What do I need to prepare to incorporate a company in HK?

Hong Kong is an ideal jurisdiction for international entrepreneurs, but setting up a company in the region can be quite a tedious procedure. Here is a preparation guide on Hong Kong company incorporation and how a Hong Kong corporation expert can help guide you through the process. 

Why Incorporate a Company in Hong Kong? 

There are many reasons why people look to incorporate a company in Hong Kong. For instance, it has low corporate taxes, a strategic position in Asia, and a stable business environment. With an attractive corporate tax rate of 16.5% on profits that exceed HKD 2 million, and just 8.25% on those below that amount, Hong Kong offers unique opportunities to the entrepreneur to grow his/her business.  

Furthermore, given that it is one of the free-trade ports where there are minimal restrictions of foreign ownership and residency requirements, Hong Kong is truly one of the best destinations to incorporate a company in HK and expand into the Asian markets. 

Key Preparations for Setting up a Hong Kong Company 

1. Select a Company Name 

Choosing a name is the first and foundational step. The name can either be in English or Chinese but it can’t combine both languages in a single name. To avoid delays, ensure the name is unique and complies with Hong Kong’s legal requirements.  

The Hong Kong corporation establishment process involves checking the name's availability, which can be done through the Companies Registry’s online portal. You can also consider to trademark the company name if you want to secure exclusive rights. 

2. Choose the Right Legal Structure 

Choosing the legal structure will determine the tax liabilities, operational flexibility, and liability under law. Among the most widely adopted legal structures in Hong Kong, these are the following: 

• Private Limited Company: It has only a limited number of shareholders owning the business. This legal structure is very popular because of its limited liability. 

• Sole Proprietorship: It is perfect for a small business set up. However, it does not give any protection to the proprietor’s personal assets. 

• Partnership: Suitable for businesses which has multiple owners. This also means the profits and losses are shared as well as the responsibility. 

3. Prepare the Necessary Documents 

To incorporate a company in HK, you will need to collect some crucial documents. For this purpose, you will need: 

• NNC1 or NNC1G Form: It is a form through which the details of the company, including directors and shareholders, have to be filed. 

• Articles of Association: This describes the internal management structure of the company. 

• Identification Documents: Copies of the directors and shareholders’ passports or ID cards. 

Be accurate and complete each and every document before submission to avoid any processing delay. A Hong Kong corporate consulting expert can help ease this process for you, ensuring that all the paper work is compliant with all the legal standards. 

4. Appoint a Company Secretary 

Every corporation operating in Hong Kong should have a local company secretary who is supposed to be the primary contact person for your business. The person’s responsibilities will involve tasks such as filing annual returns, updating records of the company, and overall transparency on regulatory matters.  

A company secretary must be either a Hong Kong resident or a registered corporate entity. It is advisable that you engage a Hong Kong corporation expert who can assist you in finding a qualified individual who will ensure that your company complies with the regulations of Hong Kong. 

5. Open a Local Office Address 

Government correspondence requires a registered address in Hong Kong. A physical office or a virtual office service can be used, but no PO boxes. For foreign companies that do not have a local office, the secretary’s address often serves as the address for the registered office. An NR1 form is used for changes of address to ensure that all government communications find their way to you. 

6. File Documents with the Companies Registry 

Once you have prepared all the documents, submit it to the Companies Registry, either online via e-Registry portal or physically. Upon submission, it would take two to six working days to get the Certificate of Incorporation and the Business Registration Certificate from the registry, and thereby incorporating your business in Hong Kong. 

7. Open a Corporate Bank Account 

Opening a corporate bank account is essential for any transactions and financial management. Banks generally insist on in-person verification in Hong Kong and may ask for incorporation documents, business plans, and proof of anticipated income. It is recommended you consult a Hong Kong corporate consulting expert to identify banks with the best terms for your business needs and to ease account opening procedures. 

8. Licenses and Permits 

Certain industries in Hong Kong require you to obtain specific licenses for legal operation. For instance, food operators, money service operators, and financial services require a license from the relevant agencies. Verify if your industry requires a license with the Trade and Industry Department and ensure you apply in time to avoid delays in operating your business. 

Compliance and Reporting Requirements 

After incorporation in Hong Kong, companies will be subject to local taxation and reporting. Annual tax returns are prepared and submitted to the Inland Revenue Department, of which the deadline is keyed to your company’s fiscal year-end. Another financial contribution each year is that of provisional tax payment to be offset against your yearly tax liability. These ought to be kept compliant since failure attracts penalty. 

Filing Deadlines: 

• For companies with fiscal years ending between January 1 and March 31, returns are due by November 15 of the same year. 

• For fiscal years ending between April 1 and November 30, returns are due by May 2 of the following year. 

• For fiscal years ending in December, returns are due by August 15 of the following year. 

Annual Compliance Requirements: 

• Annual Return Filing: Submit updated company information annually to the Companies Registry. 

• Business Registration Renewal: Renew your business registration certificate annually or triennially. 

• Audited Financial Statements: Prepare audited financial reports for tax filing, typically managed by the company secretary or an appointed accountant. 

Double Taxation Treaties 

Hong Kong has more than 40 double taxation agreements (DTAs) with countries across the globe that help avoid the tax implications of double taxation on the same income in two different jurisdictions. If your company is registered in Hong Kong and involves international operations, then the DTAs may reduce your tax liability substantially.  

For example, these treaties may allow businesses to claim tax credits on foreign taxes paid, resulting in substantial savings. For optimal benefits, consult with a Hong Kong corporate consulting expert familiar with international tax policies. 

Mirr Asia: Supporting Seamless Hong Kong Incorporation 

Incorporating a company in Hong Kong is an area of many opportunities. However, the regulatory compliance and the tax obligations may at times prove to be too tricky. Mirr Asia, with its expertise in Hong Kong corporation establishment, helps clients through every step of the process, from choosing a business structure to ensuring tax compliances. 

Our specialized Hong Kong corporate consulting services make incorporation, paperwork, and compliance easy for your business to run in Hong Kong’s competitive market. From startups to multi-national corporations, we can provide you with unique solutions based on your specific needs and objectives. 

Let Mirr Asia guide you through the Hong Kong company incorporation process in a smooth and efficient way so that you can position your business for success in one of Asia’s most vibrant economic hubs.