Business entities in Hong Kong in 2023
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 for a Hong Kong offshore company: 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.
Hong Kong offshore company with Singapore bank accountHealy Consultants Group PLC provides our Clients with our most popular recommendation – formation of a Hong Kong legally tax-exempt company with a Singapore corporate account solution. Our Clients will be able to receive global payments through their Singapore corporate account which they can then remit to their country of residence.
The legally tax-exempt Hong Kong company
- Healy Consultants will complete your Hong Kong company setup within 1 week. The process only requires:
- A minimum paid-up capital of US$1;
- One shareholder and one director, who can i) either be the same person or ii) both be foreigners and live outside of Hong Kong, and;
- Our Clients will not need to travel to complete company formation.
- A lease agreement is not legally required to complete the incorporation process;
- If required, Healy Consultants will be pleased to offer virtual office services and assist our Client to hire local employees;
- For more information on the legally tax-exempt Hong Kong company, refer to this offshore page.
- Healy Consultants will complete your Hong Kong company setup within 1 week. The process only requires:
Singapore corporate bank account
- Singapore banks require all signatories to travel to Singapore for a one-hour bank meeting before approval and issuance of new corporate bank account numbers. Healy Consultants can however try to negotiate a legal solution to avoid travel requirements for our Clients who are unable to travel to Singapore. Kindly contact us for further details;
- Our Clients must provide supporting documents for the Singapore corporate account opening process even if the business is a start-up, including i) contracts or letters of engagement with prospective clients or email correspondence evidence ii) contracts with suppliers iii) director’s resume to prove experience in the business and iv) reference letter from potential client or lawyer (supported with email correspondence);
- Most banks in Singapore do not charge an account opening fee. However, the account must be funded immediately after opening and the Client should ensure the account remains active to avoid summary closure. The minimum balance required varies with banks between US$2,000 to US$10,000 and should be maintained. Monthly service fee of between US$10 to US$20 per month will be charged for balances below the required minimum;
- Singapore’s quality of banking industry regulation is highly reputed, and the identities of account holders and transaction information is subject to high standards of confidentiality. You may refer to this banking page for further information on corporate banking and other banking services in Singapore.
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 settler(s) and beneficiary(ies) can otherwise all be non-resident foreigners. The trust is tax transparent, meaning that income channeled through a trust will not be subject to tax in Hong Kong;
- Best uses for a Hong Kong trust: 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 settlers 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 for a Hong Kong resident company: 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 for a Hong Kong public limited company: 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 for a Hong Kong branch: 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 for a Hong Kong representative office: 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 Hong Kong company 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 BOC HK HSBC HK DBS HK Statrys HK Fubon Bank OCBC Wing Hang 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 Hong Kong tax on dividends distributed to foreign shareholders? No No No No No 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$10,105 US$10,105 US$16,000 US$10,105 US$14,005 US$10,600 Draft invoice View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF
How to incorporate a company in Hong Kong
Company incorporation in Hong Kong is a straightforward process, which can be completed in a week and does not require to travel to Hong Kong. However, opening of a corporate bank account is more challenging and will require the directors and bank signatories to visit the bank for a “Know Your Customer” meeting.
Please find below more details on the process:
- Before Healy Consultants Group PLC proceeds with the Hong Kong company incorporation, our Firm requests our Clients to i) settle the fees payable for the engagement; ii) sign and email back our engagement letter and iii) provide us all requested Hong Kong company documents from each shareholder, director and beneficial owner of the company. Read our due diligence page for further details on the due diligence process;
- Healy Consultants Group PLC drafts a detailed project plan, mapping out week by week each step of the process from day 1 until completion, including i) the incorporation and business registration process; ii) required documentation and iii) procedures to open a corporate bank account;
- After agreeing the business structure of the entity with our Client, our team will perform a company name search with the Companies Registry. The availability of a name in Hong Kong can be confirmed online. If the name is available, we reserve the name on our Client’s company’s behalf.
- In addition to the notarized passport copy required in our due diligence process, our Client’s passport must be certified by our Hong Kong accountant for the registration process. There will be an additional fee of HKD250 (US$32) to be borne by the Client;
- Prior to approving company name, the Hong Kong Company Registry may require additional information if the company name includes specific wording;
- After name reservation, we register the identity of all the directors and shareholders on Companies Registry, by submitting the notarized copies of their passport. This will generate their digital signatures for incorporation. Our team also collates all the due diligence documents required for submission of the Hong Kong company incorporation and business registration applications with the Companies Registry and Inland Revenue Department;
- Following the above, our team also completes the submission of the IRBR1 business registration form and liaises with the Commissioner of Inland Revenue to complete tax registration in Hong Kong;
- Within 4 days following application submission, the company will be legally incorporated. Approval takes less time if the model articles are used and not amended; and might take longer if a corporate shareholder is appointed. Following approval, we immediately email our Client with the certificate of incorporation and the business registration certificate.
- Following company incorporation and receipt of the certificates, Healy Consultants’ Banking Team assists our Client with opening a corporate bank account. The majority of our Clients choose either a HSBC or Standard Chartered bank account to support their new company in Hong Kong;
- In accordance with Hong Kong regulations, local banks will require a KYC meeting with our Client (bank signatories and directors), before approving account numbers. Our Firm will hence assist our Client to schedule bank meetings in Hong Kong, during which our Client will sign account opening forms and submit the KYC documentation required by the Bank. Read our “Meet the bank officer when you travel” page regarding our travel policy;
- In light of the current Covid-19 pandemic and travel restrictions, many of our Clients are unable to travel to Hong Kong to complete the KYC meeting. In such an event, Healy Consultants Group PLC will secure alternative non-travel banking solutions to timely secure a corporate bank account for our Client’s Hong Kong business.
- If required, Healy Consultants Group PLC assists Clients to find business premises and recruit local and expatriate staff, by placing advertising campaigns in local publications, such as the South China Morning post etc. For further details regarding our recruitment services, read our “recruiting staff for our Client” page. If necessary, we assist our Client to register for i) social security and ii) any applicable licenses. There is no GST, sales tax, VAT or payroll tax in Hong Kong, therefore no registration is required for these;
- After a successful engagement completion and the issuance of all necessary approvals, certificates and licenses, Healy Consultants Group PLC couriers a company kit folder, to our Client’s preferred international address, containing the following corporate documents including original corporate documents, unopened bank correspondence, and a Client feedback survey to assess the quality of our Hong Kong company incorporation services.
The following documents are necessary for incorporating a company in Hong Kong:
- Copy of passport and proof of address for all directors and shareholders, notarized by a Hong Kong public notary;
- If a corporate shareholder is to be appointed, then the following company documents are required:
- Certificate of incorporation;
- Annual return
- NNC1 incorporation form.
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