A company in Hong Kong: pros and cons for international business

Hong Kong remains a consistently attractive jurisdiction today. It is one of Asia’s most stable financial centres. In recent years, interest in the jurisdiction has been growing, particularly among entrepreneurs looking to engage in international trade, IT businesses, consultancy and holding company operations.

Before deciding to register a company, it is important to weigh up the pros and cons of setting up a company in Hong Kong in order to understand the real benefits and potential risks.

The main advantages of the company in Hong Kong

1. A transparent and straightforward legal system. Hong Kong’s legal framework is based on English common law. This ensures predictability in dispute resolution; a high level of protection for shareholders’ rights; and the ability to enter into international contracts. All Hong Kong companies are registered in the official register, which allows for a quick verification of their legal status.

2. Low tax burden. One of the key advantages is the territorial principle of taxation. Key features:

• profits generated outside Hong Kong may be exempt from tax;
• the corporation tax rate is 6.5% on profits exceeding HKD 2 million and 8.25% on the first HKD 2 million;
• there is no VAT or dividend tax. 

This is the main reason why such companies and Hong Kong are attractive to international businesses.

3. Simple governance structure. For a Hong Kong Ltd, i.e. a private company with limited liability registered in full compliance with Hong Kong law, the following are sufficient:

• one director (a non-resident may act as director);
• one shareholder;
• a company secretary;
• a registered address.

This structure is suitable for small and medium-sized businesses and simplifies dealings with banks and counterparties.

4. The ability to open a bank account quickly. Once a legal entity has been registered in Hong Kong, it can open an account with a Chinese bank. Professional support greatly simplifies the process, particularly if an account needs to be opened for a non-resident.

5. The option to use ready-made companies. If you need to speed up market entry, you may consider ready-made companies in Hong Kong that are already registered and ready to be transferred to a new owner.

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Register a company in Hong Kong with a bank account

Are there any drawbacks or limitations to setting up a company in Hong Kong?

1. Strict compliance. Banks and government bodies require transparency: documents regarding beneficial owners; proof of income sources; KYC and AML checks. Breaches may result in an account opening being refused or transactions being blocked.
2. Annual reporting and audit. Even if the company is not actively trading, it is necessary to maintain accounts, file an Annual Return and undergo an audit. This can be challenging for new entrepreneurs without professional support.
3. Limited information on beneficial owners. Although basic information is available via the Hong Kong Companies Registry, full details of the owners are withheld. This requires caution when dealing with counterparties and investors.
4. Banking procedures for non-residents. If a non-resident needs to set up a company in Hong Kong, they should be aware of strict bank checks, possible interviews and the relatively long timeframes involved in opening accounts. Without professional support, opening an account may take even longer.
5. Restrictions on certain types of business. Registering a company in Hong Kong is not always suitable for all sectors. For example, licensed financial services, the gambling industry and certain types of consultancy requiring licences cannot use the standard procedure. In such cases, additional registration and approval from the regulator are required.

Before registering, we recommend that you:

• assess your business model carefully;
• choose the appropriate legal form: a new Hong Kong Ltd company or a ready-made company;
• consider the ownership and control structure;
• make arrangements to open a bank account straight away.

A comprehensive approach allows you to minimise risks and improve the efficiency of working with international partners. Our company provides full support, including:

• company registration in Hong Kong;
• turnkey account opening;
• advice on taxation and reporting;
• selection of the optimal structure for non-residents;
• ongoing support for companies established in Hong Kong;
• the option to renew professional support services annually.

We ensure full compliance with legal requirements and international compliance standards.