Setting Up a Hong Kong Company with an Operational Office. Economic Substance. Service offer

• World’s largest financial centre;
• Developed and stable economy;
• Quick company formation without visit to Hong Kong;
• No exchange control;
• No tax on Hong Kong companies that operate outside the country of registration (not applicable to companies with an office in Hong Kong);
• No tax on Hong Kong companies, whose source of income is outside the Hong Kong territory*;
• Not ‘blacklisted’ by most countries.

*From 1 January 2023, foreign-sourced passive income such as dividends, interest, disposal gains and IP income is taxable in Hong Kong subject to various exceptions connected with economic substance and nexus in Hong Kong.

*Please check with your GSL Law & Consulting consultant whether your company can open a Hong Kong bank account.

Step-by-step description of incorporation of a Hong Kong Private Company Limited by Shares:

1) You need to choose:

• company name to be checked for its availability (at least two names), such name:
  • can be in English, or Chinese, or both English and Chinese;
  • must not be identical or similar to the name of an existing company;
  • must end with a suffix denoting the type of entity (“Limited”);
• company structure (director, shareholder, beneficial owner, attorney);
• share capital and distribution of shares between the shareholders (standard share capital is HKD 1 000);
• activity and geography of business.

2) Payment of fees.

3) You need to provide documents* for directors / shareholders / beneficial owners / attorneys – copies of:

• passport or ID card;
• proof of address.

*The list is not exhaustive. Please ask your consultant for the complete list specific to your case.

At the meeting, it is necessary to show the original documents for verification or produce notarized copies.

4) Preparing a package of documents for company incorporation, having the documents signed by directors and shareholders.

5) Filing an application for incorporation of the company.

The set of documents delivered to the client upon Hong Kong company incorporation includes:

1. Certificate of Incorporation – a simple copy; the Hong Kong Registrar of Companies issues the certificate of incorporation electronically (as a secured PDF file e-signed by the Registrar’s authorized employee);
2. Business Registration Certificate – a simple copy; the Hong Kong Inland Revenue Department issues the certificate electronically (as a secured PDF file e-signed by the Inland Revenue’s authorized employee);
3. Articles of Association – a simple copy stamped FILED, with the registration number allocated to the company; it is common practice to file these with the Registrar without subscribers’ signatures because there is no such statutory requirement (the subscribers can sign the original Articles for the company file, if necessary);
4. First Resolutions of the Founder Member(s) – original;
5. First Resolutions of Director(s) – original;
6. Share Certificate – original;
7. Company seal;
8. Apostilled set including copies certified by the Hong Kong registered agent:

• Certificate of Incorporation;
• Business Registration Certificate;
• Incorporation Form (NNC1);
• Articles of Association;
• First Resolutions of the Founder Member(s);
• First Resolutions of Director(s);
• Register of Directors;
• Register of Shareholders;
• Register of Secretaries.

If the standard apostilled set (as in 8 above) does not satisfy the bank, you can order an additional set choosing one of the options below:

1. Documents certified by the Hong Kong Registrar, with apostille (each document to be certified individually):

• Certificate of Incorporation – original, certified by the Registrar, with apostille;
• Articles of Association – original, certified by the Registrar, with apostille;
• Incorporation Form (NNC1) – original, certified by the Registrar, with apostille;
• Business Registration Certificate – original, certified by the IRD, with apostille.

2. Documents certified by a Hong Kong notary, with apostille (copies of documents certified in a single bound set):

• Certificate of Incorporation;
• Business Registration Certificate;
• Incorporation Form (NNC1);
• Articles of Association;
• First Resolutions of the Founder Member(s);
• First Resolutions of Director(s);
• Register of Directors;
• Register of Shareholders;
• Register of Secretaries.

Hong Kong companies must annually submit their Annual Return, tax return and audited financial statements. Neither financial statements nor tax returns are open for public inspection.

Hong Kong has a territorial tax system, meaning that a Hong Kong company is only subject to 16,5% profits tax on its income derived from a Hong Kong source, that is to say:

• from operations with local, Hong Kong companies; or
• if it has a place of business in Hong Kong (an office and employees and/or Hong Kong resident directors).

In practice Hong Kong is widely used for delivery of goods to and from China.

On 1 January 2023, new provisions in relation to the companies’ foreign-sourced passive income came into operation. Under the new regime (Foreign-sourced Income Exemption Regime / FSIE Regime), starting from 2024, the following income is regarded as derived from Hong Kong and therefore chargeable to 16,5% profits tax:

• interest,
• dividends,
• disposal gains from the sale of equity interests in an entity (disposal gains),
• intellectual property (IP) income.

There are certain exceptions applicable to companies that have adequate economic substance in Hong Kong (in relation to dividends, interest, disposal gains, and IP assets) and nexus in Hong Kong (for IP assets) or meet participation requirement (for dividends and disposal gains).

All Hong Kong companies are required to file an Employer's Return Of Remuneration And Pensions upon request from the Hong Kong Inland Revenue Department. The request comes in within 12 to 18 months after incorporation of the company. The Employer's Return Of Remuneration And Pensions must be submitted within a month from the date of its receipt from the IRD.

The fee for submitting this return is:

USD 365 – if the company has no employees, a zero return is filed once;

USD 550 – if the company has 1 employee (directors without salary or contract are not regarded as such)*;

USD 660 – if the company has 2–3 employees;

USD 830 – if the company has 4–5 employees;

USD 280 – fee for preparing and filing with the IRD notification of hiring an employee (such notification must be submitted within 3 months of the date of signing the employment agreement).

*For a company that has employees, the return is submitted annually.

Every company must file a special notice with the Hong Kong IRD within 30 days from the date of commencement of business, otherwise the company may be fined HKD 5 000 (~ USD 640) and its officers may be liable to imprisonment of up to 1 year. The business commencement date is the date of company signing its first contract or issuing its first invoice, or the date of the first transaction in the company’s account.

The postal service includes:

• provision of postal address (same as the company’s registered office; it can be publicly stated as postal address);
• receiving mail, sending notifications of receipt (during the first three business days of each month);
• scanning up to 5 pages per month;
• one monthly shipment of mail to the office of GSL Law & Consulting.

SIM card

The SmarTone SIM card with a local Hong Kong number allows receiving and making calls from/to other countries under international roaming & IDD (rates). A positive balance of account is required, and even if there were no calls / expenses in the SIM card, it is necessary to top up every 180 days (minimum USD 7) in order to retain your phone number with the carrier.

Individual telephone line

Personal telephone line service includes:

• installation of a telephone line with an individual phone number;
• annual maintenance;
• payable separately: per-minute billing (call forwarding to Russia is approximately USD 1,73 / min);
• secretary taking phone calls with a customized greeting, or 24/7 call forwarding;
• sending a summary of the phone call by email (when using secretary’s services);
• forwarding phone calls to a local phone number in Hong Kong;
• forwarding phone calls from Hong Kong to other countries (payable per minute based on monthly bills).

The fee for making an office rent agreement without physically placing there an employee is USD 675 / month. The rented address is the same as the company’s registered office.

The fee for sub-renting an office with physically placing there an employee is from USD 1 280 / month. A large bright office with the Internet and amenities is located in one of the central areas. Details of equipment and office use should be agreed individually.

The cost of renting your own office with a separate address depends on the size and location of the premises. The minimum rent is from USD 1 280 per month for an office of 12-13 sq. m. (rare offers in the rental market, office room in a remote area without amenities).

The minimum rent period is 2 years. The landlord requires a deposit equal to 2-3 monthly rents. The agency fee ranges from 0,5 to 2 monthly rents.

The services of recruiting staff are provided upon request based on business needs, employee’s duties, and work schedule.

* The fees are valid as of October 2024.