Hong Kong is a Special Administrative Region (SAR) of China. It operates on a One Country, Two Systems policy, with its own currency, political and legal systems. The International Institute for Management Development (IMD) World Competitive Ranking 2021 listed Hong Kong as the 7th most competitive country in the world. Countries were judged across four competitiveness factors: economic performance, government efficiency, business efficiency and infrastructure. Hong Kong is also one of the easiest places to set up a corporate entity in, with over 9,000 companies choosing it as a base for their businesses.
This Article at a Glance:
Hong Kong is a classic choice for opening a company if you want to have a Southeast Asian presence for your business. We will discover why Hong Kong has enticed many business owners to start their companies there, and we will list the steps to incorporate your company in Hong Kong.
Benefits of Opening a Corporate Entity in Hong Kong
What makes Hong Kong a premier location to incorporate a business in? These are some of the reasons corporations chose HK over other countries:
- A pro-business government which offers grants and maintains world-class infrastructure.
- Low profit, salaries and property tax rates of between 7.5%-16.5%. No sales (VAT), withholding (on dividends and interest), capital gains, dividend and estate taxes.
- English, alongside Cantonese, is the official language of the country.
Mainland China vs. Hong Kong
If you plan to serve a mainly Chinese customer base, set up a manufacturing operation and hire locals, China would be your choice country to open your corporate entity in. Especially if you are a high-tech startup, you would benefit from China’s advanced tech ecosystem. On the other hand, if you have a more global customer base, and want to incorporate quickly with less costs in an English-speaking country, Hong Kong would make more sense for you.
Steps To Incorporate a Hong Kong Corporate Entity
Before registering your corporate entity with the Companies Registry of Hong Kong, you would need to choose a name for your company and decide on a company type, or the legal structure, of your company.
1. Name Your Company and Select Company Type
Company Name: Search on the Cyber Search Centre or Company Search Mobile Service to check whether your selected company name is not used by any other companies on HK’s Registrar of Companies. A company could have both or either English and Chinese names.
Company Type: The legal structure you select determines your day-to-day operations, how much taxes you pay and whether your personal assets are at risk. These are the common company types in HK:
- Sole proprietorship;
- Local Limited Company (limited by shares or guarantee);
- Branch Office.
2. Registering Your Corporate Entity
Business owners usually opt to register their companies as limited liability companies in Hong Kong because they are separate legal entities. Doing so protects their personal assets from business risks, and makes raising capital and transfer of business ownership easier. In this article we will look at how limited liability companies are incorporated.
- Company’s Articles of Association;
- Duly signed and completed incorporation form furnishing company’s information (company name, registered address, description of business activities, details of shareholders, directors and company secretary, members’ liabilities, share of capital and number of shares distributed);
- Shareholders’ and directors’ passport copies with overseas residential proof of address (for non-residents), HK ID card and HK proof of address (for residents), or parent company registration documents (for corporate owners);
- Notice to Business Registration Office form.
Register Your Corporate Entity:
- Submit your documents to the Companies Registry online via its website "e-Registry" or mobile app “CR eFiling”. You can also submit your company incorporation documents in-person at the Companies Registry Queensway Government Office on the 14th floor, High Block, Queensway Government Offices, 66 Queensway, Hong Kong. Hong Kong’s Companies Registry office is open Monday to Friday, 8.45am - 5.30pm.
- The cost for incorporation registration ranges from HKD $155 (USD $19.88) to $1,720, depending on company type and mode of document submission. In addition, you need to pay a Business Registration Fee and Levy, which ranges from HKD $250 to $5,950.
- A Certificate of Incorporation and a Business Registration Certificate would be issued within one hour to 4 working days.
Open a Business Account:
To open a business bank account in Hong Kong, generally you would need all the documents listed above in part 2., your newly issued Certificate of Incorporation and Business Registration Certificate, and the following additional documents:
- Documents stating shareholding structure;
- Company search reports;
- Latest annual return filings;
- Appointments of key persons documents especially directors.
The process would usually take around two weeks, and banks in Hong Kong would request a face-to-face interview with the official signatories of the corporate entity (sometimes even with the company’s beneficiaries or main shareholders). The interview and documents submitted would determine whether the bank account application would be approved or rejected.
Among other questions, the bank representatives would enquire on your company’s business model and nature of your operations, and about the banking service that you are considering with them. It is best to come prepared if you do manage to secure a bank interview. HSBC, Citibank, OCBC Wing Hang, Hang Seng Bank and Bank of China (Hong Kong) are some of the popular banks for business owners in Hong Kong.
If your business requires a digital payment and business management service, Silverbird is an online-banking alternative solution for international merchants. The Hong Kong Dollar is in our list of supported currencies and you could make local payments in HKD with Silverbird.
Your incorporation journey does not end there. Remember to:
- Obtain the necessary permits and licenses to run your business,
- Register your corporate entity with the Inland Revenue Department of Hong Kong (IRD),
- File annual returns with the IRD,
- Set up your employees’ Mandatory Provident Fund (MPF),
- Seek help if you need it. The Hong Kong Trade Development Council (HKTDC) and InvestHK are among the agencies in Hong Kong that offer grants and resources to entrepreneurs and business owners.
Opening a corporate entity in Hong Kong is a breeze when you have all the right preparations and support network. Manage your business operations effortlessly too with our Silverbird online business account.
Author: Syahirah Aiman
Illustration: Kate Faldina