Frequently Asked Questions
Find answers to commonly asked questions about doing business in Hong Kong.
Company Formation in Hong Kong
Hong Kong offers numerous advantages for starting a business, including:
- Prime Location – Hong Kong serves as a gateway to China and connects easily to other major global markets, making it ideal for expanding your business.
- Business Support – With entrepreneur-friendly policies, starting and running a business here is straightforward.
- Tax Advantages – Hong Kong has adopted a business-friendly tax regime, which is considered one of the lowest rates in Asia. This includes Low corporate taxes, tax breaks, and tax incentives for businesses.
- Trade Freedom – Hong Kong operates on free-market and trade principles, eliminating foreign exchange controls and ownership restrictions.
- Access to China – Businesses gain access to the mainland market with preferential treatment under the CEPA agreement with Mainland China.
- Flexible Visas – The immigration policy is designed to help entrepreneurs move and work here with ease.
- Legal Protection and Limited Liability – The Hong Kong legal system is characterized by transparency, safeguarding of intellectual property rights, and offers limited liability for corporations.
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Foreign individuals or entities who intend to establish a company in Hong Kong must consider the following aspects:
- Business Registration – All entities have to apply for the Business Registration Certificate.
- Work Visas for Foreign Employees – If you’re considering hiring foreign employees, you should ensure that you obtain the necessary work visas for them to comply with immigration rules.
- Local Company Secretary – Although you’re not required to have local shareholders or directors, having a local company secretary is a must. They’ll help you with the incorporation process and ensure you meet all statutory requirements.
- Bank Account – Opening a bank account with a local bank is important in the initial stages of incorporation and registration.
- Legal Assistance – It is beneficial to consider seeking legal advice to understand and successfully go through the legal and regulatory requirements.
The specific documents may vary based on the type of company and the business model. Here is a general list of documents for each individual director, shareholder, and UBO (Ultimate Beneficial Owner):
- Copy of national identity card or driver’s license
- Copy of national identity card or driver licence
- Copy of proof of address in English issued within the last 3 months
- A photo of holding his/her passport, which can clearly see the face and passport
Proof of address can be one of the following issued within the last three (3) months:
- Bank statement
- Credit card statement
- Utility bills (Water bill, Electricity bill, Phone bill)
- Rates and government rent demand note
You can register your Company in Hong Kong with Startupr at just USD 699! This includes registration at the company’s registry, company secretary fee, registered address, bank account opening assistance in DBS and much more.
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After receiving all the necessary documents, the registration process is quick and can be completed within 3-5 working days. However, the incorporation process can be done online as fast as 24 hours with a hassle-free experience.
The process to register a company in Hong Kong is already efficient. Additionally, you can pay the additional Incorporation service of USD 200 to expedite the company incorporation.
Yes, you can register your company online in Hong Kong, making the process convenient, accessible and efficient.
The Companies Registry Hong Kong provides clear guidelines regarding the naming of companies. They outline restricted words and make sure your chosen name isn’t identical or too similar to existing ones, avoiding a combination of English and Chinese characters, etc.
As a foreign investor, it is not mandatory to have a local director for your company. However, you have to appoint at least one designated Director who can either be local or non-local. Additionally, a local Company Secretary has to be appointed for both incorporation and ongoing legal compliance.
In Hong Kong, appointing a company secretary is mandatory for all businesses. They assist in the incorporation process, maintain important documents, ensure compliance with regulations, and represent you in communication with the government.
Not all businesses in Hong Kong need special licenses, but some do, depending on what they do. For example, financial institutions require licenses from regulatory bodies such as the Hong Kong Monetary Authority or the Securities and Futures Commission. You can thoroughly research the license requirements specific to your industry and also consult with professional guidance for accurate and tailored advice to ensure legal and regulatory compliance.
If the business nature consists of virtual assets, a VASP licence is required and it can be applied under the Virtual Asset Service Provider licensing regime regulated by the SFC in Hong Kong. If the exchange also provides security token (e.g. Solana, Cardano, Polygon) or products that are securities in nature (e.g. derivatives in crypto), such activities would be covered by the Securities and Futures Ordinance and a Type 1 and Type 7 license may be needed.
One of the licensing criteria is that the VASP applicant needs to be a company incorporated locally in Hong Kong. Since it’s the SFC who approves the VASP license, usually the regulated activity licence would be covered in the application process, especially if the requirements of the two licenses are similar.
Renewal of the Hong Kong Company
To renew a Hong Kong based company, there are two imperative processes namely:
- Submitting the Annual Return – The Annual Return has to be filed every year. This essentially contains an update on the state of affairs of the company during last year, including information such as, but not limited to, the number of shareholders of the company, the names of the shareholders and their shareholdings, and its operating.
- Renewing the Business Registration Certificate – The Business Registration Certificate is valid for one year from the date of incorporation. This has to be renewed 1 to 3 years post the incorporation date, depending on the certificate issued.
At Startupr, we provide end-to-end services for Company Incorporation and Maintenance. We create a customized plan that will be best suited for your business. Our services include:
To avoid any late fees or other related charges, it is advisable for a Hong Kong company to renew its Business Registration Certificate and deliver an Annual Return one month before the anniversary date.
Upon late renewal or failure to renew the Business Registration Certificate and Annual Return, a late fee will be levied on the company with an additional fine of HK$300 every year.
Failure to obtain a business registration while conducting business is a punishable offense. You are liable to pay a fine of HKD 5,000 and/or face prison time for one year.
For late filing of the Annual Return, the fee slab is given below:
|Within 42 days after the anniversary of incorporation
|More than 42 days after but within 3 months after the anniversary of incorporation
|More than 3 months after but within 6 months after the anniversary of incorporation
|More than 6 months after but within 9 months after the anniversary of incorporation
|More than 9 months after the anniversary of incorporation
The company has to pay a fee of HK$2,150 to renew the Business Registration Certificate and HK$105 for Annual Return.
Startupr files the Annual Return and renews the Business Registration Certificate on behalf of our clients if the renewal fee is settled with us.
When you set up the company with Startupr, you are provided a registered address for registration of your company, important government mail, invoicing, business cards, email signature, letterhead, website and disclosure to any third party – including business commercial or any other government third party. This will act as your registered office address.
The business office address is the location where you conduct your business from.
According to the Companies Ordinance, every company in Hong Kong must hire a Company Secretary (either a Hong Kong resident or a Hong Kong registered company) and have a registered address in Hong Kong.
The company will be liable for prosecution for trying to operate without a Company Secretary.
Startupr is TCSP Licensee No. TC007820 of Registry for Trust and Company Service Providers and Companies Registry.
A company is considered dormant when it has registered its status as inactive. During the year, the company should not have any account transactions other than those permitted by the Ordinance. However, the company’s registration stays valid during this period of inactivity.
A special resolution empowering its director(s) needs to be created and submitted to the Registrar of Companies. This resolution will be a statutory declaration confirming the company’s intention to become dormant. The directors must submit this special resolution to the Companies Registry within 15 days of its approval.
Hong Kong Bank Account Opening
Along with transparent banking regulations, a notable advantage of opening a bank account in Hong Kong is that the interest earned is tax-free. This enables companies to fully leverage the benefits of their savings accounts, complemented by other perks like free international capital transfers and favorable tax rates.
Yes, you can open a bank account online in Hong Kong. However, you must follow the instructions provided by the bank.
Startupr can provide assistance in opening a bank account with DBS for free – please get in touch with us for more information or if you require our assistance in arranging a meeting with any other Hong Kong bank.
Other options include Neobank, which is an alternative to traditional banks. Alternatively, you can set up an account in Airwallex, which is a trusted global payment and financial partner, to simplify the payment process. To apply, please click on this link.
Opening a bank account remotely in Hong Kong can be challenging for non-residents or first-time applicants due to stringent identity verification requirements. While online options are available, they come with limitations. Traditional banking requires an in-person visit, whereas virtual banking offers a more remote-friendly process with eligibility constraints and potentially fewer features.
Numerous banks in Hong Kong offer diverse services that cater to various types of businesses. We can assist in choosing the right one for you.
For a streamlined process, Startupr can arrange bank appointments with the following banks: DBS Hong Kong/OCBC Wing Hang Bank/Bank Of China/HSBC/Hang Seng Bank/Standard Chartered.
The following documents are required to open a bank account in Hong Kong:
- Business incorporation documents
- Identity and KYC (Know Your Customer) verification documents
- Residential proof
- Documentation of beneficiary ownership or ultimate shareholders
- Evidence of business operations
- Certified copy of the documents
- Business plan
- Resume/CV of all directors/shareholders/UBO
- Latest 3 months’s bank statements of the beneficial owner(OBO) or the company
The time taken to open a company bank account in Hong Kong tends to vary, mainly influenced by factors such as the chosen bank, business industry, and specific bank requirements. Generally speaking, this procedure may take anywhere from 2-4 weeks; however, it’s beneficial to know that the traditional bank account opening process is typically time-consuming and laborious. In high-risk industries, the due diligence and compliance requirements can seem rigorous.
Moreover, the remote option for opening a business bank account in Hong Kong can contribute to practical challenges for foreign entrepreneurs, since most Hong Kong banks require the company’s director or authorized signatory to visit the bank branch in person, causing inconvenience and additional expenses.
It is advisable to contact your chosen bank directly for up-to-date information, specific account opening procedures and timelines.
You have the option to open an account with a Neobank that is fully operated online. It’s an alternative to the traditional bank. You can set up an account in Airwallex to simplify the payment process and reap its benefits.
It is not a prerequisite to be a resident to open a bank account in Hong Kong. However, it’s important to note that banks may have various requirements for non-resident applicants and may offer different services as well.
Accounting and Taxation in Hong Kong
In Hong Kong, the Profit Tax Return (PTR) is a key tool for businesses to report their taxable income accurately. This form covers 12 months (or up to 17 months for first-time filers) and helps ensure that you follow tax rules on time. Filling out the PTR is something you must do, and it helps keep the Hong Kong tax system running smoothly.
Yes, all companies incorporated under Hong Kong’s Companies Ordinance (CO) are required to file yearly financial statements. Most companies must submit audited financial statements, but dormant companies are exempt. Additionally, small and medium-sized enterprises (SMEs) meeting specific criteria can opt for a simplified filing and do not require a mandatory audit.
Usually, the audited financial account has to be submitted for a period of 12 months. For companies that have received tax notification for the first time, the Hong Kong Government will issue an extension up to 18 months after the date of incorporation for companies.
In other words, you have to prepare and submit your first audited accounts in the 2nd year. After that, you have to submit the audited accounts on a yearly basis.
Yes, the Hong Kong Inland Revenue Department strictly requires audited financial statements to be conducted by a licensed Hong Kong Practising CPA. They do not accept audited financial statements issued by an accountant without Hong Kong qualifications.
The fiscal year/tax year in Hong Kong begins on April 1st and ends on March 31st. However, a company is allowed to choose a different financial year–end, where busy seasons can be avoided, and a suitable date can be chosen as per the company’s business cycle.
A company’s first financial year begins on the date of its incorporation. The year-end date is chosen by the company and has to fall within 18 months of its incorporation date. The following financial years will end 12 months from the chosen year–end date.
The corporate tax is 8.25% on assessable profits up to $2,000,000 and 16.5% on any part of assessable profits over $2,000,000.
If an HK company does not carry out business activities in Hong Kong, the profit tax rate will be 0% by applying the offshore tax exemption.
Starting from April 2023, all corporations and businesses, excluding dormant companies, are required to submit their profits tax returns along with financial statements and tax calculations, regardless of their income amount or how they typically file their returns.
To successfully create the financial statements, companies will have to maintain a minimum of 7 years of their accounts, including but not limited to:
- Records of sales and purchased
- General expenses including invoice, check stubs bank slips
- Any bank-related transactions
- Purchase agreement of tangible assets
- Inventory lists
It’s recommended that you scan and save all documents on your computer. You can then easily share these documents with us using Google Drive, Dropbox, or email when the financial year ends.
It is not necessary to use any accounting software; it primarily helps in managing day-to-day transactions and streamlining your tax filing. However, if you desire to minimize expenses, our in-house accountants can prepare the necessary report at the end of the financial year based on the records and statements provided to them.
For efficient recordkeeping, we are happy to recommend QuickBooks and Xero.
If your folder containing essential documents, including bank statements, contracts, and invoices, goes missing, our accountant won’t be able to complete and submit the audited financial statements on your behalf. In this scenario, the Inland Revenue Department may open a file for investigation. To avoid unnecessary complications, we suggest you contact your bank and retrieve duplicate copies. In case you are unable to furnish your contracts and invoices, it would be advisable to request your customers and suppliers to send you their copies.
In order to avoid tax evasion, the Inland Revenue Department of Hong Kong has adopted the “Assess First, Review Later” (AFAL) system for screening tax returns and information submitted by taxpayers. This procedure may take extra time depending on the complexity of the company’s business model, the verification of the documents submitted, and co-operation from the company.
To qualify for offshore status, companies have to provide supporting documents, i.e., bank statements, invoices, expense receipts, contracts, correspondence with customers and suppliers, and passport copies. Our accountant will present the facts (offshore) in the audited financial statement and profit tax return.
Only profits which have risen in the territory of Hong Kong are taxable. Profits generated elsewhere are not subject to Hong Kong’s Profits Tax.
The authorities identify the operations that produced the subsequent profits and determine their origin. The profits must be attributed to the taxpayer who produces them and not to the other members of the taxpayer’s group.
There is no VAT, GST, or any other sales tax in Hong Kong.
Hong Kong doesn’t have a traditional capital gains tax on the selling of assets. However, in case the nature of the transaction is a trading gain, then the asset’s sale may be subjected to profits tax.
Profit derived from the sale of short-term assets with a holding period of 36 months or less would be treated as a short-term capital gain and would be subjected to tax accordingly.
The assets, such as Mutual funds, preference shares, and equities, which are held for a period of more than 36 months, are considered long-term gains and will be taxed as per the guidelines.
Yes, you are required to complete and send it to the Inland Revenue, upon which the authorities will assess if you are liable to tax for that year of assessment.
The Department may issue a personal tax return to you if you have not given any notification to the Department regarding the permanent cessation of income from employment or business, renting solely owned property, etc.
Yes, director’s fees in Hong Kong are subject to salary tax if they are derived from Hong Kong-registered companies whose central management and control are exercised within Hong Kong. This applies regardless of where the director resides. Additionally, while declaring dividends may be an option if you’re also a shareholder and the company is profitable, careful consideration of your specific circumstances and potential tax implications is essential.
“Conditional Standover Order” Tax Reserve Certificates (TRCs) serve as a type of collateral that taxpayers must furnish to cover deferred tax payments during objections or appeals against assessments. These TRCs are exclusively issued in a physical paper format. Depending on the outcome of the objection or appeal, the amount purchased will be used to settle the tax in dispute or repaid to the taxpayer, in which case simple interest will be paid limited to the principal amount.