Incorporating a Company in Hong Kong: Everything You Need to Know About the Jurisdiction

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Hong Kong, as a distinct administrative region of China, opens up unique avenues for international business. Its strategic position as a conduit between the East and West offers seamless access to major global markets.

However, despite numerous advantages, relocating a business from Ukraine to Hong Kong can be challenging for Ukrainian entrepreneurs. This journey is fraught with various hurdles that can turn into significant obstacles when executing business strategies. What kind of company can be established in the Hong Kong market? What documents are needed for company registration, and how to open a corporate account in Hong Kong? Additionally, adapting a business to a new legal jurisdiction demands an in-depth understanding of local laws and regulations, which can be a complex task without expert guidance.

For those aiming to bring their business visions to life in Hong Kong, we extend our comprehensive support. Boasting years of experience and a network of reliable contacts across various jurisdictions, including Hong Kong, we are adept at ensuring a smooth transition and swift adaptation of companies to new settings. Our team is equipped to assist in overcoming all relocation challenges, from document preparation in Ukraine to securing reliable partnerships in Hong Kong. 

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Setting Up a Business in Hong Kong: Everything You Need to Know About the Jurisdiction

Opening a company in Hong Kong goes beyond a mere procedural task; it's a strategic, significant decision. In today’s globalized, ever-evolving business landscape, the choice of jurisdiction is critically important. Thus, many businessmen are attracted to starting a company in Hong Kong. Why is it so interesting for business?

Among the factors that incline entrepreneurs to choose Hong Kong for doing business, the most significant are:

  • A stable political and economic climate;
  • Low taxation;
  • Incentives;
  • A robust and expansive financial sector with access to global banking services;
  • An environment conducive to international trade;
  • Minimal bureaucratic red tape;
  • Strong legal protections.

Notably, Hong Kong's double taxation avoidance agreements with various nations minimize the risk of dual taxation for firms engaged in international commerce.

Assessing the real possibilities of their business, company owners who decide to relocate from Ukraine to Hong Kong realize that it is difficult to independently keep track of all the innovations in legislative, tax, and financial spheres. This is especially challenging in a country unfamiliar to most clients. To avoid such risks, we recommend contacting us.

Our clients are reassured by our legal team’s approach, starting with a comprehensive risk assessment, followed by developing a tailored roadmap and a detailed plan for company establishment, bank account opening, and ongoing business support.

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What Companies Can a Ukrainian Entrepreneur Set Up in Hong Kong?

These types of companies can generally be grouped into three categories:

  1. Offshore Companies are allowed to conduct business activities outside Hong Kong's territory. This setup offers entrepreneurs the flexibility to strategize their business growth and access international markets.
  2. Local Companies are commonly known as Limited Companies and are a favored choice for conducting business within Hong Kong. They provide an elevated level of legal protection, limiting the liability of the stakeholders to the extent of their capital investment.
  3. Other Legal Entities, which include trusts, partnerships, and even cutting-edge startups. This diversity enables entrepreneurs to tailor their business structure to their specific needs and goals.

What Is the Registration Process and How Long Does it Take to Set Up a Company in Hong Kong?

Company registration generally takes only a few days, provided all documentation is correctly prepared and key details like company name, structure, capital amount, and business nature are prearranged. A significant convenience is the ability to manage this process remotely, requiring only a single director-shareholder for the registration.

Key considerations for business registration in Hong Kong include specific requirements like the stipulated share capital, which should be no less than 10,000 Hong Kong dollars (about 1,300 USD). However, for the actual company registration, it's sufficient to pay for a single share (1 Hong Kong dollar).  

Additionally, depending on the business type, obtaining a license (permit or certificate) may be necessary. Such licenses are mandatory for sectors like:

  • healthcare;
  • financial services;
  • wholesale or retail (including specific licenses for alcohol trading or pet shop operations);
  • goods import/export;
  • IT and telecommunications;
  • education;
  • food services (including restaurant operations and bakery licenses);
  • tourism;
  • recruitment;
  • oil and gas services;
  • event organization.

It’s crucial to bear in mind that some business activities might require multiple licenses from various regulatory bodies. The process of acquiring these licenses can range from several months to a year. 

What Documents are Necessary for Registering a Company in Hong Kong?

For the registration procedure, prepare:

  • A minimum of three potential names for your enterprise, as it's quite common to find that your preferred name might already be in use by another business;
  • The passport of the company director and a notarized copy of a utility bill payment, both translated into English.

We stand ready to craft your foundational documents and guide you through the process of setting up a bank account locally, offering expert support at each step of the way.

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Hong Kong's Tax System: Expectations for Entrepreneurs

Prior to your company's registration, it's crucial to delve into the nuances of local taxation and weigh up all conceivable risks. Hong Kong's major allure lies in its tax regime, tailored to draw international investments. Here, corporations are taxed solely on the profits made within their borders, with a tax rate pegged at 16.5%.  

There's a 15% levy on both property and income tax. Remarkably, Hong Kong imposes a zero-rate tax on capital gains, dividends, and interests, and steers clear of currency control and import duties. This translates to tax exemption for profits derived from capital investments, dividends disbursed to shareholders, and interests accrued from financial transactions within Hong Kong.

Additionally, the absence of a value-added tax (VAT) in Hong Kong presents a further boon for businesses, markedly alleviating the financial load on enterprises and streamlining accounting practices.

In essence, Hong Kong's transparent and foreseeable tax system furnishes entrepreneurs with avenues to streamline their tax liabilities. The combination of incentives and a high level of confidentiality renders Hong Kong a magnet for those aiming at effective tax management.

What Challenges Might You Face When Starting a Company in Hong Kong?

As you contemplate either relocating your company from Ukraine or initiating a new business in Hong Kong, it's critical to balance the jurisdiction's advantages against potential hurdles. Our extensive experience in guiding clients through this process has revealed several common challenges:

  1. Hong Kong banks often have stringent requirements for opening corporate accounts. These may include having a physical office in the jurisdiction and duly employed staff.
  2. Although Hong Kong's tax system is appealing due to its low rate, it can be intricate and challenging to understand. Our clients frequently encounter difficulties in tax planning and adherence to local tax obligations, which could lead to unwanted complications.
  3. A local representative is a prerequisite for company registration in Hong Kong, a requirement that might pose a significant hurdle for Ukrainian entrepreneurs.

Our specialists are prepared to offer comprehensive assistance, as we collaborate exclusively with top-tier agents. 

Our support extends beyond just company registration. We also:

  • Provide continual guidance in both Ukraine and your chosen jurisdiction;
  • Keep you updated on legislative changes;
  • Offer a wide range of services, including accounting support, tax planning, and others.

Reach out to us, and we'll exert every effort to ensure your business operates effectively and within the legal framework, regardless of your chosen jurisdiction!

See more details on our services for setting up businesses abroad here.

Additionally, we offer services in:

Business tax optimization.

Submission of notifications and reports for CFCs.

Publication date: 29/11/2023
Ryzhova Tatiana

About author

Name: Ryzhova Tatiana

Position: Lawyer

Education: INTERREGIONAL ACADEMY OF PERSONNEL MANAGEMENT KYIV

Knowledge of languages: Russian, Ukrainian

Email: [email protected]

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