Articles
Create an Offshore Company in Hong-Kong
Updated on Wednesday 14th December 2022 By Vlad Cuc, specialist in company formation matters
Foreign investors looking to open a company in Hong Kong have the liberty to choose between a number of types of business structures. Out of the available ones, the most common one is the Hong Kong limited liability company. This is also the one used to open offshore companies in Hong Kong.
Hong Kong is a top financial hub and at the same time one of the most competitive economies in the Asia-Pacific Region occupying top positions in the most prestigious surveys in 2016. Among these, the Global Competitiveness Index and the Ease of Doing Business Report placed Hong Kong among the first countries in the world in terms of economic development.
Hong Kong is a top financial hub and at the same time one of the most competitive economies in the Asia-Pacific Region occupying top positions in the most prestigious surveys in 2016. Among these, the Global Competitiveness Index and the Ease of Doing Business Report placed Hong Kong among the first countries in the world in terms of economic development.
Our specialists in company formation in Hong Kong can help foreign investors who want to incorporate any type of company in this jurisdiction.
| Quick Facts | |
|---|---|
| Types of companies which can be started by foreigners | Private and public companies limited by shares Private and public unlimited companies with a share capital Companies limited by guarantee |
| Minimum share capital for LTD Company and Paid-In Requirement | No |
| Minimum number of shareholders for Limited Company | 1 |
| Time frame for the incorporation | 2 working days |
| Corporate tax rate | - 8.25% on the first 2 million HKD of profits; - 16.5% on the remainder of the assessable profits. |
| Dividend tax rate | 0%; No withholding tax applies on dividend payments made by a Hong Kong company to another resident or non-resident company. |
| VAT Rate | There is no VAT or sales tax. |
| Number of Double Taxation Treaties | More than 40 double tax agreements. |
| Do you supply a Registered Address? | Yes |
| Local Director Required | No |
| Annual Meeting Required | Yes, however, the Companies Ordinance provides for a number of exceptions. |
| Redomiciliation Permitted | Yes |
| Electronic Signature | Yes |
| Is Accounting/Annual Return Required? | Yes |
| Foreign-Ownership Allowed | Yes |
| Any Tax Exemptions Available? | Interest income and trading profits derived from long term debt instruments are not included in the assessable profits; other sums can also be excluded. |
| Any Tax incentives Available? | Incentives for employment (youth employment, elderly, middle-aged job seekers and people with disabilities). |
Business forms in Hong Kong
Company incorporation in Hong Kong is simple across all of the available types of companies and understanding their characteristics and differences is important before deciding to invest here.
There are several types of business forms that can be incorporated in the Special Administrative Region. Below, you can see their description presented by our team of agents who specialize in company registration in Hong Kong:
- Limited liability companies: these can be public or private and they are separate legal entities; the founders are thus protected against business risks and have limited liability.
- Sole trader: the simplest business form and also the one with the highest degree of liability; it is incorporated by a single individual.
- Partnership: a business structure formed between two or more partners in which at least one of them has full liability.
Besides setting up a company in Hong Kong, foreign investors can also open branches or representative offices and our experts can help them.
Investors who wish to know more about the available business forms can reach out to our agents. The corporations, in either the form of a private or a public company, are the ones that are available to purchase as shelf companies and they are the business forms that are used by investors who wish to set up a company in Hong Kong as an offshore company.
Small and medium companies are set up in the form of the private limited company – the most widely used business form. Usually the types of shelf companies which are available for purchase are Private Limited Companies. The advantages of a private limited company are the following: separate legal entity and limited liability for the founders as previously stated, ease of raising capital and ease of transfer of ownership, perpetual succession and an overall positive business image because limited companies have more credibility compared to sole trader or partnerships.
The company has a share capital which is divided into shares that correspond to a certain class, as defined in the Articles of Association. In the case of business failure, the shareholders will lose their investment, meaning that they will lose the shares they own in the company. As long as the company is profitable, the shareholders are entitled to share these profits in the form of received dividends.
Investors who are interested in company formation in Hong Kong will start by choosing their preferred business structure. Some of the questions that can be answered when making this decision include the following: what is the purpose of the business? What is its size? How much capital is available for starting the business? What is the degree of liability for the founder?
Ways of owning offshore companies in Hong Kong
There are two ways of owning an offshore company in Hong Kong:
- - by registering a new company;
- - by purchasing a Hong Kong shelf company.
No matter the option of the enterpriser, both types of structures have their own advantages which can be explained by our company registration agents in Hong Kong.
The new company will be incorporated from the very beginning as suitable for the investor. The Articles of Association and the Memorandum will be written by the founders and will include those company management characteristics that they are after. By contrast, the shelf company will have these constitutive documents already written and, if required, they can be amended.
Company formation in Hong Kong is a simple and fast process, this is why some investors may find that registering a new company will take approximately just as long as buying a shelf company for which subsequent changes need to be operated before it can function as per their requirements. These subsequent changes can include changing the name of the company and making amendments to the Articles of Incorporation. In all other cases when investors can take in a shelf company as it is, this choice can help them save time and start trading faster than when opening a new company. This issue should be taken into consideration by those investors who are weighting in both options.
No matter the option of the enterpriser, both types of structures have their own advantages which can be explained by our company registration agents in Hong Kong.
Requirements to open a new offshore company in Hong Kong
As mentioned above one of the two methods used by foreign investors who want to open an offshore company in Hong Kong is to register a new company with the Companies Registrar in this country. In order to set up a company in Hong Kong as an offshore company, the following requirements must be met:
- - the company must have at least one shareholder;
- - the company must also have at least one director;
- - the minimum share capital of the company is 1 Hong Kong dollar;
- - the company must have a registered address in this country;
- - the company must appoint a secretary.
The shareholder can be an individual or a company. Also, if there are no restrictions on the residency of the director and the shareholder, the secretary must be a Hong Kong resident. However, it is also possible to appoint a local company which offers company secretarial services and our company formation representatives offer nominee secretary services in Hong Kong.
Below, our team describes the registration process for a private limited liability company that can also be used as an offshore legal entity.
Registering an offshore company - a process explained by our Hong Kong company formation agents
If the requirements above are met, the foreign investor or company can proceed with the company registration process of the offshore company. However, one must appoint a local firm or representative who carries out the incorporation procedure.
The following documents are required in order to set up a company in Hong Kong as an offshore company:
- - the Memorandum and Articles of Association of the company;
- - copies after the shareholder (s) and director (s) identification papers;
- - the prescribed application form;
- - a letter from the bank for foreign shareholders and directors.
In the case of corporate shareholders, the certificates of incorporation of the shareholders' companies will be required. The company must also have an original name which can be checked with the Hong Kong Trade Register. In maximum 14 days after the company was registered, the owners must notify the Trade Register about the offshore company’s address in Hong Kong and the appointed directors and secretary. Declarations from the last two must also be submitted with the Companies Registrar.
Why open an offshore company in Hong Kong?
Why open an offshore company in Hong Kong?
One of the main reasons to choose Hong Kong as an investment destination for registering a new or an offshore company is the Commercial Law which is based on the English legal system and the low corporate tax rate which is around 16,5%. It should also be noted that an offshore company will only be taxed on the income it makes in Hong Kong. In case you need to calculate your taxes in Hong Kong, do not hesitate to use our tax calculator. Considering Hong Kong allows the use of nominee shareholders, privacy is also an important aspect to consider when choosing this country to register an offshore company. For personalized consultancy please feel free to contact our local specialists in Hong Kong company formation matters.
The openness of the business environment, the ease of doing business and opening a company and the fact that it is an international financial center are also strong reasons why investors should choose Hong Kong as their location to base their Asian business. What’s more, a special advantage for trade businesses is that Hong Kong has a free-port status.
Steps for company formation in Hong Kong
We present the necessary procedures for investors who open a company in Hong Kong:
- Choose a type of company: this is a choice based on the size of the future business and the available capital; the business form can be changed as the business expands.
- Choose a company name: the company name must be an original one; a name checkup can be performed.
- Open a bank account: this is mandatory for all companies that derive income from Hong Kong.
- Draw up the company documents: the Articles of Association and any other company Resolutions are drafted during this step.
- File for registration: the documents and a filled in application form are submitted to the Companies Registry; among the required documents, the founders will also need to include copies of their identification documents. If the documents are in order, the Business Certificate is issued in approximately one week.
- Register with the Inland Revenue Department: the company in Hong Kong needs to be registered for tax purposes.
- Obtain any other permits and licenses: this step will depend on the chosen business field; special arrangements for hiring employees must also be made.
Our Hong Kong company formation consultants can assist with the company registration procedure for offshore companies. We can offer you additional information about these steps as well as personalized information according to the business field in which you wish to enter and the type of company that will be incorporated.
Choosing a shelf company in Hong Kong
The second option for foreign investors who are interested in owning an offshore company in Hong Kong is to buy a ready-made company. The greatest advantage of Hong Kong shelf companies is that they come registered and with all documents and appointed personnel. However, the owner can amend the incorporation documents and can also replace the director and the secretary, if needed.
In order to purchase a shelf company, the owner and the seller must sign a sale-purchase agreement before a notary. The Companies Register will then be notified about the new owner. Our company registration agents in Hong Kong offer already registered companies tailored to the clients’ needs.
Costs for company formation in Hong Kong
Before setting up a company in Hong Kong you should know the main costs for forming a new company in this jurisdiction. Our incorporation agents present them below:
- Company formation fee – investors who use our services will pay approximately 660 euros.
- Virtual office costs – the virtual office package offered by our company formation experts costs approximately 51 euros/month.
- Accounting costs – the approximate costs for accounting services in Hong Kong are 100 EUR/month.
- Registration fee – the Companies Registry imposes an estimated fee of 1,720 HKD (around 195 euros).
- Minimum share capital – there is no mandatory requirement for a minimum share capital in Hong Kong, however, it is common for the minimum issued or paid-up capital to be of one share with the value of one HKD (approximately 0.11 euros).
Our CPA in Hong Kong offers complete solutions for newly incorporated companies, start-ups, and businesses of all sizes. Our team offers solutions tailored to the number of employees and the industry in which the company activates. You can reach out to us to find out more about our accounting solutions, in addition to our incorporation services in the HKSAR.
Additional costs for new businesses in Hong Kong
A new company in Hong Kong will need to be prepared for additional costs apart from those related to the minimum share capital and the incorporation fees. The company will need to have a registered office and for this purpose many business owners purchase a property in Hong Kong or rent an office space. Real estate prices in Hong Kong can be high, depending on the type of property and whether or not the space is co-owned or shared.
Some investors may find that the costs associated with virtual office services are more appropriate and suit the needs of their business. In this case, they will need to purchase a virtual office package, according to their needs.
Before setting up a company in Hong Kong, one should know that other annual costs for companies in Hong Kong worth mentioning include those associated with accounting services. Companies who are interested in hiring employees in Hong Kong will need to prepare to deal with the costs associated with employing personnel.
Our experts in company formation in Hong Kong can give you more information about different types of costs associated with various business types. Depending on the activities you wish to perform you may also need to obtain special permits and licenses and pay the additional fees for these documents.
Foreign investments in Hong Kong
Foreign investors interested in company formation in Hong Kong should know that this jurisdiction is one of the countries with the highest values of received foreign direct investments. Some of the top investing countries are China, the United Kingdom, the Netherlands, the United States and Japan, among others. The top investment business sector remains the financial one, with significant amounts directed towards finance, insurance or banking. Other sectors that attract foreign capital are trade, information and communication and construction. The following data is available for inward foreign direct investments:
- - FDI inward flow for 2016: 117,387 million USD;
- - FDI inward flow for 2017: 110,685 million USD;
- - FDI inward flow for 2018: 115,662 million USD.
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Frequently Asked Questions about setting up a company in Hong Kong
1. Can a non-resident start a company in Hong Kong?
Yes. Any individual can open a Hong Kong company, regardless of nationality. Foreign investors have the same investment rights and obligations regarding company formation.
2. Does the company have to be based in Hong Kong?
Yes. The company needs to have a registered address in Hong Kong. Foreign companies can also choose to open a branch or representative office which will also have to be based in the city.
3. How can I open a bank account in Hong Kong?
A bank account is required for companies incorporated in Hong Kong but it is not mandatory for those that do not have their main place of business in the city.
4. What are the basic steps for setting up a company in Hong Kong?
Choose the type of company, choose a company name and have it approved by the Companies Registry then make the application to register the new company at the Registry, either in person or through the electronic portal. Our company registration specialists are here to help you throughout this stage.
5. What is the minimum share capital in Hong Kong?
No specific requirements, however, companies that have a share capital must state the capital and initial shareholdings in the Articles of Association. Many investors decide to open a private limited liability company in Hong-Kong because this business form has no burdensome requirements for a minimum share capital. This also extends to other business forms, most notably partnerships, sole proprietorships and others.
6. What are the documents needed for company incorporation in Hong Kong?
The Articles of Association must include certain mandatory information about the company and its organization, including information about its members. The liability of the shareholders and their contributions are also included in this document.
7. How fast can you incorporate a company in Hong Kong?
24 hours for online applications submitted to the Companies Registry. Contact our company formation consultants for specialized consultancy in order to make sure your business is law compliant.
8. Do I need special permits and licenses in Hong Kong?
Yes. Special permits and licenses are required for businesses that sell or prepare food (restaurants and other food shops), those that sell non-food goods (electrical appliances, firearms, chemicals, materials and others) as well as for those companies that provide various services (amusement, construction, education, financial services, land and air transport and others).
Furthermore, companies that perform activities related to offering nursing home care services and those engaged in activities that have an impact on the environment are required to obtain more than the regular business registration permit. These special permits or licenses are issued by the relevant Hong Kong authorities and one of our agents can help you apply for these.
Furthermore, companies that perform activities related to offering nursing home care services and those engaged in activities that have an impact on the environment are required to obtain more than the regular business registration permit. These special permits or licenses are issued by the relevant Hong Kong authorities and one of our agents can help you apply for these.
9. What are the taxes that I have to pay in Hong Kong?
The profits tax in Hong Kong is 16.5% for income earned in Hong Kong and 15% for unincorporated businesses. Other taxes for companies in Hong Kong are the social security contributions, the real estate tax, stamp duty. There is no payroll tax, no gift or capital taxes and no withholding tax on dividends and interest. Duties are charged for a number of products, among which most importantly alcohol and tobacco.
One of our agents who specialize in company formation in Hong Kong can give you complete details on the taxation regime as well as the double taxation relief.
One of our agents who specialize in company formation in Hong Kong can give you complete details on the taxation regime as well as the double taxation relief.
10. What are the requirements for opening a private limited liability company?
In order to incorporate a private limited liability company in Hong-Kong, its founders will need to draw up the Memorandum of Association and the Articles of Incorporation. At least one shareholder, one director and a secretary (either an individual or corporation, having Hong-Kong residence) are needed to establish this legal form.
When the company only has one shareholder/or director, he cannot act as the company secretary. The number of members cannot exceed 50, however, there are no restrictions on nationality. The shares of a private limited liability company cannot be transferred freely and cannot be made available to the public. The members are only liable to the extent of the invested capital. A Hong Kong registered company is required to have a registered address, that is a physical address and not a PO box. If you need assistance for setting up a company in Hong Kong as a LLC, our team is at your disposal.
When the company only has one shareholder/or director, he cannot act as the company secretary. The number of members cannot exceed 50, however, there are no restrictions on nationality. The shares of a private limited liability company cannot be transferred freely and cannot be made available to the public. The members are only liable to the extent of the invested capital. A Hong Kong registered company is required to have a registered address, that is a physical address and not a PO box. If you need assistance for setting up a company in Hong Kong as a LLC, our team is at your disposal.
11. Is VAT registration mandatory in Hong Kong?
The Value Added Tax is one of the taxes that do not apply in Hong Kong.
12. What are the requirements for opening a bank account in Hong Kong?
Applicants must submit a set of documents when they open a corporate bank account. These will include the following:
- - the application for opening a corporate bank account, filled in and signed by the authorized persons,
- - the decision to open the bank account,
- - the certified copy of the Certificate of Incorporation as well as a certified copy of the Business Registration Certificate, the certified copy of the Memorandum of Association of the company,
- - a statement given by the company manager and from the main shareholder,
- - copies of the identification details for the company shareholders as well as proof of residence when needed; specimen signatures will also be required.
The actual documents will differ according to the selected bank. The company's lawyer or a certified public accountant can perform the document certification.
13. What are the conditions for hiring employees in Hong Kong?
Companies can use different methods to recruit the adequate candidates and then commence the process for hiring personnel in Hong Kong. Working with a recruitment agency is a method commonly employed by large companies, but other options are available such as online portals for different types of jobs, announcements in printed media or job fairs.
An employer in Hong Kong needs to observe the requirements for occupational safety and health as well as the minimum wage and other benefits. Enrollment with the Mandatory Provident Fund is needed for part-time and full-time employees and it is performed by the employer.
14. Why is Hong Kong a good location for doing business?
The fact that the city is a Special Administrative Region of China has not affected its political and economic stability. Hong Kong is the main gateway to Mainland China and this is one important location advantage. Here are the main reasons for setting up a company in Hong Kong:
- - Strategic location in Asia
- - Numerous business opportunities
- - Great infrastructure
- - Advantageous taxation regime for companies and individuals
- - Qualified workforce
- - High standards of living
Hong Kong is not a tax haven in the traditional sense, like Belize or Seychelles, but it is a jurisdiction that has low taxes for companies, and this has been very important in its ability to establish itself as a financial and business center. A large number of double tax treaties that also include a clause for the exchange of information grant commercial transparency as well as protect investors from double taxation.
Please ask our specialists in company formation in Hong Kong for more details about setting up a company in this jurisdiction.
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Roger Pay is the Managing Director of our company and an experienced company incorporation specialist. He will help you open your company in Hong Kong as fast as possible.
Call us now at +852 35651861 to set up an appointment with our company formation experts in Hong Kong. As our client, you will benefit from the joint expertise of local lawyers and consultants for opening an offshore company in Hong Kong.
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- prompt response to your inquiry (maxim 24 hours);
- cost-efficiency: competitive company formation prices;
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