Starting a business in Hong Kong amid uncertainties
Whether the decision to start a business is driven by the pursuit of wealth, the desire to do good or the need to improve the status quo for one self or for the benefit of society, Hong Kong is the ideal place for business in Asia. A highly dynamic international trade and finance hub that serves as the perfect platform and entry-point into Mainland China and the rest of Asia.
Hong Kong’s legendary spirit of enterprise created the backbone of its economy dominated by small and medium-sized enterprises and together with low taxes, progressive visa policies, free trade and little red-tape provides the ideal infrastructure for starting a new business. The local startup ecosystem is supported by a strong network of incubators and accelerators and a pool of experienced angels and venture capitalists.
Investment in Hong Kong startups reached USD 720 million in 2019, Hong Kong was listed as the third most innovative location in South East Asia, East Asia, and Oceania in the Global Innovation Index 2019, and is a new entrant in the world’s top 25 startup hubs in the 2019 Global Startup Ecosystem Report. InvestHK’s 2019 startup survey reports a total of 3,184, three times the number of startups it counted in its first survey in 2014. Financial network-effects like market depth and liquidity earn Hong Kong a top spot among the global financial centres.
Hong Kong is the conduit for most foreign direct investment in China and the main interface with global capital markets. Overall, 65% of inbound FDI in China and 61% of outbound FDI pass through Hong Kong. Hong Kong is the centre for the hedge fund industry in Asia, with more assets under management than Singapore, Japan and Australia combined. Despite more recent speculations, Hong Kong’s business infrastructure, international interdependence and connectivity is not easily bypassed, replaced or unheeded.
How to Incorporate a Company
The first step when formalizing a business idea or concept is typically the incorporation of a company. A private limited company by shares is the most common vehicle in Hong Kong and its establishment is a straight-forward process. Any application for company incorporation will include a simultaneous application for business registration. The application can be done in paper format or online. The required documents are:
1. Incorporation Form (NNC1);
2. A copy of the company’s Articles of Association; and
3. A Notice to Business Registration Office (IRBR1).
Before filing these, some consideration will have to be given to what the company name should be, who the directors and shareholders are to be, the appointment of a company secretary and having a suitable registered address. It is generally recommended to work with a trust and company service provider and leverage on their expertise in corporate governance to get all the details correct.
Businesses in Hong Kong enjoy one of the most tax-friendly systems in the world. Profits tax for the first HKD 2 million of profits of corporations is 8.25 percent. Profits above that amount will be subject to the tax rate of 16.5 percent.
Taxes which Hong Kong does not impose:
• No sales tax or VAT
• No withholding tax (except for royalties in some cases)
• No capital gains tax
• No tax on dividends
• No estate tax
Zetland Corporate Services, a sister company to Gemini Personnel, is assisting entrepreneurs and small and medium-sized businesses establishing and growing their business in Hong Kong and Asia for more than thirty years. With office in Asia’s most important locations, Hong Kong, Singapore and Shanghai we assist founders and business owner with the incorporation and governance of companies, outsourcing of administration and accounting, and tax compliance. For more information please contact hongkong@zetland.biz.
