Hong Kong – Highlights

Company registration in Hong Kong

Most of registration of a Hong Kong company is done in a form of a private company. Major restrictions of the private company include restrictions to transfer its shares; maximum number of shareholders is limited to 50; any public subscription of shares or deposits are prohibited.

Procedure for Hong Kong company incorporation

The procedure of the Hong Kong company incorporation is as following:

  1. Approval of preferred name (2 working days)
  2. An application form to be filled in, signed and scanned (containing information about an approved name, details of directors and shareholders)
  3. A beneficial owner declaration to be filled in,  signed, scanned and send to us
  4. we issue an invoice for a company registration in Hong Kong
  5. Clear scan passport copy of directors and shareholders to be sent by e-mail
  6. Clear scan copy of residence proof (utility bill, bank statement or bank reference not older than 3 month) to be sent by e-mail
  7. Upon receipt of money on our bank account for Hong Kong company incorporation, we start a Hong Kong company incorporation process.  It takes up to 10 working days.
  8. After a Hong Kong company registration director and shareholder have to sign the forms and send us the originals to be submitted with Companies Registry of HK, it takes up to 5 working days to complete the full Hong Kong company incorporation process
  9. The following process of apostille takes up to 4 working days and up to 5 working days for a courier delivery

Minimum capital requirement for a Hong Kong company

Shareholders of a Hong Kong company must subscribe at least for two shares to start an Hong Kong company incorporation process. 0.01% of capital duty is charged on authorised share capital and share premium.

Shares at a Hong Kong company

There are the following classes of shares that can be issued by a Hong Kong company:

  1. Ordinary shares
  2. Preference shares

Share premium is allowed in Hong Kong. However, share premium is a subject to capital duty of 0.01%

Nominee shareholders are allowed in Hong Kong.

Proper instrument of share transfer is required to register the transfer of shares in a Hong Kong company.

Directors of a Hong Kong company

Minimum number of directors is one to start a Hong Kong company registration process. There is no restriction for foreign nationals to act as a director of a Hong Kong company.

Corporate directors are allowed in Hong Kong.

An annual general meeting of directors can be held outside of Hong Kong.

Shareholders of a Hong Kong company

There should be at least one shareholder. There are no restrictions for foreign individuals or corporate body to be a shareholder of a Hong Kong company. Number of shareholders of private company is limited to 50.

Corporate shareholding is allowed in Hong Kong only for private companies.

Secretary of a Hong Kong company

It is obligatory to have a secretary for a Hong Kong company. Secretary could be a natural person or a company who is a resident of Hong Kong. The company secretary is responsible for keeping and filing corporate document with the Registrar of Companies. A register of directors, shareholders, secretary and minutes of meetings have to be kept at the registered office of a Hong Kong company in Hong Kong.

Registered office

Every company in Hong Kong has to have a registered office where a register of directors, shareholder, secretary and minutes of general and director meetings are kept. All changes have to be filed with the Registrar of Companies within a month from a date of a change.

Accounts of a Hong Kong company

Every company in Hong Kong has to keep accounts. Accounts of the company have to be audited on an annual basis. Private companies are exempt from filing audited accounts with Registrar of Companies.

Tax System of Hong Kong

Below are the major taxes in Hong Kong

  1. Corporate income tax
  2. Capital Gain Tax (CGT)
  3. Taxation of
    1. royalties
    2. dividends
    3. interest
  4. Stamp and capital duties

Taxable Income

Hong Kong operates territorial taxation principle. Income earned outside of Hong Kong is not a subject to Hong Kong income tax.

Residence test for companies

Taxpayers are taxed not on a residence status but on territorial principle where profit was earned.

Difference of tax treatment for income from different sources

Foreign source income is exempt from income tax in Hong Kong.

Income is not considered to be derived from Hong Kong if

  1. A contract concluded and signed outside of Hong Kong
  2. Services rendered outside of Hong Kong
  3. Capital is employed outside of Hong Kong
  4. If title of goods passed outside of Hong Kong
  5. Payment of expenses incurred in provision of services or delivery of goods done outside of Hong Kong
  6. Place where goods are stored and maintained
  7. What the company done to earn the income

Hong Kong and deemed Hong Kong source income is subject to income tax.

It is worth to notice that purchase or sales of commodities manufactured in Hong Kong is treated as a Hong Kong based income.

Trade in commodities is considered as wholly offshore or onshore for a tax assessment purpose. Even little trading activity in Hong Kong leads to whole profit classified as an onshore and subject to Hong Kong income tax.

In case of agency agreement, a source of income is where duties where performed.

Taxation of dividends

Dividend income is excluded from income tax. There is no withholding tax on outgoing dividends.

Taxation of royalties

Royalty income received from Hong Kong source is subject to income tax. There is no withholding tax on interest paid to non-residents. However, there are few exceptions from this rule.

Taxation of interest

Interest received is subject to income tax if it was earned in Hong Kong.

Capital Gains

There is no capital gain tax in Hong Kong.

Corporate income tax

Corporate income tax rate in Hong Kong is 16.5%.

Capital duties

Capital duty on increase of share capital is 0.01%

Net worth tax

There is no net worth tax in Hong Kong.

International aspects of Hong Kong taxation

Anti-avoidance regulation

Hong Kong tax code is following Australian Income Tax Model for anti-avoidance rules.
Thin capitalisation provision was introduced in 1984.

Transfer pricing

There is specific transfer pricing legislation in Hong Kong which is based on 1918 UK tax regulation.

System of Double Tax Treaties

Hong Kong signed more than 40 Double Tax Agreements (DTA) which can be successfully used for an international tax planning.