About business set-up and company formation in Hong Kong
Territiorial tax system
The Hong Kong tax system is territorial. Profits from a Hong Kong business are subject to profits tax (currently at a rate of 16.5%) but foreign-source income is not taxable even if remitted to Hong Kong. There is no capital gains tax, no sales tax, no withholding tax on dividends or interest and no inheritance tax.
The government of Hong Kong SAR has specific policies and legal protection in place for intellectual property rights. The city’s intellectual property laws have been developed to reach the highest international standards to create a free and fair business environment.
Regional headquarters and business hub
In addition to being a major financial and commercial centre in its own right, Hong Kong serves as a regional headquarters and business hub for the Asia Pacific region. It also acts as a gateway for companies looking to do business in Mainland China and mainland enterprises seeking access to global markets.
With all of Asia’s key markets less than four hours’ away, it is easy to see why over 9,000 businesses and companies have made Hong Kong their home. Many have placed their strategic functions, including sales, operations, research and development (R&D), distribution, regional headquarters and corporate treasury centres in the city.
As an international finance centre, Hong Kong’s independent legal system, rule of law, free flow of information and capital, and sound regulatory regime, put it in a prime position to help businesses make the most out of China’s ‘Belt and Road’ Initiative, which is set to link Mainland China with countries across Asia, Europe and the Middle East.
Favourable business environment
Hong Kong’s appeal is built on its political stability, the rule of law, the free flow of information and the use of English as the language of business. It offers a strong pool of local well-qualified talent, while business-friendly immigration policies make it simple to recruit professionals from overseas.
Guangdong-Hong Kong-Macao Bay Area (GBA) city cluster
Another opportunity arises from the , which will combine the resources of more than ten cities throughout the region. Hong Kong is to play a key role in ensuring the cluster is internationally competitive, making it the ideal location for businesses and companies to enjoy the benefits.
Another advantage of setting up business in Hong Kong is its free trade policy. The city’s free port status and easy customs procedures makes it easier for businesses and companies to operate.
Hong Kong has eight Hong Kong’s Free Trade Agreements, respectively with Mainland China, New Zealand, the Member States of the European Free Trade Association (EFTA), Chile, Macao, the Association of Southeast Asia Nations (ASEAN), Georgia and Australia.
Sovereign Hong Kong also provides Trust administration to help you protect your assets and family wealth. Click through to our Private Client section for more information.
Hong Kong Company Formation – why incorporate with us?
Choosing the right company set up
Private Limited Company Registration
The new Hong Kong Companies Ordinance, which came into effect on 3 March 2014, streamlined the eight different types of companies that could be formed under the old Hong Kong Companies Ordinance into five types:
- Private companies limited by shares
- Public companies limited by shares
- Companies limited by guarantee without a share capital
- Private unlimited companies with a share capital
- Public unlimited companies with a share capital
Incorporating a Public Limited Company
Companies incorporated in Hong Kong can be public or private, and can be limited by guarantee or by shares. Under the Hong Kong Companies Ordinance, a company that is neither a private company nor a company limited by guarantee is a public company.
A Hong Kong Public Limited Company (PLC) is limited by shares but, unlike a Hong Kong Private Limited Company, its shares and debentures may be offered to the public and it can have more than 50 shareholders.
Hong Kong Company Limited by Guarantee
Companies limited by guarantee without a share capital are typically used for non-profit organisations and clubs that require legal personality. This kind of company is limited by guarantee rather than capital, meaning that the parties involved are guarantee members and are not shareholders.
Instead of investing capital, the members guarantee to contribute a predetermined sum to the company to cover its liabilities in the event of the winding up of the company.
Registration of a Foreign Company
Registering a foreign company in Hong Kong can offer significant advantages to incorporating a new Hong Kong company in certain circumstances. It must be registered with the Hong Kong Companies Registry as a non-Hong Kong company that has established a place of business in Hong Kong under Part 16 of the Companies Ordinance. This must be done within one month of establishing the place of business in Hong Kong…
Branch, Subsidiary or Representative Office
The most frequently used types of business vehicle for foreign companies wishing to carry on business in Hong Kong are:
- Hong Kong-incorporated Subsidiary Company
- Branch Office of a Foreign Company
- Representative Office
Every business in Hong Kong is required under the Hong Kong Business Registration Ordinance to obtain a Business Registration Certificate within one month of commencing business for its principal office address and also for any other business address in Hong Kong.
Setting Up Partnerships
Partnerships are businesses that are established and co-owned by two or more people who join together to carry on the business with a view of sharing profits. Generally, all partners have equal rights in the management of the partnership. There is no requirement to have any written documentation, although a Partnership Agreement is advisable. Partnerships may have between two and 20 partners. Once there are more than 20 partners, the business must be registered as a company.