The most commonly registered type of the companies in Hong Kong is a limited liability company (Ltd.) Standard authorized share capital of Hong Kong companies is 10 000 Hong Kong dollars and minimum share capital is two shares at par value. Every company must have a registered local office.
The name of the company should contain abbreviation “Ltd.”. Unless the company has a special license, use of the words «Trust», «Bank» and «Insurance» is not allowed.
At least one shareholder, who can be natural or legal person of any residency, can incorporate a Hong Kong company. The liability of the owners is limited by their stake in the company. General meeting of the shareholders may be held anywhere in the world.
The one Director who manages it should appoint In Hong Kong company at least. Director can be natural or legal person, resident of any country. Company must also appoint a Secretary, natural or legal person. If a Secretary is a natural person, he/she must necessarily be a resident of Hong Kong. If a Secretary is a legal person, it must have a registered office or business activity in Hong Kong.
Information about the Shareholders and Directors is stored in the public Registry of Companies in Hong Kong. However, the data on the real beneficiary owners is confidential.
Hong Kong companies may issue registered shares: preferred or ordinary. Bearer shares are not allowed.
Taxation of companies registered in Hong Kong
Taxation in Hong Kong is carried out on a territorial basis, which means that taxes are not levied on the income originated from the outside of Hong Kong.
There are no capital gains taxes, no withholding taxes on interest and dividends, no sales taxes, no VAT, no annual net worth taxes, no accumulated earnings taxes on companies which retain earnings rather than distribute them, no collection of social security benefit.
Income tax rate currently stands at 16.5%.
Income from royalties received from a source in Hong Kong is a subject to income tax. The current income tax rate is 16.5% and the effective rate is 4.95%. In Hong Kong, all companies are obliged to pay registration fee. The fee must be paid within the first month after company’s registration and afterwards paid annually.
Accounting and audit of companies registered in Hong Kong
Every company registered in Hong Kong must have its financial accounts audited annually. For newly incorporated private companies, the first set of audited accounts should be laid before shareholders at the annual General Meeting within 9 months (6 months for other companies) after its financial year-end. There is no mandatory year-end date for Hong Kong companies, but the 31st March and 31st December are the more common ones.
Annual report together with Director and Auditor’s report contains information about all activities of the company, profit and loss accounts.
In April the Department on Internal taxes issues reports on employers to provide the information on wages. Report should be submitted within one month from the date of its receipt.
Tax Report should be filed regardless of whether the company had operations in Hong Kong or not (if the activity was not carried out – the company submits “dormant account”). Date of the first report should be fixed within 18 months from the date of incorporation of the company, and this date should not be changed in the following years.
In companies incorporated in Hong Kong it is allowed to appoint nominee shareholders, directors and secretary.
Opening a bank account for Hong Kong companies
In Hong Kong company may open a bank account in a local bank as well as in any of our foreign partner banks.
It is important to keep in mind that every bank account opening procedure is individual and depends on the accuracy and timeliness of information and documents provided by the client.