Global expansion into Hong Kong generally means that you need to set up an in-country entity. However, by partnering with us, you create the possibility to bypass this process and utilize our Hong Kong entity. By using our PEO-service we take care of the complicated paperwork.
Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of just frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.
In this guide, we will share which documents you need to establish an entity in Hong Kong, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Hong Kong.
Set up an entity in Hong Kong
In Hong Kong, foreign subsidiary entities hold the same company standing as any other conventional company in the country and are treated as equals with domestic businesses. They enjoy independence from their parent company but are subject to all national laws of Hong Kong.
The registration process comes with little variation according to the company type, together with the process being quick, generally straightforward and can be done with little difficulty. However, setting up a subsidiary in Hong Kong involves a heavy workload.
You can lighten this load by partnering with us, an Employer of Record (EOR) company. We obtain your new personnel through our Professional Employer Organization (PEO) international recruitment specialists, and our EOR experts handle all legal and compliance requirements. Use our services and be up-and-running with a presence in your new territory within days, rather than months.
How to set up a Hong Kong Subsidiary
- Decide on the company type that suits the nature of your business, your business goals and matches your own capabilities to meet establishment requirements. Common company types include: The Private Limited Company, The Public Limited Company, The Company Limited by Guarantee, a branch office, or a representative office.
- Choose a company name – can be in English (end in Limited), traditional Chinese, or an English and Chinese name (but the combination of English and Chinese characters is prohibited).
- Appoint a company secretary.
- Obtain a business address in Hong Kong.
- Prepare the appropriate registration documents and have them translated to Chinese or English.
- Notarize and legalize the registration documents at a notary’s office.
- Confirm your company name and register your company at the Companies Registry.
- Receive a Certificate of Incorporation.
- Register with the Inland Revenue Department and obtain a Business Registration Certificate, which includes the company’s Tax Identification Number.
- Open a corporate bank account.
- Apply for any additional permits or licenses (if required), within a month of incorporation.
Fees & Registration Times
The registration fees and times are as follows:
- Company Registration (Online) - HK$1,545
- Company Registration (In-person) - HK$1,720
- Business Registration - HK$250 (for 1-year certificate), HK$750 (for 3-year certificate)
- Open a bank account - Depends on the bank
Company registration can take place in person or online, and are incorporated within a few days, no matter the registration choice. The application form can be done in paper form at the Company Registry (CR) Office, or online at the one-stop shop e-registry service of the Company Registry.
Hard-copy applications will typically see the Incorporation Certificate and Business Registration Certificate issued within four working days.
Online applications for incorporation and business registration are normally processed within one hour.
What you need to set up a Hong Kong Subsidiary
For foreign companies wishing to expand into Hong Kong, certain requirements must be met:
- A local business address – leased or purchased with all relevant documentation.
- Completed registration documents:
- Subsidiary Incorporation Form.
- A Notice to the Business Registration Office.
- The parent company’s incorporation documents: The Memorandum of Association, The Articles of Association and Certificate of Incorporation
- The subsidiary’s incorporation documents: Articles of Association, and the resolution of the parent company detailing its decision to form the subsidiary.
- Business address documentation.
- Founders’ or company officers’ information – a copy of each person’s passport and residential address for foreigners (for both private individuals and legal persons/entities), a copy of each Hong Kong ID card for residents, and bank letters.
- Confirmation of incorporation registration payments.
- Notarized and legalized registration documents in their Chinese or English translations.
- A company incorporation certificate.
- A Business Registration Certificate (which includes the company’s Tax Identification Number).
- A local bank account.
- Special permits and licenses with the city, certain ministries, or special authorities (depending on type of business).
Benefits of Setting up a Hong Kong Subsidiary
Hong Kong is one of the top destinations for subsidiary establishment in the world, so it is easy to see why it is a popular destination for growing a business’ influence. There are also other significant benefits to establishing an entity in Hong Kong:
- Subsidiaries in Hong Kong are taxed the same as any other resident company.
- Subsidiary entities in Hong Kong also benefit from double tax treaties, in which there are significant reductions in tax payments on dividends, interests or royalties paid to the foreign country.
- Hong Kong ranks high at 3rd place in the Ease of Doing Business report by The World Bank (2020).
- Hong Kong boasts robust financial, tourism, logistics, and professional services sectors, as well as high-quality creative, medical and education services.
- Hong Kong entities also benefit from the lowest tax rates in Asia, as well as low workforce costs.
- In 2019, the Heritage Foundation recognized Hong Kong as the freest economy in the world, due to its focus on providing trade and monetary freedom to businesses, as well as integrity and transparency towards its governments.
- The workforce in Hong Kong is also highly trained, flexible, productive, and adaptable to international businesses, with English as the second official language alongside Chinese.
Hong Kong Subsidiary Laws
In Hong Kong, subsidiary laws may vary depending on the subsidiary entity type you wish to establish – but all are regulated under The Companies Ordinance. Compliance entails meeting these requirements:
Registration & Documentation
- A subsidiary requires at least 1 director and 1 shareholder (who do not need to be nationals), as well as a company secretary (who must be a local individual or corporation).
- A minimum share capital is not required, but it is common practice to have ordinary shares with a value of 1.00 HK$, and have an issued or paid-up capital of least one share with this value.
- All entities must be registered and regulated by The Companies Registry.
- Entities must also be registered with the Internal Revenue Department, as well as establish a Mandatory Provident Fund.
- Foreign Founders, Directors or Shareholders Documentation – foreign founders must submit certain documents that confirm their identities, for both private individuals and legal persons/entities, including parent company information, information on beneficiaries and shareholders, etc.
Accounts and Taxation
- All resident subsidiary companies are obliged to pay a corporate income tax, but the percentage depends on the amount of income gained during the tax year. If the income is under HK$ 2 million – it's 8%, and if it is over HK$ 2 million – it's 16.5%.
- All entities are subject to an annual tax return, as well as an annual financial audit, which must be done by an appointed auditor that is a member of the Hong Kong Society of Accountants and has a practicing certificate.
- A subsidiary must include a board of directors – meetings must be held at least 4 times a year, on a quarterly basis, and a reasonable notice of at least 14 days must be given for board meetings.
- Management bodies must also include an annual meeting of shareholders.
- The Companies Ordinance also requires incorporated companies to maintain up-to-date, beneficial ownership information through keeping a Significant Controllers Register. This must be open for inspection by law enforcement upon demand.
Contact us to see how we can support your plans!
Establishing an entity takes considerable time and resources, despite the ease of establishment you can find in Hong Kong. To do this, you need to acquire the right people and the right resources, which will not be easy. A cost-effective and time-saving alternative to this is engaging the services of a Professional Employer Organization (PEO) such as Bradford Jacobs.
With over two decades of global recruitment expertise and our Employer of Record (EOR) solutions, we can have employees operational within days, ensuring that all laws and regulations (employment, payroll, tax) are followed.
Our Human Resources’ experts will ensure a smooth transition of your onboarded employees into your new territory. International borders should not stand in the way of international expansion.
Contact us today to make your expansion goals a reality, with ease and confidence.