clients amend model articles to meet their business needs;
- Share allotment: Confirm identity of shareholders and allocation of shares to be issued;
- Appointment of director: Each company needs to appoint at least 1 director. This director may be of any nationality and need not be a resident in Hong Kong.
Thereafter, Healy Consultants will complete NNC1 (incorporation form) with the above information and notarize Client’s passport copy
- Incorporation application: With everything in order, Healy Consultants submits the application to Companies Registry and Inland Revenue Department. Approval of company will generally be given within a week;
- Approval of incorporation: Upon approval, Healy Consultants will email our Client the company’s i) certificate of incorporation, ii) business registration ordinance and iii) articles of association.
- Corporate bank account opening: Following incorporation of the company, Healy Consultants will assist Clients secure a bank account with their preferred bank. The banking team will draft a detailed business plan and provide the required due diligence to complete the bank’s ‘know your client’ procedure. This step will generally take 4 weeks;
- Additional registrations & licensing: Depending on business activities, the company may be required to apply for specific business license. Employer also need to apply for social security;
- Business premises: If Client requires a physical office space for business, Healy Consultants will be pleased to assist Client locate business premises that meet their business needs;
- Engagement completion: Following engagement completion, Healy Consultants couriers a full company kit to our Client, including original Hong Kong corporate documents, unopened bank correspondence, and a Client feedback survey regarding the quality of our incorporation services.
Open a local corporate bank account(Back to Top)
Healy Consultants assists our Clients with the opening of a corporate bank account in Hong Kong. It is possible for both locally-incorporate and foreign (i.e. non-Hong Kong) companies to open a corporate/offshore bank account in Hong Kong.
Hong Kong banking options
- Hong Kong is one of the leading countries in terms of banking and it is ranked 4th in the Global Financial Centres Index in 2016. The country has over 71 of the world’s biggest international banks and a FX volume of US$274.6 billion daily;
- The banks do not require foreign companies to possess a local entity in order to set up an account. However, it has become increasingly difficult to open an offshore banking account as banks tighten requirements;
- For both onshore and offshore companies, the Hong Kong Monetary Authority requires each signatory, shareholder and director to go through an hour face-to-face interview, which is a part of AML/CFT obligations;
- International banks we recommend include: i) HSBC, ii) DBS, iii) Citibank iv) BNP Paribas, v) Deutsche Bank and vi) United Overseas Bank. Out of these many international banks available, HSBC is the most highly-recommended because of the multi-currency account that the bank provides;
- Local banks in Hong Kong recommended by Healy Consultants include i) Bank of East Asia ii) Dah Sing Bank iii) Hang Seng Bank.
- Below is a sample of Hong Kong banking options:
Hong Kong bank account opening requirements
- Hong Kong companies that wish to open a corporate bank account will usually be required to submit: i) notarized residential proofs and identity documents of directors in English, ii) certified corporate documents and iii) notarized business address proofs in English;
- Hong Kong banks have tighten account opening procedures especially for foreign companies;
- Foreign companies are required to submit i) a business plan with details on the company’s product and services, ii) examples of contracts and invoices generated by and for the newly-incorporated company, iii) recent proof of address of the bank signatories (in English), vi) notarized passport and address proof copies of bank signatories and v) a bank reference letter for the bank signatories.
Legal considerations and FX control
- Hong Kong is under the AML/CFT regime, which requires banks to comply with the legal and supervisory requirements set to establish safe financial systems and regulations to avoid and identify money laundering and terrorist financing;
- Hong Kong is compliant to the Foreign Account Tax Compliance Act, FATCA. Banks and other financial organizations are obliged to report on information on financial accounts held directly or indirectly by US nationals;
- The Hong Kong government imposes no limitation on the inflow or outflow of funds for remittance of profits, debt services, capital, capital gains and returns on intellectual property or imported inputs;
- The currency used is Hong Kong Dollar, which is pegged to the US dollar. Hong Kong Money Authority has set the upper and lower guaranteed limit (US$1:HK7.75-7.85) since 18 May 2005.
How corporate taxation works in Hong Kong(Back to Top)Hong Kong is a law-tax jurisdiction with liberal laws. Many of our Clients appoint Healy Consultants as their Hong Kong tax representative to assist with i) communicating with the Inland Revenue Department (HKIRD) ii) completing financial statements and corporate tax returns and iii) supervising independent auditors. Find below specific information about Hong Kong accounting and tax.
- For resident Hong Kong companies, the corporate income tax in the city is 16.5%. Resident companies are the ones incorporated or managed from Hong Kong, and they are only taxed on net profits arising from sales within the city;
- If properly structured, non-resident Hong Kong companies are legally tax exempt if no business activity is conducted in Hong Kong. They are not taxed on income earned offshore, even if it is remitted back into the city;
- There are no capital gains taxes, withholding taxes, value added tax, sales tax or accumulated earnings tax;
- Stamp duty on the transfer of shares in Hong Kong is 0.2% of their value, which is shared equally between the two parties involved. Property tax is levied at a fixed rate of 15% on the value of the property;
- Personal income tax is also only applicable for income arising in or derived from Hong Kong. There are 4 different brackets for tax rates, as show in the table below:
Income bracket (HK$) Tax rate Under 40,000 2% 40,001 – 80,000 7% 80,001 – 120,000 12% Above 120,000 17%
- Annual corporate income tax returns must be filed with Inland Revenue Department on the 1st April every year. Penalties might be imposed in case of delays;
- Additionally, audited financial statements must be submitted annually to the Inland Revenue Department. Healy Consultants can assist our Clients to complete their annual accounting and tax obligations for a fee of US$4,950.
Miscellaneous Tax information
- Unlike many jurisdictions, business losses can be carried forward indefinitely in Hong Kong;
- A Hong Kong business benefits from the city’s 37 DTAs, which provide double taxation relief when dealing with countries like Germany, Singapore, UK, USA, etc.;
- Healy Consultants can assist our Clients to clarify their annual reporting obligations so that they can comply with all of their personal and corporate tax obligations of their country of residence and domicile.
Legal and compliance considerations(Back to Top)
- As of 2014, a Hong Kong business is required to have at least one director who is a natural person. A corporate director can no longer be the sole director of a company. If required, Healy Consultants will be please to provide your firm with a professional nominee director. Our fee amounts to US$1,950 per annum;
- All Hong Kong companies are required to have a local registered office and a resident company secretary. Most of our Clients request Healy Consultants to provide these services for their Hong Kong companies;
- After company incorporation, company information, such as capital structure and director/shareholder details are publicly available through the Companies Registry. This means less privacy for shareholders, but increases transparency of doing business in the city.
- Recruitment of foreign labour requires the employer to justify that the locals have not been denied the work opportunity. Furthermore, the foreign employee is expected to prove that he/she possesses the credentials relevant to the position;
- Residents of mainland China, Taiwan and Macau will require additional documents when applying for an employment visa, such as copies of identity cards and copies of the applicant’s household registration;
- When employing local or foreign workers, employers must comply with the 2010 Employment Ordinance. These laws resemble the English system of labour laws, in terms of employer responsibility;
- From 1st May 2015, the hourly minimum wage in Hong Kong is US$4 per hour;
- All employees must contribute to their employee’s social security fund. The contributions are divided equally among employees earning above US$916 (5%) and employers (5%).
Licensing in Hong Kong
- All Hong Kong companies must apply for the respective business license during the month following incorporation;
- All the necessary licenses, as well as the application steps, are listed at the Trade and Industry Department’s website.
- Every year, our Client will face the following recurring costs for their active companies: i) business registration renewal ii) annual return filing and iii) audited financial statements;
- Healy Consultants provides our Clients with company de-registration service in Hong Kong. Please note that our fee for this service is US$2,450 and the process takes a minimum of 6 months.
Apply for employment visas(Back to Top)
Healy Consultants Project Management Team successfully assisted our Clients with i) business visa document collection procedures ii) quality visa applications to Hong Kong Immigration Department and iii) ongoing assistance in relocation and document translation. Please find below more information on the relocation options in Hong Kong.
Hong Kong relocation considerations
- Clients wishing to open a company in Hong Kong may find that costs of living in the city can be higher than in some western countries, as Hong Kong has been ranked as second most expensive city in the world, according to The Economist in 2016;
- Hong Kong visa applications require extensive supporting documentation, which can make the process very cumbersome. Hence, prior to moving to the city, Clients are advised to conduct extensive research or engage the assistance of a corporate services firm;
- If our Clients request, Healy Consultants will be pleased to assist with applying for employment and residence visas at the Immigration Department. Our fees to obtain a work permit amount to US$7,950.
The Hong Kong visa schemes
- The ‘Entry for Investment’ visa is an employment pass best suited for foreigners who wish to work in Hong Kong;
- A successful ‘Entry for investment’ application requires the following:
- Application submitted by the sponsoring company;
- Proof of academic qualifications and relevant working experience;
- Investment plan including details of proposed business activities and monetary amounts for two years;
- Copy of Hong Kong company formation and other particulars (e.g. IRD registration certificate);
- Profit-and-loss statement of the relevant period;
- Copy of applicant’s passport and payment of fees.
- Certain nationalities are not eligible for an investment visa. Citizens from Afghanistan, Albania, Cambodia, Cuba, Laos, North Korea, Nepal and Vietnam are unable to be self-employed in the city.
- Also, citizens of mainland China cannot be self-employed unless they are permanent residents of another country or have been living abroad for at least one year;
- The approval process takes up to four weeks and the visa granted will be valid for a 1-year period. This type of Visa may be extended, on the condition that the eligibility criteria for entry is still being met. Extensions will likely follow a strict 2-2-3 years pattern.
Employee visas“Employment as a Professional” is an employment pass best suited for individuals who wish to work in Hong Kong as an employee. The employment visa is split into three categories dependent on the nationality and education of the applicant:
- Immigration arrangements for non-local graduates “IANG”
- Non-local graduates refer to individuals who completed full-time studies (Diploma, Degree, Qualification) in recognized Hong Kong institutions;
- Fresh graduates, i.e. applying within 6 months of graduation, are not required to have secured employment prior to applying for this employment pass;
- Returning graduates, i.e. applying over 6 months’ post-graduation, must secure employment prior to applying for a work permit;
- The approval process takes up to four weeks and the visa granted will be valid for a 1-year period;
- This visa allows individuals to bring up qualified dependents in Hong Kong, including: i) spouse and ii) unmarried dependent children under the age of 18.
- General Employment Policy “GEP”
- This employment pass applies to individuals who are not non-local graduates, but are educated, skilled, or have experience which will add value to the city’s economy;
- The applicant’s education or work experience should be related to the field of employment and there should be a genuine job vacancy with a market value remuneration package;
- The approval process takes up to four weeks and the visa granted is granted usually for one-year period or less depending on the lengths of the sponsorship.
- Admission Scheme for Mainland Talents and Professionals “ASMTP”
- This employment pass is specific to mainland Chinese people, except those that have been living outside of China for over a year and are eligible for the GEP. Applicants must be educated, skilled or have work experience in a field which will add value to the economy. Similarly, there should be a real job vacancy and the remuneration package should be around market value;
- There are no quotas or sector-specific requirements under this scheme.
Employee visa requirements
Please download the checklist of standard documents required to submit a work permit application, below. Additional documents can be required on a case by case basis by the Immigration authority.
Hong Kong company secretary services
- Taking into consideration the Hong Kong New Companies Ordinance, each Hong Kong corporate structure must include a secretary;
- Hong Kong company secretaries can be both i) natural person or ii) body corporate;
- All Hong Kong company secretaries must be resident in Hong Kong;
- Annual responsibilities of the company secretary include i) preparation and filing of the annual return; ii) securely maintaining company books; iii) liaising with the Hong Kong Government on behalf of the company; iv) legal filing of changes of company structure; and v) keeping track of statutory deadlines;
- Healy Consultants Group PLC’ professional fees to act as our Client’s company secretary in Hong Kong amount to US$1,100.
- Immigration arrangements for non-local graduates “IANG”
Healy Consultants’ video on registering a business in Hong Kong
Click here to customize your registration package
Select the services you require and get the estimated total fees at end of this table:
Frequently asked questions
How do I start a business in Hong Kong?A Hong Kong company will be incorporated through the Companies Registry (CR). Healy Consultants, being an experienced corporate services firm, will assist our Clients with this process. Apart from this, we will offer the following services: i) company secretary provision ii) corporate bank account opening and iii) tax registration with the Inland Revenue Department (IRD).
What type of business entity can I incorporate in Hong Kong?There are three main business entities preferred by foreign entrepreneurs for conducting business in Hong Kong. These are i) the Limited Liability Company (LLC) ii) the Branch Office and iii) the Representative Office. Healy Consultants recommends all our Clients to opt for an LLC. For detailed information about these entities, kindly refer to the attached link.
How much does it cost to incorporate an LLC in Hong Kong?Healy Consultants’ fees for company registration in Hong Kong amounts to US$6,550 which includes the following services: i) company incorporation ii) corporate bank account opening iii) company secretary and legal registered office provision and iv) Government registration. For a more detailed breakdown, kindly refer to the attached invoice.
Is there any minimum paid-up capital required for incorporation of a business?There is no minimum paid-up capital required for Hong Kong company incorporation.
Useful links for Hong Kong
Government and public authority websites:
- Tax Authority
- Companies Registrar
- Central Bank
- Stock Exchange
- Invest HK
- Chamber of Commerce
- Visiting HK
- Hong Kong blog posts – Healy Consultants
- PWC – Hong Kong Tax Summary
- Registration of a Non-Hong Kong Company
- Guidebook for Entry for Employment as Professionals in Hong Kong
- One-stop Company and Business Registration Service
- A Brief Guide to Taxes
- Hong Kong Fact Sheets
- Entrepreneurship in Hong Kong
- PWC – Immigration Guide
- Healy Consultants’ Singapore vs. Hong Kong comparison video
- Country attractiveness video
- Think Asia, Think Hong Kong
- UK Trade Minister Sees Opportunities in Hong Kong
- Business in Hong Kong
- How to manage taxes in Hong Kong
- Hong Kong: Asia’s economic Mecca
- How Hong Kong and Singapore are overtaking the UK economy
- 2013-14 Worldwide Corporate Tax Guide – Hong Kong