Company registration is the process of registration of the status of a legal entity in accordance with the legislation of a particular country. During registration, the company is officially recognized as a legal entity with its legal capacity.
To obtain this status, it is necessary to provide certain documentation and fulfill the requirements established by state authorities. Thanks to registration, the company gets the opportunity to conduct commercial activities, conclude contracts, participate in lawsuits and perform other legally significant actions.
If you are planning to start a business in the Asian region, then Hong Kong is a great choice for registering your company. The Manimama team conducted in-depth research, analyzed the main subtleties of creating a company in Hong Kong and is ready to share its results and help with the choice of proper jurisdiction.
So what are the advantages of registering a company (business) in Hong Kong?
- 100% foreign ownership
Unlike many other jurisdictions that require local partnerships for certain areas of activity, Hong Kong allows 100% foreign ownership of companies. This approach gives company owners full control over their business, including the power to make decisions.
Moreover, Hong Kong law does not oblige shareholders to be residents of the city and does not require them to have a resident director. Foreign directors may own 100% of their Hong Kong-based business.
- Easy company registration procedure
The absence of bureaucratic delays, the minimum amount of share capital, as well as the absence of restrictions on investment in business, regardless of whether it is incoming or outgoing investment.
In addition, the registration process is the same regardless of the citizenship of the business owner.
- Hong Kong government’s commitment to helping businesses grow and scale
Over the years, the Hong Kong government has created several programs to support local business development.
For example, the Hong Kong Trade Development Council helps foreign companies seeking to do business in other parts of Asia. Hong Kong companies are also getting help in finding new markets.
The Hong Kong Productivity Council helps local companies do business more efficiently. Companies receive advice on improving business efficiency and reducing operating costs.
Businesses can also contact the SME Support and Advice Centre to obtain information on the various funding schemes available.
- Easy and fast registration
The process of registering a company in Hong Kong is quite inexpensive, as well as relatively simple and fast, taking about one week. At the same time, the absence of requirements for the minimum authorized capital of the company makes it easier to start a business.
- Stable International Financial Center
For foreign business owners seeking to benefit from a safe and well-regulated financial environment, Hong Kong is one of the most suitable options. According to the 33rd edition of the Global Financial Centers Index, published in March 2023, Hong Kong ranked fourth in the world among the leading financial centers.
- Developed financial market infrastructure
Hong Kong boasts a well-developed financial market infrastructure, including efficient clearing and settlement systems.
The Hong Kong Stock Exchange is known as one of the world’s leading stock exchanges. It serves as a reliable platform for foreign business owners to facilitate their financial transactions.
How to register a company in Hong Kong and what are the basic requirements for such registration?
Step 1. Initial setup
- Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process;
- Preparation and filing of the package of documents.
Step 2. Company registration
- Selection of the type of company organization and its name;
- Checking and reserving the company name;
- Submitting the necessary documents by paying the appropriate fees, electronically through the Electronic Filing Service on the Electronic Services Portal or personally by visiting the office of the Hong Kong Companies Registry;
- Obtaining a company registration certificate from the Hong Kong Companies Registry
Requirements for registering a company in St. Kitts and Nevis using the example of an International Business Company (IBC)
- Shareholders: at least one shareholder (may be a natural or legal person; Hong Kong residency is not required; if the shareholder is an individual, then he must be at least 18 years old;); the maximum number of shareholders is 50 people.
- Director: at least one director (natural person of any nationality or legal person of any place of registration; Hong Kong residency is not required).
- Company Secretary: may be a natural or legal person and must reside in Hong Kong or have a registered office or place of business in Hong Kong (appointment of a company secretary is mandatory).
- Office: registered office in Hong Kong.
- Minimum authorized capital: there is no minimum authorized capital.
- Liability: Shareholders are liable only within the value of the shares they have paid.
- Accounting: A company registered in Hong Kong must keep a complete record of its accounting operations. All financial transactions must be entered into accounting in accordance with Hong Kong Financial Reporting Standards.
What you need to know about taxes in case of registration of a company in Hong Kong?
- In Hong Kong, the territorial principle of taxation takes place, that is, only profits arising in or originating from Hong Kong are subject to taxation.
- Income tax for companies operating outside Hong Kong is not levied.
- The current income tax rate applied to businesses operating in Hong Kong is 8.25% on the first 2 million Hong Kong dollars of profit and 16.5% on all subsequent income
- No capital gains tax is levied.
Personal income tax
Personal income tax rates are as follows:
- from 0 to 50,000 HKD $ – your income is taxed at a rate of 2% per annum;
- from 50,000 to 100,000 HKD $ – you are taxed at 6% per annum;
- from 100,000 to 150,000 HKD $ – you are taxed at a rate of 10% per annum;
- from 150,000 to 200,000 HKD $ – your income is taxed at a rate of 14% per annum;
- more than 200,000 HKD $ – your income is taxed at a rate of 17% per annum
Your net taxable income, i.e. taxable income after deductions and benefits, is taxed at a progressive rate. But if the amount you have to pay on a net taxable income basis exceeds the tax charged at the standard rate on your net income, i.e. taxable income after deductions but before benefits, then you have to pay a lower tax amount.
Value added tax (VAT):
There is no VAT, goods and services tax or sales tax in Hong Kong.
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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
