Doing business in Hong Kong
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
It normally takes around two weeks to set up a company.
What is the minimum investment needed?
There is no minimum capital or investment amount.
How can I raise finance?
You could raise finance from banks but normally they will ask for security for borrowings.
What are the legal requirements for setting up my business?
Most foreign investors register as a private limited liability company.
Formation procedures could be done either online via a direct application with the Companies Registry or by application using professional accountants or lawyers.
A minimum of one shareholder (native person or corporation) and director (native person) is required. No resident director is required.
Local company secretary and registered office is required.
What structure should I consider?
Private limited liability company would be the recommended approach.
What advice can you give me in regards to payroll and taxation requirements?
Any district in Hong Kong is available for foreign company investment.
Payroll and HR requirements:
Payroll is usually processed on a monthly basis. There is no monthly income tax deduction requirement for employers. The employer must report employees’ income annually, while employees report and pay their own tax annually.
There is a mandatory provident fund which both employer and employee each must contribute 5% of monthly salary with a top ceiling of HK$1,500 monthly.
Workmen compensation insurance is compulsory.
Tax/regulatory and reporting:
There is no value-added tax, sale tax, interest tax, dividend tax, capital gain tax and estate tax in Hong Kong
We have the following taxes:
- Corporation profits tax – standard tax rate is 16.5% with certain exceptions profits tax rate could be 8.25%, only annual tax reporting is required
- Individual income tax – net chargeable income (assessable income after deductions and allowances) is charged at progressive rates 2% to 17%. But if what you need to pay on the basis of your net chargeable income exceeds the tax charged at standard rate (15%) on your net total income (i.e. assessable income after deductions but before allowances), then you just need to pay the lower amount of tax. Double tax relief is available. Only annual tax reporting is required.
- Property tax – flat rate of 15% on rental income, after a standard deduction of 20% allowance. Only annual tax reporting is required
- Stamp duty on company shares transfer – on every sold note and every bought note 0.13% (i.e. total 0.26%) of the amount of the share consideration or fair market value whichever is the higher.
- Stamp duty on immovable property conveyance transaction – For non-residential property ad valorem stamp duty is from HK$100 up to 4.25% based on the consideration or value of the property. For residential property there are ad valorem stamp duty is 15% (exception HK permanent resident and also is the first time property owner), buyer’s stamp duty 15% and special stamp duty from 10% to 20% (property sold within 3 years from date of acquisition).
- Stamp duty on lease of immovable property – normally from 0.25% up to 1% of the yearly or average yearly rent.
Is there anything else that I should know?
A work permit is required for any foreigner who works in Hong Kong.
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