Private company limited by shares
Hong Kong is a vibrant, densely populated urban center with a skyscraper-studded skyline and is a major regional free trade port and a global financial hub.
This jurisdiction has one of the most liberal, competitive and laissez-faire economies worldwide. Characterized by simple taxation with a competitive level of corporation tax (8.25% / 16.5%), capital gains and dividends free from taxes, no sales tax, and no customs duties.
Although there is no specific legislation for international companies, due to its territorial tax system, a correctly structured and managed company may qualify for a 0% tax for its business carried out outside the jurisdiction.
Supported by a legal system derived from the Common Law, which is very scrupulous in respect of private property, and an independent judicial system in which the rule of law applies to legal and contractual procedures.
A high international reputation and business-friendly jurisdiction, with great facility to establish companies, it can be done in as little as 2 days and remotely, and move capitals from Hong Kong abroad.
Hong Kong is also one of the safest and convenient places to do banking. Being home to some of the most solid banks worldwide, with the highest levels of solvency and liquidity. No exchange controls and availability of multi-currencies accounts, merchant accounts, and payment processing services.
In addition, it is the gateway to one of the largest and fastest-growing markets worldwide, China. The Closer Economic Partnership Arrangement (CEPA) provides to companies incorporated in Hong Kong preferential access for goods and services entering the mainland China market.
Hong Kong participates in the OECD's Automatic Exchange of Information for tax purposes (AEoI) and is undertaking exchanges of information through Common Reporting Standard (CRS).
All in all, Hong Kong is an excellent jurisdiction to incorporate and its company limited, a powerful vehicle for international trading, start-ups, internet entrepreneurs, investment businesses, IP holdings and as a holding company.
Country code - HK
Legal Basis – Common law
Legal framework - Companies Ordinance
Company form – Private company limited by shares (Ltd.).
Liability - The liability of the shareholders for the company is limited to the amount of their respective shareholdings.
Share Capital – There is no minimum share capital established, but usually the authorized share capital is HKD 10,000 represented by 10,000 ordinary shares of HKD 1.00 each. Minimum issued share capital is HKD 1.00. It may be denominated in any currency. Bearer shares are not allowed.
Shareholders – One minimum shareholder and a maximum of 50, who can be either individuals or corporations, residents or non-residents, without limitations. Details of shareholders are publicly disclosed.
Directors – At least one director, who may be a natural or legal person, resident or non-resident. A director must be not bankrupt or have been convicted due to malpractices. A sole shareholder may be also the director. Directors’ details are disclosed to the public registrar.
Secretary – A local secretary must be appointed, either a corporation or an individual. Secretary must maintain statutory books and company records, in addition, to ensure company compliance.
Registered Address – Limited companies must have a local registered physical address, a P.O. Box is not allowed.
General Meeting – A shareholders general meeting must be held annually, without restrictions on its location. The first general meeting after incorporation must be held within 18 months. Instead of a general meeting, a written resolution is allowed.
Electronic Signature – Permitted.
Re-domiciliation – Not permitted.
Compliance – Limited companies are required to prepare and maintain accounts, which must be audited annually by a Certified Public Accountant in Hong Kong, file them in the annual return to the Companies Registry and pay the annual registration fee. The Business Registration Certificate may be renewed annually or every three years. Resident entities must file annually their tax return to the Inland Revenue Department.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- HKD 1 Minimum issued capital
- - Minimum paid up capital
- HKDAny Capital currency
- Anywhere Location of annual general meeting
- 2018 AEOI
Tax residency – A legal entity is deemed to be tax resident in Hong Kong if it is incorporated and/or managed and controlled in Hong Kong.
Basis - Corporate income tax is levied on profits derived from Hong-Kong, foreign-source profits may be exempt from taxation, whether remitted or not.
Tax rate - Companies incorporated in Hong Kong are subject to profits tax at 8.25% for the first HKD 2,000,000 and 16.5% on profits over HKD 2,000,000.
Capital gains - Capital gains are usually not subject to taxation.
Dividends - Dividends received from resident entities are tax-exempt, whereas dividends received from non-resident entities are usually considered foreign-source income and exempt from taxation.
Interests - Interest income derived from Hong Kong is subject to profits tax, except interest derived from any deposit in a financial institution.
Foreign-source income - Foreign-source profits are usually exempt from taxation. The profits source is usually determined by the place where the purchases and sales contracts are affected or the place where the key activities to generate the profits are carried out.
Withholding taxes - Payments to non-residents on dividends and interests are exempt from taxation. Royalties are subject to a withholding effective tax rate of 4.95% if are paid to a resident of a jurisdiction where the royalty payments are deductible for profits tax purposes. If royalties are derived from the use of intangibles that previously were owned by a person carrying business in Hong Kong, they may be subject to an effective withholding tax rate of 16.5%.
Losses – Losses arising from taxable income may be carried forward indefinitely. Losses may not be carried back.
Inventory - Inventory may be declared at its cost or market value, whichever is lower and must be valued through the First in first out (FIFO) method.
Anti-avoidance rules – On July 4, 2018, Hong Kong passed The Inland Revenue (Amendment) (No. 6) Ordinance 2018 (IRO), which codifies transfer pricing rules (Fundamental Rule) and requires transactions between affiliates to be carried out at an arm’s length basis for tax purposes.
The Fundamental Rule entitles Hong Kong’s taxman, the Inland Revenue Department (IRD), to adjust profits or losses of a company if compensations arisen from transactions with associated persons differ from compensations which would have been made between independent actors, and have led to a tax advantage.
The Fundamental Rule applies to transactions involving sale/transfer/use of assets and provision of services, and financial and business arrangements within a group structure.
The IRO Amendment also codifies transfer pricing documentation requirements. Hong Kong companies transacting with affiliates are required to prepare a master file and local file transfer pricing documentation, and HK ultimate parent entities (UPE) need to prepare country-by-country (CbC) reports (CbCR).
The local file typically includes documentation on the local entity intercompany transactions, whereas the master file includes high-level information about the group’s global business operations and transfer pricing policies.
A CbCR is an annual return that includes the key elements of the financial statements of a given multinational group by jurisdictions. It provides information to tax authorities about revenue, tax paid and accrued, employment, capital, retained earnings, tangible assets, and business activities, among others.
These transfer pricing reporting requirements are becoming a worldwide standard international tax practice in line with OECD’s BEPS anti-avoidance requirements.
Companies that meet certain conditions, such as total revenue of not more than HKD 400 mil or total assets of not more than HKD 300 mil, among others, might be exempted from preparing the local file and master file documentation. For its part, an HK UPE with consolidated group revenue of less than HKD 6.8 Bil may not be required to file a CbCR.
Companies subject to prepare the master file and local file documentation, and fail to do so may face a fine of HKD 50,000, and may be ordered by the court to prepare such documentation within a specified time. Failure to comply with that order may entail an HKD 100,000 fine on conviction.
The IRO amendment also provides for enhanced economic substance requirements to benefit from HK tax treaties; and modifications to certain preferential regimes.
Labor taxes – Employers are required to make contributions to the Mandatory Provident Fund (MPF) at 5% of employees’ monthly income, capped at HKD 1,500. Employees whose salary is over HKD 7,500 contribute other 5 %, also capped at HKD 1,5000.
Tax credits and incentives – A tax credit may be available for foreign tax paid on income taxable, provided that is derived from a jurisdiction where Hong Kong has concluded a tax treaty with. A tax credit is usually limited to the amount of tax payable in Hong Kong on the same income.
Investments funds may be exempt from taxation. Concessionary tax rates (up to 50% of the standard tax rate) may be available for certain treasury corporate centers, reinsurance and authorized captive insurances.
Compliance – The tax year in Hong Kong starts on 1st April and ends on 31st March. On average, a Limited Company may require 3 payments and 74 hours per year to prepare, file and pay taxes.
Personal income tax – Individuals who ordinarily reside in Hong Kong or stay in the country for more than 180 days per year or more than 300 days in two consecutive years may be considered Hong Kong tax residents. Although, tax residency rules may vary according to a tax treaty.
In Hong Kong income tax is levied on a territorial basis. This means that both residents and non-residents are subject to income tax on their income accrued in Hong Kong, being foreign-source income exempt from taxation.
Personal income tax on salaries is levied at a progressive rate from 2% to 17% on income exceeding HKD 120,000. Income from business is taxed under profits tax (16.5%). Dividend and interest income are exempt from taxation. Capital gains are usually tax-exempt, although those derived from certain trading assets may be subject to profits tax.
Rental income is taxed under property tax, at a 15% on the net assessable value of land or buildings. Property tax does not apply on residential properties occupied by the owner for self-use. Note that while it is possible to buy condominium units, the land is owned by the government and its tenure is on a renewable leasehold basis.
Other taxes – There are no sales taxes, nor customs duties on general imports, some commodities such as tobacco, alcohol, and hydrocarbons may be subject to excise taxes.
Hong Kong levies property tax on land and buildings owners at a 15% rate.
There is a stamp duty on contracts of sale and purchase of Hong Kong-registered stocks (0.2%) and the transfer of immovable property, up to 8.5%. There is a special stamp duty on the resale of properties held less than 36 months from 10% to 20%.
There are no capital duties, net wealth, inheritance and taxes.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- 16.5% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 4.95% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- Indefinitely Losses carryforward (years)
- FIFO Inventory methods permitted
- 72 Tax time (hours)
- 3 Tax payments per year
- 5.00% Social Security Employee
- 5.00% Social Security Employer
- 17% Personal Income Tax Rate
- 0% VAT Rate
- 35 Tax Treaties
Hong Kong is a Special Administrative Region of the People’s Republic of China (Hong Kong SAR). Its official languages are English and Cantonese.
Although it is part of the People’s Republic of China, the region maintains an independent economic, administrative and judicial system, and even its own currency, the system of customs and external borders. Its official legal tender currency is the Hong Kong Dollar (HKD), pegged to the USD, which is the ninth most traded currency worldwide.
The legislative council is the Hong Kong Parliament, which is formed by 60-members, half elected by universal suffrage in geographical circumscriptions, while the other 30 are elected by groups of representatives from different economic and social sectors.
Its public finances are characterized by its sustainability, with no public net debt, continuous government surplus and ample foreign exchange reserves, all supported by rigorous anti-corruption measures.
Hong Kong’s economy is mainly based on financial services, tourism, wholesale and retail trade, and international trade, especially trade between China and the rest of the world. Hong Kong is one of the world’s major financial hub, ranking eleventh worldwide in the volume of banking operations and the Hong Kong Stock Exchange being the second largest capital market in Asia, after the Tokyo Stock Exchange.
Tax treaties Map
Hong Kong Limited Company Formation – USD 950.00 (All included)
We pride ourselves in providing the best possible professional service which includes our honest hassle-free “No Hidden Fee” policy. Your incorporation package includes:
- Government Incorporation Fee
- Government Business Registration Fee
- Certificate of Registration
- Memorandum and Articles of Association
- Share Certificate(s)
- Appointment of Director(s)
- First Board Resolution
- Registered Office including all fees for the calendar year
- Green Box Set including:
– Company Chop
– Official Banking Chop
– Company Seal
– Minutes Book
– 10 Sets of Articles of Association Booklet
Time to form: 2-3 business days
All our incorporation services include a yearly consulting session, a dedicated account manager and access to our global network of trusted business services, including introductions to accountants, financial, tax and legal advisors at no cost.
Hong Kong Local Corporate Secretary – USD 900.00 p.a.
Hong Kong corporate law requires all Hong Kong limited companies to appoint a secretary who is a Hong Kong resident. Our Corporate Secretarial Services include:
- Appointment of a Hong Kong resident corporate secretary
- Annual General Meeting
- Maintenance of Minute Book and Statutory Records
- Annual Return Preparation and Filing
- Allotment of share options to employees
- Change of Registered Business Address
- Appointment/Resignation of Directors
- Appointment/Resignation of Corporate Representative
- Appointment/Change of Auditors
- Change of Financial year end
Annual Fees (2nd year) – USD 800.00 p.a.
- Business Registration Renewal Fee
- Annual Return Filing Fee
- Registered Office Fee
Bank Account Opening Support Services (Optional)
Bank Account Options:
- Hong Kong Bank Account (In-person) – USD 900.00
- Labuan (Malaysia) Bank Account (Remotely) – USD 500.00
- Mauritius Bank Account (Remotely) – USD 500.00
- Offshore Bank Account* (Remotely) – USD 300.00
- Bahamas Bank Account (Remotely) – USD 500.00
- Curaçao Bank Account (Remotely) – USD 500.00
- Singapore Bank Account (In-person) – USD 900.00
- Lithuania Bank Account (In-person) – USD 1,200.00
- Latvia Bank Account (In-person) – USD 1,200.00
- Poland Bank Account (Remotely) – USD 1,200.00
- Liechtenstein Bank Account (Remotely) – USD 1,200.00
- Luxembourg Bank Account (Remotely) – USD 1,200.00
- Switzerland Bank Account (Remotely) – USD 1,200.00
- Cyprus Bank Account (In-person) – USD 1,200.00
- Bulgaria Bank Account (In-person) – USD 1,200.00
- Armenia Bank Account (Remotely) – USD 1,200.00
- Turkey Bank Account (Remotely) – USD 1,200.00
*Offshore Bank Accounts: Belize, Puerto Rico, Nevis, Antigua, Saint Lucia. Other bank account options may be available depending on business profile and turnover.
Our Bank Account Opening Support Service includes:
- Introduction to the Bank Manager
- Bank Account Opening Process Management
- Assistance and advice in filling out Business Questionnaires, KYC Forms and Bank Account Application Forms.
- Certified Copies of Constitutional Documents
- Introductions to Payment Processing and Merchant Account Providers
Our banking service is not just a mere introduction to the bank. We assist you in filling out the business plan forms appropriately and help you understand and provide business details, commercial information and purpose/use of the bank account that a given bank wants to know in order to approve your account application.
Banks want certainty and clarity on how the account will be used. Everything must be watertight. We will work with you to make sure there is minimal ‘back and forth’ and a smooth account opening process
We include introductions to payment processors or merchant accounts with all of our bank account opening support services. Whether you just need standard credit card processing or specialized services for high-risk processing, we are happy to help you with introductions that can empower your business
Accounting and Tax Services (Optional)
- 25 transactions (per month) – ~USD 400.00 per month*
- 75 transactions (per month) – ~USD 650.00 per month*
- 150 transactions (per month) – ~USD 900.00+ per month*
- Up to 25 transactions (per year) – USD 1,300 p.a.
- Next 25 transactions (per year) – USD 200.00 p.a.
Both the Monthly Plan and the Yearly Plan includes the following:
- Management of Accounts
- Receipt/Invoice Processing
- Prepare profit tax computation in accordance with HK tax law
- Complete company profit tax return
- Submit the tax return to IRD
*Estimated costs. Price may vary according to the type of transactions, reporting frequency, account complexity, etc
Annual Audit Services (Optional)
All Hong Kong Companies are required by law to have their annual accounts audited by a Certified Public Accountant in Hong Kong. The following annual audit fees include the audit procedures, drafting the audit report and sign off by a HK CPA.
- 25 transactions (per month) – ~USD 2,500 per year
- 75 transactions (per month) – ~USD 3,500 per year
- 150 transactions (per month) – ~USD 5,000 per year
*Estimated costs. Price may vary according to the type of transactions, reporting frequency, account complexity, etc
Additional Services (Optional)
Annual employer tax compliance* – USD 800.00
- Fulfill employer’s responsibility under HKIRD (report new employment, on termination of employment, on leaving HK, etc) in accordance with tax law
- Complete employer’s return and file to HKIRD
*Cost for each individual employee annually since the employer will need to report to HKIRD for each individual employee’s details and on a timely basis.
Nominee director – USD 4,800.00 p.a.
- Includes legal document including deed of Indemnity, a power of attorney
If you wish to appoint our HK local director, you will need to use our office address as the registered office address and as corporate bank correspondent address.
Nominee shareholder – US$1,800.00
- Includes legal document including the declaration of trust
Other corporate services – Request quote
- Certified true copies (for bulk documents, a discount will be applied)
- Global trademark registration
- Legal documents drafting and consultation
- Financial and legal due diligence
- Tax dispute with HK IRD (e.g. offshore claim, deductibility)
- Tax planning and tax advisory
- Pre-IPO advisory
- Working Visa/ Quality migrant admission scheme
Click here to incorporate your Hong Kong LTD.