The Complete Guide to Setting Up a Company in Hong Kong

Taxex are business-friendly.

Corporate tax is 16.5% only, with an exemption for the first HKD 20,000 profit.

There is no VAT or tax on capital gain.

On a related note, the monthly social charges a company must pay are at most HKD 1,500/employee

Step 1: Get Familiar with the Organizations You'll Deal With

At the time of setting up a company, and throughout your company’s life, you will be in contact with 3 main interlocutors:

Your company secretary

Your company secretary will be your primary contact regarding all corporate questions about the establishment and maintenance of your company: appointing a new director, changing shareholders, increasing your registered capital, and so on.

Read more about company secretaries below.

The Companies Registry

The Companies Registry is the government department responsible for the registration of companies in Hong Kong.

Its role also includes the monitoring of companies to ensure that they operate in compliance with corporate laws and regulations.

The Inland Revenue Department

The Inland Revenue Department (IRD) is the government department responsible for taxes and duties in Hong Kong.

To put it simply, every year you must file your company tax return with the IRD, who will then determine how much tax your company has to pay.

Step 2: Determine your company name

The first thing comes first, select a name for your company. It can be in traditional Chinese, English, or both.

Here are a few recommendations that may save you a lot of trouble:

Tip #1 – Check if the name is available on the Hong Kong Company Registry’s website.

Alternatively, you can send a list of names to your company secretary who can check it for you.

Tip #2 – Make sure your company name is not trademarked in another region.

For example, there is no company registered with the name “Pop-Tarts®” but you probably don’t want to get into a legal battle with the Kellogg’s Company.

Tip #3 – If you intend to use your company name as a trademark, make sure you protect it by registering it at the Hong Kong Intellectual Property Department.

If you need more details on company name registration, check the Companies Registry guideline.

Step 3: Choose the Legal Vehicle of Your Company

Now that you have the name of your company, it’s time to decide what legal form is best for your business.

This is an important step as it impacts everything from your business operations to your tax filing.

There are 3 main types of company vehicles in Hong Kong:

• Limited company
• Sole proprietorship
• Partnership

Let’s get straight to the point, go for a ‘Limited company’ structure. Here’s why:

Firstly, it’s the most common legal structure in Hong Kong.

Secondly, it’s an independent legal entity which means that your personal assets are protected from your business risks and liabilities.

Third, if you raise funds, it’ll be easier to have your new investor(s) taking a share in your company.

In the same manner, transferring a share from one shareholder to another is a very straightforward process.

Step 4: Appoint a Company Secretary

All companies in Hong Kong are required to have a local company secretary.

It’s mandatory for a reason: Hong Kong authorities want to have a “go-to” person in case they have any inquiry about your company.

That’s why your company secretary has its name mentioned in the registration document of your company.

Your company secretary will be in charge of ensuring that your company is in good standing with the regulations governing the incorporation and maintenance of companies in Hong Kong.

Who can be your company secretary?

Short answer: any Hong Kong resident, no matter if it is an individual or a company.

Long answer: You can ask your friends or family, as long as they reside in Hong Kong, to be your company secretary.

However, we advise you to use this option only if they are familiar with the duties of a company secretary.

Otherwise, you should look to hire a qualified company secretary holding a TCSP license.

What does a company secretary do for your business?

Do not underestimate how much time and trouble your company secretary can save you.

The services your company secretary may provide include:

• Maintaining your company records, such as the register of directors, the register of shareholders, the share certificates, and the significant controller register
• Organizing, preparing the agendas for, and taking minutes of your board meetings and annual general meetings
• Arranging your tax filings
• Monitoring changes in relevant legislation and the regulatory environment and taking appropriate action

Step 5: Select the Registered Address of Your Company

The registered address of your company is the address at which governmental departments will send correspondences.

Needless to say, you want to make sure that you receive them.

For this reason, it is common (and recommended) to use your company secretary’s address as the registered address for the company.

The company secretary will alert you of any new mail sent to your company.

Of course, there’s nothing wrong if you prefer using your office address as a registered address.

However, in this case, be diligent in collecting your mail and remember to inform the authorities of Hong Kong each time you relocate your office.

Step 6: Prepare the Incorporation Documents

Unlike many countries, the incorporation of a company in Hong Kong is not subject to the preparation of tons of documents.

All you have to do is to gather the following (based on our recommendation of setting up as a Limited Company):

• NNC1 incorporation form duly filled in and signed by one of the shareholders (click here to download the document)
• Copy of the directors’ and shareholders’ identification documents (Hong Kong ID card for Hong Kong residents and passport for foreigners)
• Articles of Association of the company - this is a relatively standard legal document that your company secretary normally provides. The Articles of Association serve as the constitution of the company as it provides the rules that govern the company’s internal affairs: appointment of directors, transfer of shares, handling of financial affairs.

Step 7: Submit to the Companies Registry

The incorporation of your company is a straightforward procedure to be carried out with the Companies Registry.

Incorporation documents must be submitted in either one of the following ways:

• Online through Hong Kong’s 24/7 Companies e-Registry;
• By mail sent to the Companies Registry address; or
• At the counter of the Companies Registry.

 Within 2 to 6 business days after submission, the Companies Registry will issue two documents evidencing the incorporation of your company: the certificate of incorporation and the business registration certificate.

Both certificates can be collected in person at the Companies Registry or electronically.

Keep in mind that the certificate of incorporation is issued only once, at the time your company is set up and remains valid during the entire lifetime of the company.

On the other hand, the business registration certificate is only valid for one year.

It must be renewed every year within one month following the anniversary date of the establishment of your company (otherwise fines will be issued).

Step 8: Pay the Government Fee

At the time you submit the incorporation documents to the Companies Registry, you will be required to pay the applicable government fee.

In reaction to the economic slowdown caused by the coronavirus, the Hong Kong government has decided to waive the fees for the years 2020 and 2021. Enjoy your new Hong Kong company for HKD 0!

Step 9: Get Relevant Permits and Licenses (if necessary)

Chances are high that your company will not need any permits or licenses to carry out its business in Hong Kong.

As a matter of principle, being one of the most liberal economies in the world, Hong Kong authorizes everyone to engage in every business.

Exceptions only apply when licenses and permits are necessary to protect the general interest (safety & hygiene, public health, people’s savings...).

For instance, if you’re opening a restaurant, you will need to obtain a General Restaurant Licence and Provisional General Restaurant Licence and a Liquor Licence from the Food and Environmental Hygiene Department.

You can visit the government website to find out which licenses, permits, certificates, and approvals are actually needed to carry out certain businesses.

Step 10: Keep Up With Your Taxes & Financial Reporting

At the time of incorporation, the Companies Registry will automatically report the existence of your company to the Internal Revenue Department.

So no need for you to take any action on this front.

Hong Kong is known for offering many tax benefits to companies, such as the ones we listed below:

• Corporate tax rate of 8.25% on the first HKD 2 million of profits, and 16.5% on everything thereafter. One of the lowest corporate tax rates in Asia and in the world
• Territorial tax regime, which means there is no profit tax for companies conducting their business outside Hong Kong
• No capital gains tax
• No VAT

For more information and updates regarding the rules and regulations for tax in Hong Kong, you can check the Hong Kong Government’s website.

Generally speaking, your reporting and tax notifications should be handled and communicated to you by your company secretary.

Depending on the level of service your company secretary provides, you may want to keep these items in the back of your mind or on a calendar.

Final thoughts

Once you’ve got all this covered, your company is ready to start doing business and your focus can shift to other important questions: opening a bank account, finding an office space, hiring staff, taking out insurance, getting financing, and handling your accounting.

Where you’ll really struggle is opening a bank account for your company.

Hong Kong's traditional banks are notorious for being extremely difficult and time-consuming to open accounts with.

It will require you to visit a branch and provide many documents and information.

Then you will have to wait for weeks while they review your application.

Open a virtual business Account with Statrys today, and get access to 11 currencies in less than 48 hours.