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Hong Kong's Complete Guide to Business Registration
Hong Kong is a prominent market for global investors and entrepreneurs, positioned near China and the Asia-Pacific area. With a pro-business administration, tax breaks for startups, a well-functioning judicial system, and cutting-edge tech infrastructure, it is considered to have the most free economy in the world. Establishing a business in Hong Kong is the first step towards realizing its potential. The statement advises reading on for additional details on the city’s business registration requirements.
Understanding Hong Kong Business Registration
The legal foundation for conducting business in the area is provided by the Companies Ordinance of Hong Kong. New registrations are handled by the business registration office, which is under the direction of the Inland Revenue Department (IRD). The text offers to provide further crucial details regarding the Hong Kong company registration procedure for both individuals and corporations.
Directors
A minimum of one director is required, and their nationality or place of residence are unrestricted. Furthermore, the maximum number of directors that may be selected is unlimited.
Shareholders
A limited liability company must have one shareholder at minimum and up to fifty at most in Hong Kong. There are no residency requirements for shareholders. Although there is no minimum share capital needed for registration, most businesses register with HKD 10,000 worth of share capital, which is made up of 10,000 common shares at HKD 1 apiece.
Tax
Due to Hong Kong’s territorial tax structure, registered businesses are only required to pay corporate tax on earnings made within the city. There is no social security tax, no VAT, and no withholding tax on profits or interest. The Single-Tier Corporate Tax System, which levies a tax of 16.5% on corporations and 15% on unincorporated firms, and the Two-Tier Profits Tax Regime, which offers an 8.5% rate on the first $2 million in assessable profits, are the two profit tax choices available to businesses. Businesses that do not operate in Hong Kong can take advantage of the offshore tax system, which offers a zero percent tax rate.
Company Secretary
In Hong Kong, a limited liability corporation needs a company secretary who lives in the area. Serving as the company’s spokesperson, the secretary keeps the company’s legally required books and records up to date and makes sure local laws are followed.
Compliance
The owners, directors, and company secretary of a company must make sure that accounts are created and kept up to date after the company is incorporated in Hong Kong. Every year, a certified public accountant is required to audit these accounts and report the results to the Inland Revenue Department.
Benefits of Business Registration In Hong Kong
The procedure of forming a business in Hong Kong is simple, fast, and affordable; incorporation certificates are usually issued in four days. Recognized as one of the most liberal jurisdictions in the world, the area is placed second in Asia-Pacific for M&A and IPO activity and seventh overall in the Global Competitiveness Booklet 2023. All foreign investors need is a local holding address to operate their companies remotely. Profits made outside Hong Kong are tax-free, but local profits above 200,000 HKD are taxed at 17%. Hong Kong, which is well situated close to important markets like China and Singapore, has an English common law legal system and uses Cantonese and English as its official languages.
Types of Business Entities In Hong Kong
In Hong Kong, starting a business requires choosing the right kind of corporation. The main categories of businesses are listed below:
Limited Company
Because of their unlimited activities and eligibility for tax breaks on overseas income, limited companies are a popular choice for establishment in
Hong Kong. This makes them perfect for holding businesses. The simplest prerequisites for establishing a limited company are the presence of a resident company secretary, one shareholder (regardless of nationality), and at least one director. Corporate directors are not permitted in limited corporations, although the companies function independently of their owners. At annual meetings, they are required to provide audited accounts and tax reports. The minimum share capital is unrestricted, and government approval is not needed for incorporation. There are other currencies in which share capital can be expressed, such as USD, EUR, GBP, and HKD.
Branch Office
In Hong Kong, branch offices lack a legal status and are viewed as a continuation of their parent companies. They are perfect for companies who want to get into the market rapidly or that are only interested in the Hong Kong market. The parent business bears full accountability for the branch’s financial results. Branch offices must have the required licenses to conduct business and can follow the policies of the parent company. They have up to one month to start operating before registering as a “Registered Non-Hong Kong Company” with the Hong Kong Companies Registry. Branch offices do not have to include audited financial accounts with their yearly returns and tax filings; instead, they are free to negotiate contracts, invoice local consumers, and collect income.
Representative Office
Representative offices are only allowed to perform market research and advertise the parent company’s products in Hong Kong; they are not allowed to engage in direct sales. A local distributor or agent is required by companies having a representative office in order to market and sell their goods and services. For companies wishing to investigate market potential in Hong Kong, this kind of office is perfect.
How PRISM Consultancy Can Help
An experienced immigration and visa consultant for Hong Kong, PRISM Consultancy specializes in company incorporation and offers expert assistance to foreigners looking to operate in Hong Kong. They provide clients with professional assistance throughout the business registration procedure, guaranteeing adherence to regional laws and assisting them in navigating the intricacies of forming a corporation.
PRISM Consultancy can help with every facet of these procedures, guaranteeing a seamless and legal company establishment in Hong Kong.
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