Any international company that wants to start a business in Hong Kong can start a business in a few ways. One of the most common ways to expand your business is opening a branch office at the place you want to expand. So, setting up a branch office in Hong Kong is the most natural way to go into a new market and recreate the kind of business done by the parent company. This guide will be exploring how you set up a branch office in Hong Kong, its benefits and what you need to know.
Key Summary
Branch Office Definition
A branch office is an extension of a foreign parent company, not a separate legal entity, and the parent is fully liable for the branch’s operations and obligations in Hong Kong.
Eligibility for Foreign Companies
Foreign businesses can fully own and operate a branch in Hong Kong, but must appoint at least one Hong Kong-resident representative to handle legal and compliance matters.
Major Benefits
Setting up a branch office is simple, cost-effective, and fast, with direct market access, operational control, competitive tax advantages, no statutory audit, and straightforward closure procedures.
Requirements & Documentation
Key requirements include a matching branch name, local representative, registered business address, and certified copies of parent company incorporation documents, constitution, and financial statements.
Step-by-Step Registration & Compliance
Check name availability, submit registration documents, obtain certificates, open a bank account, and apply for licenses if needed.
What Is A Branch Office In Hong Kong?
A branch office is an extension of a foreign parent company that operates in Hong Kong without forming a separate legal entity. Unlike a subsidiary, which is legally independent, a branch is not a separate company, and the foreign parent remains fully responsible for all debts, obligations, and legal liabilities of the branch.
In Hong Kong, a branch office must be registered with the Companies Registry as a non-Hong Kong company before commencing business activities. While it can conduct the same operations as the parent company in Hong Kong, it must comply with local tax regulations, including profits tax, but cannot access Hong Kong’s network of Double Taxation Agreements (DTAs).
Can Foreigners Open a Branch Office in Hong Kong?
Yes, foreign companies can establish a branch office in Hong Kong, and there are no restrictions on foreign ownership. This means a branch can be fully owned and operated by non-resident individuals or companies, making it an ideal option for businesses looking to expand directly into the Hong Kong market while retaining control under the parent company.
However, Hong Kong regulations require that the branch must appoint at least one local representative who is a Hong Kong resident to act as a representative of the office.
Setting up a branch allows foreign companies to conduct business operations, explore market opportunities, and engage potential clients in Hong Kong without forming a separate legal entity. Compared to a subsidiary, a branch maintains the corporate identity of the parent company, making it simpler to manage while remaining fully accountable for its liabilities.
Benefits of Setting Up a Branch Office in Hong Kong
Setting up a branch office in Hong Kong offers several strategic and operational advantages for foreign companies.
1. Simple and Cost-Effective Setup
Hong Kong imposes no minimum capital requirement for establishing a branch office, making it straightforward and affordable to start. Registration is fast and requires minimal documentation, typically only the parent company’s incorporation documents and a business registration certificate. Compared to incorporating a separate legal entity, the setup and maintenance costs are significantly lower which makes it an attractive option for businesses entering the Hong Kong market.
2. Access to the Hong Kong Market
A branch office provides direct entry into Hong Kong’s dynamic business environment. It allows foreign companies to extend operations, engage local customers, and establish a presence while retaining the parent company’s international brand identity. This makes it ideal for companies testing the market or expanding regionally.
3. Operational Control and Branding
The parent company maintains full control over management and operational decisions of the branch. This ensures consistent branding, business practices, and strategic alignment across multiple jurisdictions, which is especially beneficial for multinational corporations.
4. Favorable Tax Environment
Hong Kong offers a competitive corporate tax rate and other incentives. While a branch typically cannot access all Double Taxation Agreement benefits, tax obligations are generally simpler than for a subsidiary, and in some cases, partial treaty benefits may apply depending on the business structure.
5. No Statutory Audit Required
Unlike subsidiaries, branch offices are not required to undergo a statutory audit unless specifically requested by the Inland Revenue Department (IRD). This reduces recurring compliance obligations and lowers administrative costs.
6. Simple Cessation Process
If a branch office needs to cease operations, the process is straightforward. Companies simply notify the Companies Registry and the Inland Revenue Department within seven days of cessation, avoiding the more complex closure procedures required for subsidiaries.
Requirements To Set Up a Branch Office In Hong Kong
Establishing a branch office in Hong Kong requires foreign companies to meet specific regulatory and administrative requirements to ensure successful registration.
1. Branch Name
The branch must use the exact name of the foreign parent company. The Companies Registry may reject names that are already registered, misleading, or offensive. Conducting a name search beforehand is recommended to avoid delays.
2. Local Representative
A branch office must appoint at least one Hong Kong-resident representative. This can be an individual or a corporate entity responsible for receiving official notices and handling compliance matters on behalf of the branch.
3. Physical Location
A branch must have a registered business address in Hong Kong. This address is used for statutory record-keeping and official correspondence. Note that PO boxes are not acceptable, and temporary arrangements using a professional service provider’s address are common.
4. Governing Documents & Business Activities
Unlike a Hong Kong-incorporated company, a branch does not require its own Articles of Association. The foreign parent company’s constitution governs the branch, including its scope of business activities.
5. Registered Capital
Hong Kong imposes no minimum capital requirement for branch offices, which makes it easier and more cost-effective for foreign companies to establish a presence.
6. Required Documents
To register a branch, the following documents are generally required:
- Completed branch registration form with:
- Hong Kong business address
- Local representative details
Parent company information
- Certified copies of:
- Parent company’s Certificate of Incorporation
- Memorandum and Articles of Association
- Latest financial statements
- Identification documents of the local representative
All documents must be in English or Chinese. If in another language, they must be officially translated and certified.
Step-by-Step Guide to Set Up a Branch Office in Hong Kong
1. Ensure the Company Name Is Acceptable
- Verify that the branch name matches the parent company exactly.
- Names will be rejected if they:
- Are identical or too similar to existing names in the Companies Registry
- Infringe trademarks
- Are considered offensive or misleading
- Name availability can be checked via the Companies Registry CyberSearch Centre or at the Public Search Centre, 13th floor, Queensway Government Offices.
Read How to Choose a company name in Hong Kong
2. Register with the Companies Registry
- Submit all required documents, including:
- Completed registration form
- Certified parent company documents (Incorporation Certificate, Articles of Association, financial statements)
- Local representative details
- Proof of Hong Kong business address
- Registration must be completed within one month of establishing a business presence in Hong Kong.
3. Wait for Approval & Certificate Issuance
- The Companies Registry will review the submission and notify you if any issues arise.
- Once approved, the branch receives a Certificate of Registration of a Non-Hong Kong Company.
- The certificate can be collected in person by the representative, and a written authorization is required if collected by a third party.
Post-Registration Ongoing Compliance Requirements
After successfully registering your branch office in Hong Kong, there are a few important steps to follow to ensure ongoing compliance.
1. Obtain A Business Registration Certificate
Once the Companies Registry approves your application, you will be issued both the Certificate of Registration of Non-Hong Kong Company and the Business Registration Certificate from the Inland Revenue Department (IRD). These certificates are essential for legally operating your branch office in Hong Kong.
2. Open a Corporate Bank Account
With your registration completed, the next step is to open a corporate bank account in Hong Kong. To open a bank account, you will need:
- Certified copies of company documents
- Proof of business address
- Details of the branch office’s authorized signatories and representatives
Most banks will require an in-person interview with company directors or representatives as part of the account opening process.For a smooth experience, it’s advisable to work with a corporate service provider who can guide you through document preparation and bank coordination.
3. Apply for Business Licenses or Permits (If Applicable)
While not all businesses in Hong Kong require specific licenses, some industries are required to obtain proper approvals before commencing operations. It is your responsibility to verify if your business activities require a license and ensure timely application to avoid penalties or delays in operations. If your business falls into any of the categories below, you must apply for the relevant licenses from the appropriate government departments:
- Education services
- Employment agencies
- Event management companies
- Financial services
- Restaurants and food services
- Retail businesses
- Trading companies
- Travel agencies
Set Up A Hong Kong Branch Office With FastLane
Hong Kong plays the role of a perfect spot for most business entities that wish to be established in the Asia Pacific region. If you don’t want to incorporate an independent company right now, starting with a branch office set up in Hong Kong as your operating base is a good option.
Whether this is your first branch or you are considering expanding your business from one office, you are likely to face some challenges. Contact FastLane to find out more about how you can benefit your organization. We offer a wide range of secretarial services tailored to the needs of our client companies, including registering the branch.
Schedule a meeting with our team today!
Frequently Asked Questions About Hong Kong Branch Offices
1. How long does it take to set up a branch office in Hong Kong?
Setting up a Hong Kong branch office typically takes around two weeks, though the timeline can vary depending on the complexity of your documents and the Companies Registry’s review process. Engaging a professional service provider can help expedite registration and ensure all requirements are met.
2. What are the main differences between a branch office and a subsidiary in Hong Kong?
A branch office is not a separate legal entity, meaning the parent company is fully liable for all the branch’s operations, debts, and contracts. In contrast, a subsidiary is a distinct legal entity, so the parent company is generally not legally responsible for its actions. Choosing a branch is ideal for companies that want to maintain full operational control while expanding, whereas a subsidiary offers limited liability protection.
3. Can a branch office freely transfer funds to its parent company in Hong Kong?
Yes, Hong Kong does not impose exchange controls, so a branch can freely remit profits to the parent company. However, any profits sent abroad may be subject to tax regulations in the receiving country, so it is important to comply with local tax laws.
4. Is there a minimum capital requirement to open a branch office in Hong Kong?
No. Hong Kong imposes no minimum capital requirement for branch offices, making it a cost-effective option for foreign companies looking to expand into the market.
5. What documentation is needed to register a branch office in Hong Kong?
You will need:
- Certified copies of the parent company’s Certificate of Incorporation
- Memorandum and Articles of Association of the parent company
- Latest financial statements
- Details of the Hong Kong local representative
- Proof of a Hong Kong business address
All documents must be in English or Chinese, and documents in other languages must be officially translated and certified.
6. Can a branch office engage in contracts and business activities independently in Hong Kong?
Yes, a branch can conduct the same business activities as the parent company in Hong Kong. However, since it is legally part of the parent company, all contracts signed by the branch are legally binding on the parent company.
