If you are considering expanding your business to Hong Kong, you are not alone. Many foreign investors have decided to expand to this promising market to test the Asian market or tap into new opportunities. Horizons can help you with your HK company formation and guide you through every step of the process. Here is your complete guide to company formation in Hong Kong, which includes clear actionable steps that you can take to make your launch in Hong Kong a success.
Types of Hong Kong Companies
A limited company may be formed by shares or by guarantee. A limited company by shares is the most common type of entity in Hong Kong and is a popular option for setting up a subsidiary. It is commonly established by profit-making businesses.
A limited company by guarantee is established by charities, trade associations, religious bodies, clubs, and professional organizations. It is often more difficult to establish a bank account in Hong Kong with this type of entity.
An unlimited business is one in which the owner or owners have unlimited liability for debts taken on by the business. This includes sole proprietorships and partnerships. The profits from these businesses are currently taxed at 15%, which is lower than other types of businesses. It is also less expensive to maintain these types of companies.
A branch office in Hong Kong is not technically a separate company. The foreign company is completely liable for all debts the Hong Kong branch takes on. Annual audits for branch offices are not necessary. Additionally, the Hong Kong tax bureau usually accepts unaudited branch management accounts once the branch office submits its annual tax return. Non-residents are subject to Hong Kong profits tax, so there are no real tax benefits to forming this type of company.
The representative office provides limited usefulness to foreign businesses because it cannot engage in profit-generating activities. Its activities are limited to conducting marketing and making connections in the local market. Businesses sometimes use this tool to test out the local market before making a significant investment in Hong Kong.
The incorporation specialists at Horizons can discuss your needs and help you determine the best type of entity for your business.
Requirements for Company Formation in Hong Kong
To incorporate a Hong Kong limited company, you must meet the following minimum requirements:
- Have a business that ends with the word “Limited”
- Have a Hong Kong physical address
- Appoint a Hong Kong resident or company as your company secretary
- Invest share capital of a minimum of HK $1
- Have at least one director, the first of which must be a person
- Have at least one shareholder who is a person or company
Most limited businesses can be formed with a single trip to Hong Kong with the help of Horizons. The director and shareholder must be physically present to meet with the banker when forming a corporate bank account. We can schedule your meeting with the banker ahead of time so that your time is spent wisely once you arrive in Hong Kong. In some situations, you will not need a corporate bank account and may be able to establish your company without the requirement of your physical presence. Contact our specialists for more information.
Simplified Process for Company Formation in Hong Kong
Horizons can help you form a separate legal entity in Hong Kong quickly and efficiently with minimal investment and requirements, including:
- Only one shareholder
- Only one director
- No minimum capital requirement
- No residency requirement for the shareholder or director, who may be the same person
- No existing staff
- No rented office
- A bank account opened anywhere in the world
- Use of Horizons as your registered agent
With the help of Horizons, company formation in Hong Kong is faster and easier than ever before.
4 Steps to HK Company Formation
You can establish your company in Hong Kong with the following 4-step process:
Pick your name and entity
You pick your desired name and which type of business you want to establish and provide our sophisticated team with the relevant details and documents.
Our HK company formation experts check the availability of your chosen name and prepare documents on your behalf. You sign the documents. We submit all necessary documents to the proper governmental departments and take care of the process.
Receive HK company formation documents
Typically, within a matter of days, your company is legally established. We provide you with your original incorporation documents, including your Certificate of Incorporation, Business Registration Certificate, Articles of Associations, share certificates, and company stamps.
Attend your bank appointment
You attend your pre-arranged bank appointment to set up a local account. We recommend the online bank Statrys.
Benefits of Company Formation in Hong Kong
There are many significant benefits of forming a separate legal entity in Hong Kong and making this the location of your next global expansion. Some key benefits include:
- Low tax rate – Hong Kong has a low tax rate for companies. The profits tax rate is 16.5%, which is one of the lowest corporate rates in the world. Furthermore, this tax can be lowered to 8.25% in certain situations. Profits tax is charged on a source basis rather than a more expensive worldwide basis, so you are only taxed on the income arising in or derived from Hong Kong and not your global income. Additionally, there is no GST or VAT, so there are lower overall taxes and less administrative costs to comply with tax laws.
- Simple tax system – In addition to offering advantageous tax rates, Hong Kong has a very simple tax system. There are three types of direct taxes: profits tax, salaries tax, and property tax. Unlike other countries, there is no withholding tax system, no turnover tax, no capital tax regime, no VAT and no GST.
- Simple company incorporation – The process to incorporate your company is simpler in Hong Kong. Your shareholders and directors do not have to be Hong Kong citizens, so there are fewer requirements to set up the business when you are a foreigner.
- Low startup costs – The setup fee is low, and so are the maintenance costs for your business, making Hong Kong an attractive location to expand your business.
- Strong legal framework – Hong Kong uses a common law legal system that provides protections to Hong Kong businesses. You can seek enforcement of your legal rights and others’ obligations through this judicial system. Hong Kong has also adopted internationally recognized codes of practice in business and commerce.
- International finance center – Hong Kong is recognized as one of the most robust international financial centers in the world. Foreign businesses are not kept out of investing in the area and there are no restrictions regarding capital inflows and outflows here. Additionally, there are no exchange controls.
If you would like to expand your business to Hong Kong and take advantage of these important benefits, contact the Horizons team today to learn more.
Ongoing Support to Make Your Company Formation a Success
Horizons is truly your global partner in expanding your business. We provide ongoing support to help you maintain compliance with the Hong Kong authorities. Additionally, we can update information about your company and the key members behind it, file annual returns with the Companies Registry and advise you on new changes in the law.
Additionally, we offer you the following services:
- A virtual office that you can use as your registered office address
- Translation of official documents into Chinese
- Apostille and notarization services for your important documents
- Payroll management
- Assistance in accounting and tax matters
- Compliance assistance
- Human resources management
- Hong Kong PEO & Employer of Record
Contact us today to inquire about our host of services.