Nowadays, most investors and entrepreneurs are gearing up to set up their business overseas – especially in areas like Hong Kong. The primary reason behind this trend is to enter into the international market and to benefit from tax-friendly jurisdictions.
Hong Kong is perceived as one of the best cities to establish and run a company because it scores high on factors that make a difference to businesses. Some of these factors include:
- Strategic location
- Productive workforce
- Attractive tax regime
- Pro-business environment
- World-class infrastructure
- An effective legal system
- Stable economic and political environment
These are some of the major factors that continue to contribute to its success.
Why choose Hong Kong to set up a business?
There is something about Hong Kong that attracts foreigners from all over the globe to introduce their business in Hong Kong; but what is that thing which makes Hong Kong so attractive and such an ideal place to do business? The Heritage Foundation and the Wall Street Journal have referred to Hong Kong as one of the freest economies of the world.
What’s more? The simple tax system, elite location, developed communications and free import and export of goods for a business of all industries to succeed and flourish in the Hong Kong economy.
Detailed below are all the questions and the major benefits of setting up a business in Hong Kong that demonstrates why Hong Kong is and will remain a popular and invaluable jurisdiction.
Strategic Location
Hong Kong is strategically located near China which plays a vital role in accessing the Chinese market. Indeed, Hong Kong has taken several measures to position itself as a gateway to China with developments like The Hong Kong Innovation Circle, that inspires Chinese enterprises to conduct scientific research in Hong Kong.
What’s more? Hong Kong’s location is only a 1-hour drive from the Pearl River Delta, the world’s largest manufacturing zone. This offers Hong Kong access to around 450 million consumer markets in southern China alone.
Word To The Wise: Two-thirds of the global middle class will soon be from Asia. In addition to this, many entrepreneurs are showing interest to the continent from all over the world. Being in the heart of Asia, Hong Kong is often the first choice for entrepreneurs. Last but not the least, Hong Kong is just a 4-hour flight from most of Asia’s major regional markets.
With Hong Kong’s Closer Economic Partnership Arrangement (CEPA) with China, it is undoubtedly the most business-friendly economy from which to take hold of Asia’s future opportunities.
Ease Of Doing Business
Hong Kong is known for being an easy place to set up a business. You can set up your company in Hong Kong in around 3 to 5 days. Hong Kong is also regarded for its excellent infrastructure facilities since business premises are easily available. Intellectual property rights are also taken very seriously, with strict regulations in place.
Not only this, but Hong Kong also has various dispute resolution channels that businesses can use such as ADR For Financial Disputes. Also, the business-friendly and straightforward tax system draws foreign investors to the city. Foreigners who wish to set-up business in Hong Kong can easily relocate by applying for an appropriate work visa.
Transportation
Organizations that incorporate in Hong Kong have access to its developed airport, subway, roads and sea links. Hong Kong’s international airport is the busiest in all of Asia and the Pacific, handling more than 50 million passengers seasonally and hosting direct flights to over 150 international destinations.
Additionally, general commuting within Hong Kong is concluded to be the best in the world by Forbes Magazine as taxis are affordable and public transport is well developed.
More than 100 international shipping lines operate from Hong Kong, connecting to over 5,000 destinations worldwide. In addition to this, a brand-new rail link is in the making, named the “Guangzhou-Shenzhen-Hong Kong Express.” It will greatly split current journey times between Hong Kong and Guangzhou. On the same token, Wuhan will be 5 hours from Hong Kong, and Shanghai will be an 8 hour trip.
Attractive Tax Regime
Taxes and policies are the primary concern for any entrepreneur who intends to set up a business in a given jurisdiction. In this case, Hong Kong enjoys the status of being one of the lowest tax jurisdictions in the world. Due to the prevalent business culture in Hong Kong, there is a business-friendly tax and legal infrastructure.
Salary tax or personal income tax starts at 2% and goes up to 17% for income above HKD 1,20000. Corporate tax is fixed at 16.5% of assessable profits for companies and 15% for unincorporated businesses. Moreover, there is no need for any capital gains tax, nor any withholding tax on dividends and interest or collection of social security benefits. Also, there is no trade tax in Hong Kong.
If you want to know more about taxation in Hong Kong, refer to our Hong Kong Tax Guide.
Productive Workforce
Hong Kong offers highly skilled, well-educated and trained workforce. The workforce is mainly a local talent pool of experienced professionals and entrepreneurs who are known to be well-versed with the growing business culture.
The employees of Hong Kong are generally considered to be hard-working, competitive and are constantly seeking to enhance themselves. Although English is the most applied language in business settings, but you would be happy to know that the majority of the workforce can also communicate with Mandarin and Cantonese, owing to the country’s link to China.
Business Support & Assistance
Hong Kong has the best business support and assistance. A remarkable number of associated programmes have been authorized by the Hong Kong government and the individual (private) sector to help your company grow and develop in every aspect of your business.
Also, a large number of business support programmes and financial incentives to encourage the growth of SMEs have been established. Even the chief organizations, such as the Hong Kong Trade Development Council, support international companies to do business in the Mainland and Asia and also assist Hong Kong companies to find new markets.
The Hong Kong Productivity Council promotes increased productivity and the use of more efficient methods throughout Hong Kong’s business sectors. The Support and Consultation Centre for SMEs is a comprehensive information and advisory center for SMEs. Financial assistance is also available through some noted government funding schemes.
World’s Freest Economy
Hong Kong falls into the category of the world’s most dynamic economies driven by 3 major principles, such as:
- Free enterprise
- Free trade
- Free markets
The brute force of the economy over the past two decades has contributed to the GDP growth at an average rate of 5% annually.
Currently, there are no such limitations on outward or inward investments, no foreign ownership, and no foreign exchange controls. Factors such as a stable banking system, almost no public debt, a strong legal system, sizable foreign exchange reserves and a strict anti-corruption regimen serve to strengthen Hong Kong’s position as a business-friendly region.
Additionally, businesses that are already set up in Hong Kong can now benefit by gaining preferential access to the Mainland China Market from the CEPA (Closer Economic Partnership Arrangement) – a free trade agreement between the central people’s government and the government of the Hong Kong Special Administrative Region.
All goods qualified as Hong Kong origin may be shipped to the Mainland tariff-free. Moreover, Hong Kong service suppliers in 40 regions are likely to receive preferred treatment in affording services in the Mainland.
Liberal Immigration Policy
Hong Kong supports liberal immigration policies. The nationals of 170 countries and territories are allowed to enter Hong Kong without any visa from 7 to 180 days. People on short-term visitor visas might conduct business negotiations and sign contracts.
The government has proposed appropriate work visa provisions, assuming the needs of business entrepreneurs who may want to relocate to Hong Kong to run their company or who may aspire to engage foreign professionals to work in their organization.
There are a plethora of policies for the hiring of foreign professionals, employment of Mainland talents and professionals, those hoping to enter for investment and more. Dependent visas allow the holder to undertake almost any type of legitimate job in Hong Kong.
For more information, refer to “Hong Kong Work and Business Visa Schemes.”
Company Incorporation
The incorporation of your business in Hong Kong is not only a wise decision but is also very cost-effective and straightforward. What’s more? Hong Kong is proudly ranked as the fourth easiest place to do business as per a recent survey by World Bank. It takes just 3-5 days to incorporate a Hong Kong company.
Global corporate bank accounts are easily available, and there is no requirement to have a physical office to complete formation, and business offices are also admissible.
So, what are the requirements to form a company in Hong Kong? Well, these are
- You must have at least one director and one shareholder.
- A copy of the directors & shareholders passport or HKID.
- A copy of residential address proof of director/shareholder.
- A copy of the registered incorporation documents, if the shareholder is a company.
- A Hong Kong company secretary.
- A completed company incorporation form, which would be provided by Startupr, with the company’s detailed particulars.
Please Note: The director and the secretary cannot be the same person. Officially certified translated versions of any non-English documents must be presented.
Hong Kong company incorporation is certainly a viable option for almost any entrepreneur because it requires only a minimum issued capital of one share at HK$1.
Are you ready to incorporate?
If you too want to set up a company in Hong Kong, then we at Startupr can help. Request a quote now and give wings to your business with our top-rated services.