We can confidently say that Hong Kong is a fantastic center for premium commerce and service provision if you’re considering company formation in Hong Kong. Hong Kong is recognized as a global hub for international trade and finance.
It has an established government, advanced infrastructure, a thriving capital market, skilled laborers with a high level of education, and a favorable tax system. Hong Kong, as one of the world’s most active economic zones, provides a superb site for entrepreneurs and enterprises to engage in the Asian economies and acts as a gateway to the Chinese market.
Trade, invoicing, recruiting, and transferring funds overseas are all possible via Hong Kong enterprises with very cheap initial investments from foreign investors. Hong Kong also has a relatively low tax rate compared to other developed countries.
While foreigners need not be permanent residents to register a Hong Kong corporation, they must go there in order to open a corporate bank account. This guide will help startups and medium-sized businesses with Hong Kong company formation and bank accounts, taxes, and continuing compliance concerns by providing accurate and complete information and solutions.
The first and most important stage in growing your business worldwide is the formation of a Hong Kong company structure that fulfills your needs and the rules of the country where your organization will operate. Considering the advantages and disadvantages of your preferred business entity in light of your overall company objectives is crucial.
You must answer the following essential questions before a decision can be made.
Since the law of the jurisdiction discourages the use of demanding bureaucratic procedures, registering a business in Hong Kong under the form of a Limited Liability Company (LLC) may be carried out online and following the streamlined system. These are Hong Kong company formation requirements:
It’s possible to set up several different types of companies in Hong Kong. Let’s examine each of them in-depth to see what it’s about:
This company setup is the most common kind of legal entity in Hong Kong. It is argued that a company is private if and only if its articles of organization impose minimal constraints on its operations.
A board of directors and a firm secretary will need to be hired by the private limited business. However, neither the director’s nationality nor their place of residence is a factor that is considered in any way.
A company limited by guarantee is the next corporate form and is ideal for non-governmental organizations. As a result of the firm’s articles of association, there is a limit on how much of the company’s surplus may be distributed to the shareholders.
There is no idea of share capital in a corporation limited by guarantee, and members’ liability is limited to the amount they contribute. The company directors need to Take Ownership of their ethical and legal obligations.
If a company is not privately held, then by definition, it is open to the whole public. To put it another way, their articles of incorporation will have no restrictions. It might be either a publicly-traded company or a private company.
A key feature of this kind of organization is that it is subject to additional regulations and reporting requirements than a typical private corporation would be under the Companies Ordinance. In order to be listed, a private firm must first become a public corporation.
A sole proprietorship is an entity in which a single individual has all legal and financial responsibility for the company. While being a sole proprietor may seem like the least complicated company structure, it really carries with it a high degree of risk.
Why take that chance? Why? Because it doesn’t provide any safeguards for your possessions or place any limits on your personal liability as a business owner. It might be difficult to generate money and expand the firm with this organizational structure. The reason is investors’ skepticism of new businesses.
Both limited partners and general partners are part of a partnership firm. Before all of your general partners have relocated to a country other than Hong Kong, you don’t have to fill any local management positions.
While the general partner has unlimited responsibility for the company’s obligations, the limited partner is only liable for the amount he contributed to the company’s formation. It’s also important to remember that the general partners have a significant say in the company’s direction and are named as beneficiaries in its will.
On the other hand, limited partners are not heavily involved in running the firm and have no voting rights on major topics.
Partners with the same vision for the company and who want to advance professionally together might consider a partnership business structure. This kind of organization may be formed quickly and easily and consists of 2 or more partners.
Each member in a general partnership is personally accountable for the obligations of the company and shares responsibility for the partnership’s actions as a whole. Establishing a general partnership in Hong Kong is simple since there are no mandatory registration procedures or other regulations that must be met.
You must submit the following items with your Hong Kong offshore company formation registration application.
To complete the incorporation process, you will also need the following documents:
Note that you are required to supply the legally approved translated copies of any document for a Hong Kong company that is not written in English.
You should be aware of the primary startup Hong Kong company formation cost before deciding to register there. The following are the articles of incorporation as presented by the company formation agents in Hong Kong:
Other than the expenses associated with the required minimum share capital and the formation fees, a new business looking to start operations in Hong Kong must be prepared for other charges.
A physical location in Hong Kong for the company’s registered office is a legal requirement; hence many entrepreneurs choose to buy or lease an office there. Properties in Hong Kong may be rather expensive, depending on the area, the size of the unit, and whether or not it is a shared or co-owned facility.
It’s possible that the expenses connected with a virtual office solution may be more reasonable for certain investors. Depending on their precise requirements, they will need to invest in a suitable virtual Hong Kong company formation package.
Other noteworthy yearly expenditures for firms in Hong Kong include those related to accounting services, which should be considered when the formation of the company in Hong Kong. Any business looking to set up shop in Hong Kong must be ready to handle the high expense of recruiting locals.
Hong Kong is a member of the Financial Action Task Force. Therefore, all banks based in Hong Kong are bound by rules that are consistent with global risk management norms. Therefore, to comply with anti-money laundering legislation, all banks must acquire specific documentation from prospective customers before officially accepting them as customers.
If you are starting a business in Hong Kong for the first time and need to create a business bank account, you will need to present the following papers (in English) as evidence of business.
However, if you already have a firm up and running, you’ll need to produce the following papers (in English) as evidence of your enterprise’s legitimacy
Purchase orders, confirmations of transactions, records of agreements (between buyers and sellers), and so on are all examples of trading history.
In addition, you will need to draft a business strategy (your agency can assist you in doing so if you lack the requisite expertise). A business plan doesn’t need to be very thorough, but it needs to outline where you want to take your company(what services you want to provide, where you hope to expand, etc.).
If you want to establish an account with this bank, you’ll need to visit their Hong Kong location. Simply said, there is no way to get around this. However, your agency will offer you advice, a pre-screening service, and an appointment with the bank of your choice for a small price (1,000 HKD, which is already included in the incorporation package fee).
A company formation agent in Hong Kong will go with you to the bank to establish an account and check on its progress if the bank agrees to do so. It is recommended that the in-person interview not exceed 60 minutes.
Do not forget your passport and ten thousand Hong Kong dollars (This amount will serve as the company’s first paid-in capital and must be placed into the new business bank account on the same day the account is opened).
Remember that it is not necessary for you to go all the way to Hong Kong in order to open a bank account if you are already in an authorized Chinese coastal city such as Guangzhou, Beijing, Shenzhen, Shanghai, or others. If you want additional banking alternatives and a quicker approval process, though, you could visit Hong Kong.
One additional option is to use one of the newer companies in Hong Kong that facilitate opening alternative bank accounts.
When deciding whether or not to register Hong Kong limited company formation, foreigners should keep in mind the following information, which is essential for any company formation Hong-Kong:
When it comes to worldwide tax payment services, Hong Kong has the most comprehensive, easy-to-use, and low-cost options. SAR; (Special Administrative Region) is ideal for companies and workers since it has no value-added tax, estate tax, sales tax, withholding tax, income tax, capital gains tax, interest tax, or inheritance tax.
To protect Hong Kong’s restricted tax structure and guarantee the SAR’s continued independence from China’s tax administration, two articles were inserted into the Basic Law at the time of its establishment in 1990.
This suggests that Hong Kong is not obligated to pay taxes to Beijing’s central government in its capacity as a self-governing region.
Three primary taxes are administered by the Inland Revenue Ordinance (IRO):
Profits from any trade, profession, or business carried out in Hong Kong by a natural or legal person (including a company, partnership, trust, or body of individuals) are subject to Profits Tax if they arise in or are resultant of Hong Kong.
Assessable profits are used to calculate the Profits Tax liability after subtracting allowable deductions and exempt income.
The two-tiered profits tax rates system became effective for the fiscal year beginning 1 April 2018. It reduced the rate of taxation for the first $2 million in assessable earnings for companies and unincorporated companies.
Salaries Tax is a tax levied on earned incomes such as salaries, wages, and pensions in Hong Kong. The standard tax rate and the progressive tax rate are used to determine taxable wages for salary tax purposes, with the standard rate being used if it is lower than the progressive rate.
For those who own land or buildings in Hong Kong, the government collects a tax known as the Property Tax. When determining property taxes, the net assessed value of a property is considered. The assessable value of a property is its actual income, less any deductions or allowances.
To avoid confusion, taxpayer identification numbers (TINs) are not issued in Hong Kong, China. As an alternative to a TIN, you may use any of the following:
Identification number from a Hong Kong Identity Card (HKID). All inhabitants of Hong Kong, China, aged 11 and above, are required to get an HKID from the Immigration Department (other than those who are exempted). The HKID number may be found in the kid’s lower right corner.
A typical Hong Kong company tax identification number format is @ 123456(#).
As the identification that is equal to a TIN for persons, the whole HKID number, including the check digit but excluding the brackets, is used. This includes both the letters and the numbers.
(BR) the number for business registration. Entities operating in Hong Kong, China must register with the Business Registration Office. A business’s BR number is a special identifier. Certificate of Registration (BR) numbers is located in the document’s center, next to the words “Certificate No.”
The Business Registration (BR) number consists of the first 8 digits of the Business Registration Certificate Number (e.g., 00000000-&&&-&&-&&-&).
All the digits in a company’s BR number serve as its unique identity, just as a TIN would do for individuals.
Hong Kong requires all firms to have a business registration number (BRN) to do business and legally pay taxes in the territory. This is because the BRN serves as the Tax Identification Number (TIN) for Hong Kong businesses. According to the BRO, all businesses operating in Hong Kong are required to be registered with the IRD’s Business Registration Office. The process of opening a branch in Hong Kong includes registering the branch with the local authorities.
There are two methods of Hong-Kong holding company formation:
Both kinds of structures, regardless of which one the business owner chooses, have their distinct benefits.
The new company formation in Hong Kong will start by being formally organized in accordance with the investor’s requirements. The founders will draft articles of Association and Memorandum to reflect their vision for the company’s management structure.
As a counterpoint, the shelf corporation will already have these fundamental papers in place, which may be revised as necessary. Some investors may discover that the time required to create a new business in Hong Kong is comparable to the time required to purchase a shelf company and make the necessary modifications to make it functional for their needs.
These changes may include revising the Articles of Incorporation or the company’s name. The time and effort needed to start a new business might be much more than the time and effort required to acquire a shelf company and get it ready for trade. Anyone putting money into either choice has to think about this.
The following are the necessary actions to register a corporation in Hong Kong:
The registration of a business in Hong Kong is required. When it is not registered, a corporation is considered to be intangible; it may have been founded by or under the law; it may have a separate legal identity; it may have perpetual succession, and it may have a common seal.
The following is a list of some of the most important benefits that come with Hong Kong holding company formation:
In most cases, the Hong Kong company formation service you choose to help you set up a business will see all the details, from the first paperwork to the final registration on your behalf. Since this is a long-term, continuous partnership, choosing a company that can provide excellent service is crucial.
The hired firm will do the following for you:
Is it possible to set up a Hong Kong company formation for foreigners?
Yes. It is possible for a foreigner can become the sole director of a company in Hong Kong and take up a 100% ownership stake in the business.
In Hong Kong company formation online, how long would it take time?
When all necessary paperwork is in order, the whole process of offshore company formation in Hong Kong takes just three to five business days.
What makes Hong Kong the best place to register a business?
When it comes to Hong Kong’s new company formation, Hong Kong is routinely rated high.
Here are a few of them:
If I want offshore company formation in Hong Kong, do I need to move to Hong Kong?
To put it simply, that’s not required to move for offshore company formation in Hong Kong.
If you are starting a business in a foreign country, or even if you are from that country, it is highly recommended that you use Hong Kong company formation services that are familiar with the local laws regulating corporations. They are also well-versed in maintaining compliance with all applicable Hong Kong company formation laws and regulations.