HONG KONG COMPANY SET UP GUIDE

Advantages of opening a Hong Kong company

Hong Kong is, along with Singapore, the most liberal economy in the world. Therefore, opening a limited company is simple, fast and cheap (the government requires a fee for the Company Registration and Business Registration Certificate). You don’t even need to live there, as you can hire a secretary and get a registered office address for a small annual fee.

In comparison to many other countries, the required registered capital in Hong Kong is very low and pretty reasonable even for medium and small companies that have little resources. You can run your business from any country in the world (if you don’t live in Hong Kong, Corporation China can provide you annual service packages for secretary and registered office address in Hong Kong).

Hong Kong is a major banking center and, once you have incorporated your company there, you’ll be entitled to open a multi-currency business bank account (with e-Banking) at a bank recognized worldwide such as HSBC or Hang Seng Bank. This is a key feature if you plan to do business worldwide. Notice that, if you prefer, you can also open the bank account of your company outside Hong Kong, for instance in Singapore or Switzerland.

Hong Kong is the best gateway to mainland China, and the Closer Economic Partnership Arrangement (CEPA) provides Hong Kong with additional and exclusive mainland market access benefits. So, if you’re planning to do business with a Chinese partner, having a company in Hong Kong may be your best bet, especially when it comes to receiving money from your Chinese business partner. Even if Hong Kong is, from a political point of view, a province of the People’s Republic of China, its legal system is different from mainland China’s, as English common law prevails. 

Hong Kong has a very simple taxation system: your company will have to pay 16.5% tax on all profit. If the director/s of the company doesn’t live in Hong Kong (and other conditions apply), you can then apply for “off-shore company” status. In this case your company will have to pay the 16.5% tax earned in the territory of Hong Kong and no taxes on profits generated elsewhere.

This implies if for instance your organization imports clothes and accessories from China to then export them to European wholesalers or on an American online business website, at that point the legislation of Hong Kong won’t expect you to pay any duties if your business is under the off-shore company category. Be aware of the fact that this doesn’t imply that you, as an investor (sole proprietorship or not) of the business, won’t need to pay taxes at the country in which you live. Truth be told, to get to your organization’s profits you will have to be paid a salary or annual dividends. It is on that sum that you’ll need to pay individual taxes in the country you live. It is important to mention that spending your organization’s cash for individual use without declaring it is a crime in the vast majority of nations.

Moreover, take note of that numerous nations have laws to decide if a foreign organization is truly running from the country in which at least one of the directors live. This is called Controlled Foreign Corporation (CFC). For this situation, the nation in which the executives live could require extra tax payments to compensate the difference between profit taxes in their countries and Hong Kong. Thus, it is essential to examine this with a bookkeeper in your nation of living before you open a company in Hong Kong.

The disadvantages of opening a Hong Kong company

Opening an organization in Hong Kong requires a lot of printed material and, in the event that you have never done this, it might be hard to deal with everything independently. Besides, you’ll need to go there. You can solve this issue by hiring Corporation China to do all the work for you. In case you’re intending to live in China, your Hong Kong organization can’t give a Chinese VISA to you. For this situation, you have to open an organization in mainland China.

Opening a Hong Kong company without going there

Before, even if you did not hold a Hong Kong resident permit you were still permitted to open a Sole Trader Company in Hong Kong. As for now, unless you’re planning to stay in Hong Kong, you can only open a Limited Company. You can still go to Hong Kong and open the company alone. However the law requires your organization to have an office and a secretary in Hong Kong. Fortunately you don’t have to lease an office and hire staff. Corporation China will be glad to offer this service to you for low cost yearly base contract. This is possible by the that many different companies are allowed to share the same structure.

Moreover, you can open your company without going to Hong Kong (everything can be done remotely from your current location). We will discuss the details by email or telephone and send all the documents by email. Payment can be done by PayPal, credit card or bank transfer. You will then receive the final documents at your home and send back the original signed copies by DHL or another international courier service.

What documents are required to register the company in Hong Kong and how the process works.

Above all else, defining the name of the company will be the first step along with the service fees payment. Corporation China will then check if your new company name is available for use in Hong Kong or another name will have to be chosen.

At that point you’ll need to send a copy of your passport, a copy of official document as a proof of residence (for instance, a driver’s license) and the legal representative, directors and shareholders of the Hong Kong company.

For a basic organization structure, unless you have unique prerequisites, this might be sufficient. Corporation China will setup and register your company, get the brand new company’s certificate of incorporation and business registration certificate.

If all documents are correct, the entire procedure should take around 7 working days to get the organization registered.