When you decide to start a business in Hong Kong, you need to consider the rules for business registration: This applies equally whether you intend to incorporate a company in Hong Kong, begin a sole proprietorship, form a partnership, or engage in some other form of business enterprise.
Business registration in Hong Kong is managed by the Inland Revenue Department, and registered businesses receive a business registration certificate.
Here we explain how business registration in Hong Kong works: This includes how to initially register a business in Hong Kong, how to renew your business registration, and potential penalties for non-compliance.
Which businesses are required to be registered in Hong Kong?
All of the following business structures and entities must be registered in order to operate in Hong Kong:
- Companies that are incorporated in Hong Kong. This includes companies in Hong Kong that are subsidiaries of international enterprises. And it applies whether or not the business operates solely in Hong Kong, or operates in other jurisdictions;
- Branches or representative offices of international companies;
- Partnerships including limited partnerships;
- Sole proprietors and self-employed. Business registration is a requirement for any activity which makes a profit. Sole proprietors who are not resident in Hong Kong may use an authorized agent to register their business in Hong Kong.
The key exception to the requirement for business registration is where income arises from employment.
What must be included in a business registration certificate?
The business registration certificate (‘BRC’) must be applied for within 30 days of commencing business operations, and contains the following information:
- The business name;
- The business’s physical address;
- The type of business and the nature of its activities;
- The date of beginning operations;
- A BRC number;
- A date of expiry.
When should I register my business?
When incorporating a company in Hong Kong, you should apply immediately after receiving your certificate of incorporation.
Where you are commencing a self proprietorship, partnership, a branch, or a representative office, you should apply for business registration before you begin operating.
Note, the BRC must be applied for within one month of commencing operations.
What should I do with the business registration certificate?
Once you have received the BRC, you should display it in your place of business so that the Hong Kong authorities can review it when necessary.
Besides being a compliance requirement, displaying your BRC also promotes the reputation of the business in the eyes of the consumer and any potential investors.
How do I renew my business registration certificate?
On application, and payment of your registration fee, you will elect to have a BRC for either one year or three years. During the month prior to your current BRC expiring, you should receive a demand note from the Inland Revenue Department asking for full payment to renew your registration.
If you do not receive such a demand, you should contact the Inland Revenue Department. Once paid, the demand note converts into a new BRC.
What are the penalties for failing to register your business?
If you fail to register your business on time, as required under the law, you may be subject to stiff penalties — a fine of $5,000 and up to 1 year of imprisonment.
Perhaps even more serious, is the fact that you will struggle to file your tax returns without a business registration number. Failing to file your tax returns, and pay the appropriate amount of tax, is an even more serious compliance breach than failing to register your business.
Note also, that if you have failed to register your business, and then subsequently do so at a later date, you will need to pay for all periods of non-registration, including any late penalties.
The importance of Hong Kong business registration
Some businesses incorporate a company in Hong Kong and believe that is the end of their compliance obligations. This is incorrect. Business registration is a separate, and crucial, step. Whether you are operating through a Hong Kong company, or any other kind of business setup, it is crucial that you receive a business registration certificate issued by the Inland Revenue Department.