7 Must-Know for Company Formation in Hong Kong

by Cheap Incorporation | November 6, 2023

As we all know, Hong Kong is one of the most popular places in the world for company formation due to its low, simple and competitive tax regime, but most importantly, being a leading financial hub in Asia, connecting all other neighboring ASEAN members in the region. Many foreigners decide to register a company here for taxation purposes. This article will list seven of the most important things you need to know about before you decide to incorporate a company in Hong Kong

Registered Company Address

 It is required by the Hong Kong law that each company must have a registered commercial address for official registration. However, Hong Kong has some of the highest real estate prices amongst the world, especially for office spaces in the prime business districts like Central, Sheung Wan, Wan Chai and Causeway Bay. You are looking at around HKD $200 per square foot. A registered office address can either be physical or virtual. Hence, many foreigners who wish to register a company in Hong Kong choose not to use a physical office address due to a limited budget. They will usually go to a company formation agency and hire them to be their company secretary and utilize their office address as theirs to save costs. 

Once your company is registered, you can use the virtual office address immediately. You are free to put the address on your business cards, letterheads or a website. Normally, your company formation agent will receive letters from the government on your behalf, they will open them and send them to you digitally as it is often part of the service from a company secretary. You are allowed to have one registered office address for your company and the location must be in Hong Kong and it must be a commercial address because most residential addresses are not allowed unless it fits the rigid criteria set by the Hong Kong government. 

Company Secretary 

It is also required by the Hong Kong law that each company must have a registered company secretary represented. In addition to being TCSP licensed, a company secretary must be either a Hong Kong permanent resident or a body corporate with a registered office address. A company secretary handles mostly compliance matters for their clients, such as knowing when to renew the annual business registration certificate and file for an annual return (NAR1) form to help companies avoid bearing a late penalty or even further punishments. Matter of fact, a company secretary does not handle your company’s day-to-day administrative work such as ordering stationeries or arranging meetings with clients, they take no part in operating your company. What they do is simply ensure your company complies with the local regulations without having your physical presence in Hong Kong. 

As company director, you have the power to change company secretary and company’s registered address at any time. The procedure can be simple, all you need to do is to sign a written resolution stating your intention to switch. Your new company secretary will then take care of the rest with the Hong Kong Companies Registry and the Inland Revenue Department

Corporate Tax

Hong Kong is a tax haven for its relatively low, simple and competitive tax regime. For those of you who are considering incorporating a company in Hong Kong, you must know that the taxation rate is only at 8.25% for the first 2 million dollars in profit, and 16.5% for any profits gained after the 2 million benchmark. Offshore income, dividends and interests are not taxable. However, if you intend to claim 0% offshore status for your company, you must not have employees, customers, suppliers or operations in Hong Kong. 

Additionally, Hong Kong does not have sales tax, value added tax (VAT), good & services tax (GST), estate tax as well as capital gains tax. Moreover, Hong Kong has been a free port ever since its development in the 19th century, and so it has a long tradition for not levying custom tariffs on import and export except for four types of commodities, they are liquor, tobacco, hydrocarbon oil and methyl alcohol. For more information, you can visit the Hong Kong Customs website for further information.

Bank Support

It can be quite tricky to open a business bank account in Hong Kong with traditional banks. Bankers in Hong Kong often want to see if you have prior business experience before approving your application mainly to ensure your genuinely in starting an actual business in Hong Kong and not for money laundering purposes. If this is your first time starting a business, you can consider e-wallets at the initial stage. Generally speaking, e-wallets are easier to work with in terms of account opening because they have less questions than traditional banks. 


Accounting plays an important role in the company formation industry as every company is required to file for an audit report and tax form to the government for every financial year. A newly incorporated company does not need to file for an audit report or tax form until 18 months after its incorporation. As mentioned above, if your company intends to apply for a 0% offshore status, you must not have employees, customers, suppliers or operations in Hong Kong. If your auditor agrees that your company is offshore, he/she will state the fact on the audited report before submission. The government will then decide whether your company is offshore or not depending on the audited report submitted by your auditor. If the government thinks that your company is onshore for the first 18 months after its incorporation, they will send you a tax demand note. If not, your company will not receive one. 

Accounting prices vary depending on which accounting firm you go to. But generally speaking, the accounting fee is based on the total sales and total transactions of your company. Why? Because the more total sales you have the more the government will pay attention to your company. In terms of total transaction, it is all about the labour costs and time costs. Hong Kong has one of the highest salaries for accountants amongst the world, the more transactions you have means more time for an accountant to book for each transaction. Aside from the annual audit report and tax form, if you ever decide to close down your company, you must hire an accountant to file an audited report and tax form to the government as well. These are the crucial times where you have to provide supporting documents such as bank statements, invoices and expense receipts for the entire financial year. 

Company Maintenance

Besides the annual NAR1 form and renewal of the Business Registration Certificate, a company secretary is also responsible for many other things required by their clients depending on their needs. Such as share transfer and share allotment. For share transfer, that is when a company director wishes to transfer partial or all of his/her shares to another person as a new company member. In this case, if the company has commenced business, the company secretary must prepare a letter to the Inland Revenue Department, sold note & bought note, Instrument of Transfer, a written resolution and an unaudited report to submit to the government. 

As for a share allotment, this is when a company director wishes to allot new shares to a new shareholder(s) while one gets to keep his/her original shares simultaneously. In this case, a company secretary will just need to prepare an NSC1 form and a written resolution for this process. Hence, a share transfer is generally more expensive than a share allotment because more documents are required which means more time costs. 

Close Down

It is perfectly normal to close down a company if you no longer wish to operate it. However, you must be aware that there are several criteria that must be met before closing down. Firstly, the company must not have any business activity 3 months prior to deregistration or commenced any business activity at all; second of all, the company must not have any outstanding liabilities; third, the company must not be a party involved in any legal proceedings; fourth, the company’s assets must not include any immovable property situated in Hong Kong and finally, the decision must be agreed unanimously by all members of the company. 

To close down a company, you must still file for an annual NAR1 form and renew your Business Registration Certificate as it is required by law. Besides, you must file for your annual audit report and tax form to the government, this is the time when you have to provide your supporting documents such as bank statements, invoices and expense receipts to your auditor. The deregistration process can be time consuming where it can take approximately 6 to 10 months versus incorporating a new company can be done as fast as one day. This is simply because the Hong Kong government wants to make sure the public interest isn’t affected by the close down of a company. This entire process can take approximately 5 – 10 months. 

Hopefully this article helps you to better understand the norm in regard to registering a company in Hong Kong. If you have further questions or would like to form a company with us, please do not hesitate to contact us via email at info@cheapincorp.com or message us at +852 5404 0902 on WhatsApp. 

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