Private Limited Company Formation in Hong Kong doesn’t involve capital contribution on the subsequent incorporation. They just have to declare the capital as it is on signing the articles of association without paying the money or assigning the capital.
Also, there are no taxes on dividend, for a company which is incorporated in Hong Kong. Only if the profits are derived from the Hong Kong region, a flat tax rate of 16.5% prevails.
Also, there are various programs designed to help overseas companies, set up in Hong Kong like Loan Guarantees, Incubator operations, funds for marketing. It is one of the most business-friendly cities in the world. It is strategically located in the heart of Asia & has an independent judiciary.
It thrives on ‘One County, two systems concept. It is one of the least corrupt economies of the world due to its transparent structure.
A Business can be set up in HONG KONG in the following ways:
- Limited Company Registration in Hong Kong– It can take advantage of various tax concessions offered against this business model. Application to be made to Central Registry.
- Branch Office of Parent Company- If an overseas company wants to establish a business place in or a branch office as a subsidiary in HONG KONG, it must get itself registered as NON-HONG KONG Company with Central Registry within one month of the establishment.
- Representative Office registration in Hong Kong – It is a non-profit making entity which is set up just to explore HONGKONG marketplace & its orientation for larger investments style.
Checklist for a Business Set-Up in Hong Kong
For Incorporation, we need, following documents for Company registration in Hong Kong
- One Director* – (Min 1 & Max Unlimited & at least one director must be a natural person)
- One Shareholder (individual & corporate)* – (Min 1 & Max 50 & can appoint nominee shareholders & directors as well)
- One company secretary – (If the individual then must be a resident of HK or if a Corporate then the business place must be in HK)
- One registered office address in Hong Kong
- No prescription of minimum paid-up capital (generally it is HK$ 10000 or equivalent in foreign currency). The capital duty of 0.1% is paid on the Authorized Share Capital.
- Auditors must be a firm of Hong Kong-registered Certified Public Accountants (Must be appointed within 18 months of incorporation i.e. before first AGM).
- No resident Bank Account needs to get opened in Hong Kong.*
- An overseas bank account can also be opened in the name of the Hong Kong Company provided they are certified at two levels i.e. Notarized by a lawyer in Hong Kong & then Apostle by Court in Hong Kong.)
- A valid Passport is essential for a non-resident.
*Both can be the same persons (Individual & Corporate)
*HSBC Banks are the biggest player in the market along with Hang Seng Bank where the majority is owned by HSBC; these Banks are generally willing to open accounts for non-residents.
SINCE LAST TWO DECADES HONG KONG HAS BEEN RANKED AS WORLD’S FREEST ECONOMY BY HERITAGE FOUNDATION/WALL STREET JOURNAL). IT IS AN EXTERNALLY ORIENTED ECONOMY. In EInterslice Package with official documents forms the Government authorities of Hong Kong is received at the end when incorporation is affected. It comprises of the following docs:
- Certificate of Incorporation
- Business Registration Certificate
- Articles of Association
- Certificate of Shares
- Statutory Books
- Company Chops
Checklist for Company Formation in Hong Kong?
- Application for name availability from Registrar of Companies. An apt company name can be can be searched through the Companies Registry Cyber Search Centre.
- Application to be made in Form NNC-1 to Hong Kong Company Registry with Companies Articles of Association along
- The registered office of the company is situated in Hong Kong & for this IRBI1 i.e. Notice to the business registration office. Should be submitted to CR.
- One has to register the business with the Business Registration Office of the Inland Revenue Department. It must be registered within one month of the start of business & should be displayed on the business premises.
- The opening of Bank Account. Hong Kong Monetary Authority will provide all the useful information related to the same.
- For the protection of IPR, the application should be made to Hong Kong Trademark Register.
What is Government fees for Company registration in Hong Kong?
- Company Registration Fee: HK$ 1720 (If, not succeed in attempt filing then, a refund of HK 1425$ may be made)
- Company Registration Fee: HK$ 2000 for a one year certificate & HK$ 5200 for the three-year license
- Levy for Protection of wages on insolvency fund: HK$ 250 for a one year certificate & HK$ 750 for a three-year
Legislations for Company formation in Hong Kong:
- Companies Ordinance (Chapter 622 of the Laws of Hong Kong )
- Companies (Winding Up &Miscellaneous Provisions)
- Companies Ordinance (Chapter 32 of the laws of Hong Kong)
- Hong Kong Corporate Tax Guide
Timeline for Company Formation in Hong Kong
Electronic Certificates after the filing of Incorporation will normally be issued within one hour after delivery of documents at the e-registry.
This will be evidenced by an email notification on the registered mail ID which will contain the Certificate Download Link.
What us Tax structure in Hong Kong?
Hong Kong witnesses highly attractive Tax regime.
- Low Personal & Corporate tax rates
- No Capital Gain Tax; Hence Capital Loss expenses are not allowed as deductions.
- No VAT or Sales Tax; probably GST
- No withholding tax on dividend or interest either to a resident or a non-resident.
Tax Rate for Corporations: 16.5%
Also, there are no foreign exchange controls in Hong Kong. It follows a single tier tax system.
By aligning its tax policy with growth-oriented economic goals, Hong Kong has emerged as one of the preferred locations for most global entrepreneurs and business enterprises.