Company Registration in Hong Kong: What You Need to Know!

In 2023, Hong Kong remains a privileged place for the development of international trade and business. The application of the “common law“, the legal system that prevails in the Anglo-Saxon world, the dynamism of the city and its “business friendly” attitude still attract many companies wishing to develop their activities in Asia, and more particularly in China.

This attractiveness lies in particular in its tax system as well as in the simplicity of the procedures related to the creation of a company by non-Hong Kongers.

The incorporation of a company in Hong Kong allows access to the Chinese market more efficiently than a direct establishment in mainland China: the freedom of enterprise and the absence of restrictions on foreigners secure and facilitate legal and tax procedures while opening the door to the Asian market to Europeans.

A SIMPLE AND ADVANTAGEOUS TAX SYSTEM

Hong Kong’s tax system is one of the most attractive in the world for both companies and individuals:

• Corporate Tax Rates

Corporate tax amounts to 16.5% on taxable profits, one of the lowest in the world.

• Income tax

Residents in Hong Kong enjoy a lower income tax rate than in Europe, with a maximum rate of 17% for income above a certain threshold.

Dividends received by Hong Kong residents are not taxed.

• No VAT

Finally, unlike China, VAT does not exist in Hong Kong.

CONDITIONS FOR THE CREATION OF A COMPANY

The conditions for the incorporation of a company by foreigners are relatively simple, even if support is sometimes useful for some of the procedures.

The main points to consider are:

• A Hong Kong limited liability company can be formed from a single partner (natural or legal person). Partners are not required to reside in Hong Kong;
• A director will need to be appointed. No Hong Kong residency requirements are required;
• the registered office of the company must be located in Hong Kong (a domiciliation in a business center is possible depending on the field of activity of the company);
• there is no minimum capital to incorporate a company;
• At a minimum, an annual general meeting must be held;
• the appointment of a local “legal secretariat” in charge of drafting general meetings and holding annual legal documentation is mandatory; and
• The drafting of the articles of association must be prior to the registration of the company.

A PLATFORM FOR THE ESTABLISHMENT OF A SUBSIDIARY IN CHINA

Developing one’s business in mainland China as a foreign investor can be a major challenge given the restrictions on carrying out certain activities. Despite this,business opportunities remain numerous.

From a legal point of view, foreign investment in China is mainly carried out, through the establishment of a WOFE “Wholly Owned Foreign Enterprise“.

Chinese WOFE refers to a type of business entity in China that allows a foreign company to have full ownership and control of a local subsidiary or branch without the need for a Chinese partner.

The senior partner of a WOFE may be a Hong Kong holding company. The creation of the WOFE will then be facilitated. This holding company will naturally be subject to Hong Kong legal rules.

In the event of a subsequent change in the shareholding or management of the WOFE, these steps will be easier to carry out at the level of the Hong Kong holding company than at the level of the Chinese company.

To access the essential Asian market, Hong Kong remains one of the best options, offering many legal and financial advantages.

Ginestié Magellan Paley-Vincent, France, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact france@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.