Hong Kong has evolved into an international financial centre, well served by local banks and international bank offices. Hong Kong is a respected, business-friendly country with a very appealing taxation system that includes low rates of business tax (most foreign business can be legally transacted tax-free in Hong Kong), no value added tax, no capital gains tax, and no withholding taxes.
Hong Kong is frequently chastised for being an offshore tax shelter. In truth, it is a low-tax jurisdiction rather than a tax haven. Hong Kong has likewise committed to the worldwide standard for tax information and exchange. As a result, an offshore corporation based in Hong Kong is not regarded adversely or suspiciously.
Hong Kong is regarded as one of the easiest places in the world to conduct business. Setting up a Hong Kong corporation is simple and straightforward, with no additional red tape. Furthermore, Hong Kong has a favourable foreign ownership regulation that allows a company's shares to be 100% foreign-owned. There are no particular permissions necessary from government officials.
We can assist our clients with the incorporation of Hong Kong companies and will try to fulfil any specific requirements. Clients may purchase a shelf company from us or choose a company name so that we can check whether the name is available for incorporation. The incorporation of a Hong Kong company takes approximately 5 working days.
Where there is a need to commence immediate business operations, we recommend that you buy a shelf company. In order to conduct a name search and to start the process of incorporating a Hong Kong company, please request our Company Order Form.
Hong Kong lies on the south-east coast of China and consists of a large number of islands nearby as well as part of the mainland totalling approximately 1025 km2. The main areas are Hong Kong Island, Kowloon and the New Territories.
These areas were ceded to Britain in perpetuity in 1842 under the treaty of Nanking, and in 1898, the New Territories were leased by Britain from China for a period of 99 years. On 1 July 1997, the whole of Hong Kong reverted back to China and became a Special Administration Region within the People’s Republic of China.
The population of Hong Kong is currently 7-8 million, mainly consisting of people of Chinese origin and it is one of the most densely populated areas in the world.
Until 1 July 1997, Hong Kong was a British Colony. A governor appointed by the Queen presided over the Hong Kong government, which consisted of the executive and legislative councils. On 1 July 1997, Hong Kong elected its own legislature and maintained its court structure. The head of the government of the Hong Kong Special Administrative Region is the Chief Executive Officer. The Legislative Council is the legislature of the Hong Kong.
Infrastructure and Economy
Separating Hong Kong Island and the Kowloon peninsular is Victoria Harbour, which is internationally acknowledged as one of the world’s best natural harbours. It varies in width from two to ten kilometres. An additional 13,517km2 of land has been reclaimed in the New Territories to provide additional dockyard and warehousing facilities. It is estimated that well over 100,000 containers per month pass through the port.
Hong Kong is a major centre in South-East Asia for both finance and commerce and it ranks as the world’s third largest financial centre after New York and London. There are more than 160 licensed banks with more than 130 foreign banks with representative offices in Hong Kong and a further 225 licensed deposit taking finance companies, all of which play an active role in the financing of international trade and commerce.
The official languages are English and Chinese, with English being used in a commercial and political context and Cantonese and Mandarin Chinese being widely used in industry and domestic trade.
Type of Company
The type of company registered in Hong Kong that will be used for International Trade and Investment is a private company limited by shares or Hong Kong limited company.
When setting up a company in Hong Kong, the Articles of Association and Incorporation Form need to be filed with the Companies Registry.
Restrictions on Trading
A Hong Kong corporation is not allowed to undertake banking, insurance or financial activities unless the relevant licences are obtained.
Powers of the Company
A Hong Kong limited liability company has all the powers of a natural person.
Language of Legislation and Corporate Documents
When incorporating a Hong Kong company, both Chinese and English, or either one of these two languages may be used in the corporate documents.
Registered Office Requirement
Upon the incorporation of a Hong Kong company, the company must maintain a registered office in Hong Kong where the correspondence from the Hong Kong Government can be received.
The Hong Kong business name does not need to be approved prior to the registration of the company, nor is it possible to reserve a name either. However, it is essential to check that there is no similar or identical name on the Register maintained by Companies Registry, which would prevent the company from being incorporated.
We can also supply you with Hong Kong shelf companies. These are very popular and they are available for immediate delivery.
Time to Incorporate
Registering a Hong Kong company that is tailor-made (created from scratch) takes 6-7 working days from start to finish.
If you want to buy a ready-made Hong Kong company, it is possible for the whole process to be completed within one working day.
When forming a Hong Kong company, there are certain restrictions upon which names may be used, for example, a name that is too similar to or identical to an existing company, a name that constitutes a criminal offence or is otherwise contrary to the public interest or a name that implies government patronage.
Names Requiring Consent or Licence
When establishing a Hong Kong company, the following words are not allowed to be used in company names: Building society, Chamber of Commerce, chartered, co-operative, mass transit, municipal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, department.
Suffixes to Denote Limited Liability
Disclosure of Beneficial Ownership
Following the incorporation of a Hong Kong company, the details of the shareholder(s) are available to the general public. However, anonymity may be preserved by using nominee services or setting up an offshore IBC to hold the shares.
Issued Share Capital
The minimum issued capital is one share of HKD1.
Classes of Shares Permitted
Ordinary shares, preference shares, redeemable shares and shares with or without voting rights.
A company incorporated in Hong Kong is not allowed to issue bearer shares. However, privacy can be achieved by using nominee services or setting up an offshore IBC to hold the shares.
Hong Kong income tax is a tax on income, the source of which is in Hong Kong rather than a tax based on residence. Hong Kong does not therefore impose tax on any income that does not derive from Hong Kong, even when such income is remitted to Hong Kong. Consequently, if a Hong Kong company’s trading or business activities are based outside Hong Kong, no taxation will be levied in Hong Kong.
However, every offshore tax return is subject to being reviewed and approved by the Hong Kong Inland Revenue Department and the company is obliged to prove to it that all of its income was sourced outside Hong Kong.
Hong Kong companies with income deriving from Hong Kong currently pay a corporate tax rate of 16.5% on their profits.
There is no tax on capital gains. Interest income and dividend income is also tax free. The local currency is the Hong Kong Dollar. There are no exchange controls in Hong Kong.
One of the major advantages of registering a Hong Kong company is that there is no immediate presumption that the company will be a tax avoidance vehicle because Hong Kong is major trading hub in its own right. It is one of the world’s largest importers and also exporters. The vast majority of the 50,000 Hong Kong company incorporations annually are local trading companies doing real business in the region.
Double Taxation Agreements
Hong Kong has an arrangement with a number of jurisdictions for double taxation relief.
The normal Business Registration and Levy Fee is HK$2,150 (around US$276) per annum, is due and payable upon incorporation of a Hong Kong company and then annually on the anniversary of the first payment.
Financial Statement Requirements
After setting up a Hong Kong company, it is required to prepare full audited accounts as per Hong Kong company law. In addition, a copy of the audited financial statements has to be provided to the Inland Revenue Department along with a Tax Return showing it profits. The audited financial statements are not available to the public, apart from those of a public company.
Upon Hong Kong company registration, a minimum of one (1) director is required and full details thereof must be filed with the Companies Registry and are available for public inspection. The director(s) may be of any nationality and resident anywhere. There is no requirement for board meetings of a business in Hong Kong to be held within Hong Kong and directors may be resident anywhere in the world. Corporate directors are permitted. However, every Hong Kong limited company must appoint at least one individual director.
During the formation of a Hong Kong company, a company secretary must be appointed, who may be a natural person or a legal entity, but the company secretary must ordinarily reside in Hong Kong or in the case of a corporate company secretary, its registered office must be situated in Hong Kong.
A minimum number of one shareholder is required for a Hong Kong company registration, whose details are filed at the Companies Registry and available for public inspection. Corporate shareholders are permitted and anonymity can be achieved by using nominee shareholders or an offshore IBC holding company. The shareholder(s) can be of any nationality, resident anywhere in the world and meetings can take place anywhere.