Are you looking for a way to minimize taxes? Or are you simply trying to expand your exporting business into the Asia market? For entrepreneurs looking for a stepping stone into the huge Asia-Pacific market, opening your business in Hong Kong may give you a leg up.
In this article, we share some reasons why you should consider Hong Kong for your exporting business, the steps to opening a corporate bank account in Hong Kong, and what you will require as a non-resident.
This article at a glance:
- Can I open a business bank account as a non-resident in Hong Kong?
Yes. Everyone can open a corporate bank account in Hong Kong.
- How strict is Hong Kong with non-residents opening corporate bank accounts?
Hong Kong is stricter than most jurisdictions. However, that should not defer you from applying for a business bank account for your exporting business.
- What should I consider when choosing my bank?
There are a few considerations you should think of when choosing your bank of choice, including bank reputation, services offered and charges you should know beforehand.
Setting Up a Corporate Bank Account For Your Exporting Business
The process of opening an account typically takes a minimum of two to four weeks. That is, if you do not face any issues with the bank’s account opening process. Opening a corporate bank account can be done by everyone, regardless of resident or non-resident. However, note that non-residents may be asked to provide additional verification documents for identification purposes.
For businesses wanting to open an account, you and your business partners will be required to show up in person at the bank for an interview with the bank representative. This includes directors, shareholders, beneficiaries, controllers and bank account signatories.
Here are the steps to follow:
1. Prepare your documents that are normally required
- Proof of identity
- Proof of address
- Business formation documents
- Business proof
2. Keep additional documents on hand, especially for non-residents
- Original copy of director’s passport
- Original copy of annual return
- Proof of residential address
- More business proof, such as: name proof for each of the directors, authorized signatories, principal shareholders and beneficial owners. (The final list of documents will depend on the bank of your choice.)
3. Submit documents to your bank of choice
In-person meeting and interview with the bank representative. Remember that all members of your management will need to show up.
4. Wait for bank approval and activate bank account
After you’re done with the above, all you have to do now is wait for approval. If your application is approved, you can proceed to activate your account.
Why Choose Hong Kong to Open a Corporate Bank Account?
Hong Kong’s territorial advantage places it in close proximity to China, one of the world’s largest economic hubs. If you are looking to expand your business into the China market, you’ll be glad to hear that they welcome foreign entrepreneurs and businesses from Hong Kong.
Taking into account Hong Kong’s extensive sea and air facilities including shipping, logistics and freight forwarding services, goods and services can reach your customers easily.
Advantageous corporate tax system
Hong Kong has one of the lowest tax rates in the world, which is an important factor in maximising your company’s overall revenue. Refer here for detailed information on the corporate tax rates in Hong Kong.
A free economy
A free trade policy, no trade barriers and no limit for foreign offshore investments, entrepreneurs can expect to receive the maximum amount of earnings from their trades and business operations.
Nonetheless, it is crucial to note that whilst Hong Kong can be advantageous for businesses, foreign entrepreneurs who wish to open an offshore corporate bank account in Hong Kong should understand that the process may not be as straightforward as doing so in their home country. It is also worth noting that the cost of living for international expats and merchants in Hong Kong isn’t cheap, mainly due to the property prices and rentals that are sky high due to space and land constraints in the country.
While opening a corporate bank account in Hong Kong may not be an easy feat for non-residents, it still remains a safe and secure financial hub in the Asia region for starting a business.
What Kind of Challenges Will Foreign SMEs Face When Opening a Bank Account in Hong Kong?
Hong Kong has always been stringent about their customers and corporate entities who wish to open a bank account. Entrepreneurs should be prepared to invest time and money during their application process, especially for business bank accounts.
Keep in mind that we are talking about a business bank account under your company’s name, not a personal bank account that you use to carry out business transactions.
📍 Tip: You should not use your personal bank account to handle business transactions. This could cost you when settling company accounting matters and corporate taxes.
Higher bank charges
For example, to keep your account open, you will need to have a minimum bank balance of approximately US$2,000 to US$50,000, depending on the bank of your choice. Other bank charges include annual account charges and outgoing fund transfers. By searching for the bank you want to open an account with, you will be able to see the charges offered by each bank.
Hong Kong banks preference for larger companies
As compared to small and medium sized businesses, top ranking banks in Hong Kong prefer to focus on larger businesses which are perceived as being low-risk. Although this may not always necessarily be true, startups and newly incorporated companies do face more difficulties when opening an account in a Hong Kong bank. Part of this can be attributed to the due diligence process for a new business, which we will cover in the next section.
KYC compliance and due diligence checks
Financial institutions like banks are often a target for fraud and criminal activities, which commands regulators to impose a series of rules and standards for KYC compliances. In order to make sure the client or customer is verified and trustworthy, more procedures have been set up, making it more complicated to open a new bank account. Thus, non-residents and foreign companies are often turned away due to the expensive diligence checks for opening an account.
You have to be physically present in Hong Kong
In order to open a Hong Kong bank account, you have to be present in-person at the bank. This is why many foreign entrepreneurs who have incorporated their offshore company in Hong Kong may not always be based in Hong Kong. In fact, most of foreign owned companies run an e-commerce business structure, which means that they can be operated from anywhere in the world.
There are many bank options, how should you choose?
Hong Kong has a variety of reputable banks, including DBS Bank, Citibank, Standard Chartered and HSBC. We have listed out a checklist to get you started.
When choosing a bank to open an account with, consider the following basic criteria:
- Bank reputation
- Services offered
- Minimum deposit needed
- Minimum account balance you need to maintain
- Internet banking, especially for non-residents
- Monthly and annual administrative charges
Is There An Easier Method?
Yes. At Silverbird, we offer a global business account enabled with 30+ currencies, direct IBANs, and fast EU/US/UK transactions – so you don’t have to go through the trouble to open multiple ones. Our secure onboarding is 100% online, which means you won’t have to travel to a foreign country.
If you’re an international trader looking for a simple way to receive and send money abroad, start onboarding today.
Author: Silverbird Content Team
Illustrations: Kate Faldina, Juliet Markova