Hong Kong, due to its strategic location, has become a crucial point in global commerce. Opening a company in Hong Kong has become a popular choice among international entrepreneurs.
The main advantages of the jurisdiction include not only a flexible tax policy but also a stable legal system, making Hong Kong attractive for those entering dynamic Asian markets.
Advantages of Registering a Company in Hong Kong
The Hong Kong economy is highly resilient and flexible, making it one of the best in global rankings of economic freedom. Transparent business practices, open markets, and effective regulatory mechanisms create ideal conditions for conducting business. Developed infrastructure, including modern transport hubs and technologies, allows companies to effectively interact with clients and partners. The rapid adaptation of businesses to regional conditions is made possible by a high level of telecommunications systems.
The justice system in Hong Kong, based on common law, ensures predictability and protection of entrepreneurs' rights. International norms and standards make this jurisdiction particularly attractive for investors who require legal transparency.
Hong Kong also offers a variety of investment opportunities, including information technology, fintech, and e-commerce, making it appealing for new and growing companies.
The banking system in Hong Kong is one of the most respected in the world, providing access to multi-currency products and international financial instruments. A low level of corruption also contributes to trust in the financial sector.
The tax system in Hong Kong, with low rates, is another important factor. The standard corporate tax rate is 16.5%, and for small and medium-sized enterprises, the rate can be reduced to 8.25%. The absence of VAT and taxes on goods and services significantly simplifies doing business.
Additional initiatives, such as grants and incubators, support entrepreneurs in their endeavors. Visa issuance programs and relocation opportunities allow companies to manage their personnel flexibly.
How a Foreigner Can Open a Company in Hong Kong
Before starting the registration process, it is important to determine the target market, competitive advantages, and operational costs. These aspects will help shape the business structure and avoid difficulties in the initial stages.
Foreign entrepreneurs can register a company in various forms, the most common of which is a private limited company (Ltd). To establish it, only one director and one shareholder are required, and there is no minimum share capital requirement.
It is also possible to create a partnership, where participants bear responsibility under the terms defined in the agreement. Partnerships can be general or limited, allowing for flexible risk distribution.
Companies that do not want to create a separate legal entity can open a branch, which does not have independent legal personality. To test the local market, it is advisable to create a representative office, allowing for research without engaging in commercial activities.
The registration procedure includes several steps: Choosing a unique name that complies with local requirements. Preparing incorporation documents for submission to the Companies Registry. Paying fees and obtaining a Certificate of Incorporation.
The next step is to open a bank account. Local banks offer reliable services and multi-currency tools, making them convenient for business. After that, it is necessary to register with the tax service and the social security system, which completes the process of obtaining the company's legal status.
It is important to remember that formal registration is just the first step in legalization. Many types of activities require licensing, and without permits, operations in these areas will be prohibited.
Taxation in Hong Kong for Multinational Companies
As of January 1, 2023, Hong Kong has updated the mechanism for taxing foreign passive income. The Foreign-sourced Income Exemption (FSIE) regime allows certain foreign income to be treated as local if it is related to economic activities in Hong Kong.
Starting in 2024, certain types of income will automatically be considered as earned in Hong Kong and subject to taxation at a rate of 16.5%. These include:
interest;
dividends;
income from the sale of shares;
profits from intellectual property assets.
Legislation also considers exceptions, allowing companies to avoid tax recalculations if they can prove their economic presence in Hong Kong. It is important to note that Hong Kong adheres to a territorial principle of taxation, and the FSIE regime does not apply to individuals.
Conclusion
Hong Kong, as one of the most dynamic economic spaces in Asia, attracts entrepreneurs looking to develop international projects and launch innovative companies.
This region has created conditions for the free movement of capital and flexible legislation, making it attractive for entering Asian markets and optimizing financial flows. It is important to choose the legal form of the company correctly, depending on the business model and financial capabilities.
Our team offers comprehensive support in registering companies in Hong Kong, analyzing project goals and providing recommendations for choosing the optimal organizational structure. We also provide assistance with issues that arise after the company registration.
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