Registering a company in Hong Kong: what you need to know
In 2023, Hong Kong remains a privileged place for the development of international trade and businesses. The application of the common law », the legal system which prevails in the Anglo-Saxon world, the dynamism of the city and its attitude “ business friendly » still attract many companies wishing to develop their activities in Asia, and more particularly in China.
This attractiveness is due in particular to its tax system and the simplicity of the procedures involved in setting up a company by non-Hong Kongers.
In particular, the incorporation of a company in Hong Kong allows access to the Chinese market more efficiently than a direct installation in mainland China. : freedom of enterprise and the absence of restrictions on foreigners secure and facilitate legal and tax procedures while opening the door to the Asian market for Europeans.
A simple and advantageous tax system
The Hong Kong tax system is one of the most attractive in the world for both businesses and individuals :
- Rate of corporation tax
Corporate tax is 16.5% on taxable profits, one of the lowest in the world.
- Income tax
Hong Kong residents benefit from a lower income tax rate than in Europe, with a maximum rate of 17% for income above a certain threshold.
Dividends received by Hong Kong residents are not taxed.
- No VAT
Finally, unlike China, there is no VAT in Hong Kong.
Conditions for setting up a company
The conditions allowing the constitution of a company by foreigners are relatively simple, even if support is sometimes useful for some of the procedures.
The main points to consider are as follows:
- a Hong Kong limited liability company may be formed by a single shareholder (individual or corporate). Shareholders are not required to be resident in Hong Kong;
- a director must be appointed. There is no requirement to be resident in Hong Kong;
- the company's registered office must be in Hong Kong (domiciliation in a business centre is possible depending on the company's field of activity);
- there is no minimum capital required to form a company;
- at the very least, an annual general meeting must be held;
- the appointment of a local company secretary responsible for drafting general meetings and maintaining annual legal documentation is compulsory; and
- the Articles of Association must be drawn up before the company is registered.
A platform for setting up a subsidiary in China
Developing your business in mainland China as a foreign investor can be a big challenge taking into account the restrictions on the exercise of certain activities. Despite this, theBusiness opportunities remain numerous there.
From a legal point of view, most foreign investment in China is made through the establishment of a WOFE, “Wholly Owned Foreign Enterprise”.
The Chinese WOFE refers to a type of business entity in China that allows a foreign company to have full ownership and control of a local subsidiary or branch without the need for a Chinese partner.
The main shareholder of a WOFE may be a Hong Kong holding company. This will facilitate the creation of the WOFE. This holding company will naturally be subject to Hong Kong legal rules.
In the event of a subsequent change in the ownership or management of WOFE, these procedures will be easier to carry out at the level of the Hong Kong holding company than at the level of the Chinese company.
To access the essential Asian market, Hong Kong remains one of the best options, offering many legal and financial advantages.
Marine Vanhoucke advises companies on Intellectual property and accompanies them on their subjects of Compliance.
Head of Hong Kong office, she assists French companies in their establishment and growth in Asia and has built up expertise in legal issues of international law, notably combining French and Asian interests.