9 Basic Facts Need to Know Before You Register a Company in HK
Hong Kong Company Incorporation
Today, many investors and entrepreneurs are choosing to set up their businesses overseas, especially in jurisdictions like Hong Kong. The drive behind this trend is to primarily facilitate their entry into an international market and to benefit from tax friendly jurisdictions.
Why set up a company in Hong Kong?
1. Politically stable with supportive policy
Hong Kong will capitalize on the opportunities arising from the national Belt and Road Initiative and the development of Guangdong-Hong Kong-Macao Bay Area proactively and holistically. Key initiatives announced in the 2020-21 Budget cover:
√ Extend coverage of Technology Talent Admission Scheme to new technology areas.
√ Inject $500 million into Social Innovation and Entrepreneurship Development Fund.
√ lnject $1 billion into the BUD Fund scheme and increase the funding limit to $2 million for enterprises under the Mainland Programme and Free Trade Agreement Programme.
√ Inject $1 billion into the Export Marketing and Industrial Organization Support Fund.
√ Offer tax concessions for ship lessors and leasing managers.
√ Enhance the SME Financing Guarantee Scheme:Free flow of informationStrict anti-corruption regime
2. Skilled Workforce
√ Highly-trained, well-educated and skilled workforce
√ Proficient at international business culture
√ In addition to their fluency in English, the workforce can also speak Cantonese and Mandarin
3. Open Business Environment with Easy Start
√ World’s most competitive economy with excellent business and financial infrastructure
√Company incorporation in a very short time
√ No restrictions on business scope and foreign ownership
√ Extensive international transportation hub
4. Simple, Low & Competitive Tax System
√ Corporate profits tax for the first HK$2 million of profit is 8.25% and that above HK$2 million is 16.5%; Salaries tax in progressive rate from 2% to 17%
√ Exemption for offshore income , no sales tax or VAT
√ Only three direct taxes are levied and the generous allowances and deductions can reduce the taxable amount
√ No withholding tax on dividends and interest and no capital gains tax
5. Premier Business Hub with Free Trade and Free Market Economy
√Free port (major free trades and free markets)
√ No restrictions on investment ,no foreign exchange control
√A leading financial center
√ Direct handling of RMB by banks for cross-border trade
√Qualified goods of HK origin can be exported to the Mainland China with no tariff levied
6. Sound Legal Environment
√ Independent legal system
√ English common law
√ Intellectual property protection in force, as well as complete regulations in patents, copyrights, trademarks and registered designs
Basic Requirements & Facts for
Hong Kong Companies
Company Name
√ It is required to have the company name approved by the Hong Kong Companies Registry to avoid repetition.
√ Can be both in English and Chinese or in English only.
√ Get every possible name and check its availability
Companies Ordinance
With the amendment, taking effect on 1st March 2018, every company incorporated in Hong Kong, except for that listed on Hong Kong Stock Exchange (HKSE), will be required to create and maintain a register of all persons who have significant control over the company.
Every company shall appoint a Designated Representative (DR) responsible for reporting in related to SCR to prescribed local authorities as demanded.
Directors
√ There is no limit for the number of directors, at least one of whom shall be natural person
√ A local or overseas corporate entity can act as one of the directors
√ No Hong Kong residency requirement
√A Director can also be a shareholder
√ The appointment of nominee director is permitted
Shareholders
√ A Hong Kong private limited company can have a minimum of 1 and maximum of 50 shareholders
√There is no residency requirement for shareholders. A director can also be a shareholder.
√ Any shareholder shall be at least 18 years old but can be from any country. The shareholder can be a person or a company
√100% local or foreign share is allowed.
√ The appointment of nominee shareholder is permitted
√ The shareholder meeting can be held anywhere
Company Secretary
√ Appointing a company secretary is mandatory
√ The secretary, when being acted by an individual, shall ordinarily reside in Hong Kong; the secretary, when being acted by a body corporate, shall have its registered office or a place of business in Hong Kong. It has to be noted that, when it comes to a sole director/shareholder, the same person cannot act as the company secretary.
√ The company secretary shall maintain the statutory books and records of the company, and guarantee the company’s compliance with all statutory requirements. A nominee secretary can be appointed.
Share Capital
Although there is no minimum share capital requirement, the general form for HK companies is to have at least one shareholder with one ordinary share issued on their formation.
Share capital can be expressed in any major currency and is not restricted to the Hong Kong Dollar alone. Shares can be freely transferred, subject to stamp duty fee. Bearer shares are not allowed.
Registration Address
√ To register a Hong Kong company, you shall provide a local Hong Kong address as the registered address of the company
√ The registered address shall be a physical address and shall not be a PO Box address
Taxation
√ Corporate tax, (or profits tax as it is called), is set at 16.5% of assessable profits for companies set up in Hong Kong. Hong Kong follows a territorial basis of taxation, that is, only profits which arise in or derived from Hong Kong, are subject to tax in Hong Kong.
√There is no capital gains tax, withholding tax on dividends, or VAT in Hong Kong. For more details on corporate taxes, please refer to Hong Kong Corporate Tax guide.
Ongoing Compliance
It is mandatory for companies to prepare and maintain accounts. The accounts shall be audited annually by Certified Public Accountants in Hong Kong. The audited accounts together with tax return shall be filed annually with the Inland Revenue Department.
Every company is required to file annual returns with the Companies Registry and pay the annual registration fee. The Business Registration Certificate shall be renewed, one month before expiry on an annual basis or once every three years, as the case may be. An Annual General Meeting (AGM) shall be held very calendar year.
The AGM shall be held within 18 months of the date of incorporation, after which no more than 15 months can elapse between one AGM and the next. A written resolution in lieu of Annual General Meeting is permissible. For more details, please refer to Annual Compliance for Hong Kong Companies guide.
How to Set up a Company in HK?
1. Individual Investor as Shareholder
Fill out the QA form, KYC and other related forms prepared by us
Shareholder Identification (Foreigner: passport copy, Chinese: ID card)
Proof of address of all directors and shareholders (Copy + Original); the personal name shall be put down on in the proof of address, which, within the recent three months, can be bank statement/water bill/electricity bill/phone bill/driver license. You can provide the proof of address in China or in any other country where you live.
2. Company Investor as Shareholder
Shareholder Identification: Company certificate of incorporation
Company structure map (Disclose the beneficiary till the individual)
Proof of address of all directors and shareholders (Copy+ Original); the personal name shall be put down on the proof address, which, within the recent three months, can be bank statement/water bill/electricity bill/phone bill/driver license. You can provide the proof of address in China or in any other country where you live.
Fill in QA form+ KYC and other related form prepared by us
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