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Hong Kong is widely recognized as a hub for business and finance in Asia, offering a favorable environment for foreign investors to set up companies. Its stable political environment, transparent legal system, low tax rate, and proximity to the Chinese market make it a popular choice for entrepreneurs seeking to expand their operations in the region.
In addition, registering a private limited company in Hong Kong offers access to various government incentives and opportunities for business growth. In this context, it is important to understand the benefits that setting up a company in Hong Kong can offer, and how it can serve as a gateway to the wider Asian market.
This article provides a summary of the requirements and process for registering a private limited company in Hong Kong. It also highlights the benefits of setting up a company in the city.
Foreign ownership in a Private Limited Company in Hong Kong
Foreigners can own 100% of their private limited companies in Hong Kong, giving them complete control over the company’s operations and management. Being the sole shareholder also means they can make independent decisions with minimal bureaucratic intervention, allowing for greater flexibility in managing the company.
Owning a private limited company in Hong Kong also adds credibility to potential customers, partners, and investors. Hong Kong’s reputation as a global business hub with a strong legal and regulatory framework enhances the company’s legitimacy and stability in the eyes of stakeholders. This creates a sense of security for foreign owners who are looking to invest and establish a business presence in Asia.
Benefits of a private limited company in Hong Kong
Having a private limited company in Hong Kong offers a range of benefits, they include:
Favorable tax regime
Hong Kong offers one of the most favorable tax regimes for businesses worldwide. A key tax benefit is the exemption of foreign income from taxation, which allows individuals and companies to retain their earnings from overseas sources. This policy has attracted many international businesses and entrepreneurs to the city, making it a hub for global commerce and investment.
In addition to the exemption of foreign income from taxation, Hong Kong offers another valuable incentive for small and medium-sized enterprises (SMEs) in the form of a Tax Holiday. This program provides tax relief to new businesses, allowing them to enjoy a 100% profits tax exemption on the first HKD 2 million of their assessable profits for each of their first five years of assessment.
Also, Hong Kong does not have a value-added tax (VAT), which allows companies to avoid charging or paying additional taxes on their products or services. This is particularly beneficial for businesses that receive international payments and operate in countries with high VAT rates. By registering their business in Hong Kong, companies can reduce their tax burden and avoid the complexities of VAT.
Access to Double Taxation Agreements (DTAs)
Hong Kong’s extensive network of Double Taxation Agreements (DTAs) with numerous countries is a significant benefit for businesses operating in the city. These agreements help prevent companies from being taxed twice on the same income, thereby reducing their tax liability.
Private limited companies particularly benefit from DTAs, as they can pay lower rates of tax on certain types of income, such as dividends, interest, and royalties received from foreign countries.
Emerhub helps you with company registration, corporate secretarial services, bank account assistance, and more. Contact us today to learn more about how we can help you achieve your business goals in Hong Kong.
What do you need to set up a private limited company in Hong Kong?
Setting up a private limited company in Hong Kong requires compliance with several legal and regulatory requirements. In order to register a company in Hong Kong with Emerhub, this is what you will need:
- Director
Every private limited company must have at least one director. The director must be at least 18 years of age and can either be a local or a foreigner.
- Shareholder
A private limited company must have at least one shareholder. There is no restriction on the nationality or residency of the shareholder.
- Share capital
There is no minimum share capital requirement for setting up a private limited company in Hong Kong. However, the general norm is to have an authorized share capital of HKD 10,000 represented by 10,000 ordinary shares of HKD 1.00 each.
- Company name
The company name you choose should not be used by any other company in Hong Kong, and it should be different from existing company names to avoid confusion.
- Registered office address
A private limited company must have a registered office address in Hong Kong, which must be a physical address and not a P.O. Box.
- Company Secretary
To comply with the legal and regulatory requirements, every private limited company in Hong Kong must have a company secretary who is a resident of the city. The role of a company secretary is crucial as they are responsible for ensuring the company’s adherence to relevant laws and regulations. Apart from fulfilling these legal obligations, a company secretary in Hong Kong also provides essential administrative and corporate governance support to the company.
- Annual compliance requirements
There are several annual compliance requirements that must be met after setting up a company in Hong Kong. These include filing annual returns, holding annual general meetings, and renewing the business registration certificate.
What is the process for setting up a private limited company in Hong Kong with Emerhub?
The process for setting up a private limited company in Hong Kong with Emerhub includes the following steps.
Step 1: You will need to choose a unique name for your company and ensure that it is available for registration. Emerhub checks the availability of your preferred company name through the Companies Registry Cyber Search Centre.
Step 2: Emerhub prepares the following documents on your behalf to set up a private limited company in Hong Kong:
- Articles of Association
- Incorporation Form (Form NNC1)
- Notice to Business Registration Office (IRBR1)
After preparation, Emerhub files these documents with the Companies Registry.
Step 3: Emerhub applies for a Business Registration Certificate with the Business Registration Office.
Step 4: Emerhub helps you open a corporate bank account to conduct your business transactions in Hong Kong. To do so, Emerhub provides the documents, such as the company’s Articles of Association, Certificate of Incorporation, and Business Registration Certificate to the bank.
Step 5: Emerhub applies for tax registration with the Inland Revenue Department.
The estimated time required to register a private limited company in Hong Kong with Emerhub is between 3-8 working days.
Streamline your company registration with Emerhub
Emerhub offers a range of services to businesses looking to set up a company in Hong Kong. Our services include company registration, business registration certificates, corporate secretarial services, bank account assistance, accounting and finance, tax and audit services, serviced office space assistance, and monthly payroll.
By utilizing Emerhub’s services, businesses have a hassle-free experience when setting up their company in Hong Kong. Emerhub’s team of experts assists with all aspects of the registration process and ensures that all requirements are met. We also assist with ongoing compliance and administrative tasks, such as bookkeeping and accounting, tax filing, and payroll management.
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