Guide for China Company Incorporation in Hong Kong

Hong Kong is an international metropolis that enjoys very advanced information and the freest trade port in the world. Together with a good infrastructure and sound legal systems, Hong Kong offers China businessmen and entrepreneurs an environment they can vouch for.

Hong Kong is the third largest global financial center and hence draws many investors to register their companies in Hong Kong because of its open market that enables free entry and exit from the business sector. Recently, there is a growing number of mainland businessmen who establish their own companies in Hong Kong for various reasons, extending their business through diverse channels, building up international image and enhancing competitiveness.

Advantages of China Company Incorporating in Hong Kong

Here are 7 advantages for China company incorporating a company in HK:

1. Reduce corporate tax losses: Hong Kong companies pay a profit tax of 8.25% for earnings not exceeding $2 million; after $2 million it is taxed at the rate of 16.5%. Hong Kong uses regional taxation such that profits not generated therein would be excluded from tax charges.
2. Few restrictions on business scope: In Hong Kong, you can engage in all businesses except for some businesses that require special licenses, such as: Banking, insurance, real estate, charitable,finance, etc. If your company has restrictions to registration and business operations within the boundaries of China – you can opt for setting up a Hong Kong company for doing business.
3. Convenient banking operations: Hong Kong is a major financial center in the world that has very relaxed foreign exchange controls. Foreign exchange can be received in any currency into accounts opened in Hong Kong banks where there is no limitation on foreign exchange receipt or payment and it is also easy for settlement of foreign exchange. Foreign exchange transactions can be transacted normally provided that there is no money coming from a conflict zone or any sanctioned countries..
4. No need to operate locally: Hong Kong acts as a significant port for Southeast Asia and foreign markets, drawing buyers worldwide, and serving as a suitable starting point for businesses targeting global markets. Following registration of a Hong Kong Company one does not necessarily have to be resident in Hong Kong nor requires an office space. There is no need to employ people either. You can even set up trading operations for a business or an investment regardless of its location in the Hong Kong territory or outside boundaries. In this case, the Hong Kong company is just used as an office or register address. A complete legal protection system can fully protect your interests.
5. Export declaration: Exporters often have experience and situations where they declare USD 100 million for export, but get only 97 million dollars due to many various reasons or they agree with the customer on a 180-day deferred payment letter of credit to make their firm more competitive. The exporter can in this case easily transfer funds from offshore account into the domestic company account on time after obtaining export tax refund to have extra money for conducting the next round of trade.
6. Avoid trade barriers: It costs one to two times more when a company exports products into the United States since it needs to apply for quotas and other related procedures. However, when the company has an offshore overseas subsidiary, and the company exports to the offshore subsidiary and then re-exports to developed countries such as United States, it will be free from any tax as well as being able to get through export duties
7. Apply for BUD subsidy up to 7 million: Non-listed companies registered in Hong Kong and established for more than one year, with annual operating income in Hong Kong of HKD3 million or more, and with employee and MPF records, financial audit reports, actual business premises and transactions, etc., can apply for subsidies. After submitting the report, the subsidy will be received within 4 months. The subsidy will be directly transferred to the Hong Kong company’s bank account.
   Non-listed companies registered in Hong Kong and operate for over one year, having annual operating income located in Hong Kong at HKD3 million or above as well as employees hired and MPF records, financial audit reports, real business premises and transactions can make subsidy applications. The subsidy shall be received 4 months after submission of the application and it will be transferred directly to the company’s Hong Kong company bank account.

What Documents are required for China Business Registration in Hong Kong?

For registering China business in Hong Kong, one must compile a range of documents and present them to the registry. These documents are:

A duly filled company registration form that includes the following details.

1. The name of your company.
2. The company’s registered address.
3. Description of company activities.
4. The particulars of its directors, shareholders, and resident company secretary.
5. Ensure you provide a copy of directories and passports as well as evidence of stay back documents from their nations if you run a company with non- residents as directors and shareholders.
6. For copies of identity cards for local directors and shareholders in such a case.
7. For corporate shareholders, you supply a duplicate of the parent company registration.
8. Liabilities of the company directors.
9. The share capital.

If you’ve got the documents in another language apart from the English languages, you need to submit an English translated document.

Process of China Company Registering a Hong Kong company

The process of incorporating a company in HK can be summarized in the following steps:

1. Choose a company name: Start by picking a unique and accurate company’s name that indicates the business you are going to do.
2. Determine the company structure: Such companies may incorporate by registering as a limited liability company, operate as a sole proprietor, or form a partnership. Hence, it is essential to be aware of all these structures, and how they differ, selecting that is most suited for your business objective.
3. Appoint a company secretary: All HK companies are obliged to appoint a company secretary who will ensure that the company complies with legal as well as statutory obligations.
4. Prepare incorporation documents: The essential incorporation documents are the Memorandum and Articles of Association, a signed declaration made by a company secretary, and then the Certificate of Incorporation.
5. Submit documents to Companies Registry: Subsequently, the prepared documents should be forwarded to the companies registry for verification and approval.
6. Open a bank account: Upon incorporating, it is necessary for firms to open a hk banking account for daily purposes.
7. Register for taxes and licenses: You may have to carry out a tax registration process and secure licenses in line with the type of your business.
8. Commence business operations: After all the required procedures are fulfilled, you can begin to run your operations in Hong Kong.

Conclusion

Establishing a company in Hong Kong offers Chinese businesses numerous advantages: low corporate tax rates, liberal scope of investment activities and ease of entry to overseas markets. The company FastLane Group offers professional guidance to assist with such incorporation as Hong Kong looks very attractive to Chinese seeking internationalization.