Setting Up a Company in Hong Kong: A Practical Guide

Published on October 1, 2025 and written by Cyril Jarnias

Hong Kong, this dynamic metropolis located at the heart of Asia, has long been considered one of the best places in the world to start a business. With its stable legal system, favorable taxation, and strategic position as a gateway to mainland China, Hong Kong attracts thousands of entrepreneurs from around the world each year. In this article, we will explore in detail why and how to establish a company in Hong Kong, examining the legal, tax, and practical aspects of this process.

Why Hong Kong is the Ideal Choice for Your Offshore Company

Hong Kong offers numerous advantages that make it a preferred destination for international entrepreneurs:

• A favorable and stable business environment
• Highly advantageous taxation
• A legal system based on British common law
• A strategic geographical location in Asia
• Modern and efficient infrastructure
• A skilled and multilingual workforce

Hong Kong’s business environment is recognized as one of the most liberal in the world. The city consistently ranks among the top positions in economic freedom and ease of doing business indices. Administrative procedures are simplified, and company formation can be completed in just a few days.

Hong Kong taxation is particularly attractive for offshore companies. The corporate tax rate is 16.5%, but it only applies to income generated in Hong Kong. Income from abroad is not taxed, making Hong Kong a true tax haven for international businesses.

The Most Popular Legal Structures in Hong Kong

When it comes to establishing a company in Hong Kong, several options are available to entrepreneurs. Here are the most commonly used legal structures:

Limited Company

This is the most popular legal form in Hong Kong. It offers limited liability to shareholders and can be 100% owned by foreigners. The main characteristics are:

• A minimum of one shareholder and one director
• No minimum capital requirement
• Requirement to maintain accounting records and file annual accounts

Branch Office

A branch is an extension of a foreign company in Hong Kong. It does not have a separate legal personality from its parent company. This structure is often used by large companies that want to establish a presence in Hong Kong without creating a separate legal entity.

Representative Office

This structure is limited in its activities and cannot generate income in Hong Kong. It is mainly used for promotional, liaison, and market research activities.

Corporate Taxation in Hong Kong: A Major Asset

Hong Kong’s tax regime is one of the most competitive in the world, making it a major attraction for international entrepreneurs. Here are the main aspects of corporate taxation in Hong Kong:

Corporate tax: The standard rate is 16.5% on profits generated in Hong Kong. However, the first two million Hong Kong dollars of profits are taxed at a reduced rate of 8.25%.

Territoriality principle: Hong Kong applies a territorial tax system. This means that only income generated in Hong Kong is taxable. Income from abroad is not subject to Hong Kong tax.

No withholding tax: Hong Kong does not levy withholding tax on dividends, interest, or royalties paid to non-residents.

No capital gains tax: Capital gains realized from the sale of assets or shares are generally not taxable in Hong Kong.

Tax treaties: Hong Kong has signed numerous tax treaties with other countries, which can offer additional benefits in terms of double taxation.

This advantageous taxation, combined with the simplicity of Hong Kong’s tax system, makes Hong Kong a very attractive jurisdiction for international companies seeking to optimize their tax structure.

Establishing Your Company in Hong Kong: A Simplified Process

Establishing a company in Hong Kong is a relatively simple and quick process. Here are the main steps to follow:

1. Choose a Name for Your Company

Check the availability of your chosen name with the Hong Kong Companies Registry. The name can be in English, Chinese, or both languages.

2. Prepare the Necessary Documents

• Company articles of association
• Information about shareholders and directors
• A registered office address in Hong Kong

3. Submit the Incorporation Application

The application can be made online or through a certified registration agent. Processing time is typically 3 to 5 business days.

4. Obtain the Certificate of Incorporation

Once the application is approved, you will receive the certificate of incorporation and the Business Registration Certificate.

5. Open a Bank Account

This step can be more complex and may require physical presence in Hong Kong, although some banks now offer remote account opening options.

6. Comply with Ongoing Legal Obligations

This includes maintaining records, preparing annual accounts, and filing tax returns.

Hong Kong vs Other Offshore Jurisdictions: An Enlightening Comparison

Hong Kong stands out from many other popular offshore jurisdictions in several aspects:

Reputation and legitimacy: Unlike some poorly perceived tax havens, Hong Kong enjoys an excellent international reputation as a major financial center.

Infrastructure and services: Hong Kong offers world-class infrastructure and a wide range of professional services, surpassing many other offshore jurisdictions.

Access to the Chinese market: Hong Kong’s unique position as a gateway to mainland China is a major advantage that few other jurisdictions can offer.

Legal system: Hong Kong’s common law system, inherited from the United Kingdom, offers legal security appreciated by international investors.

Compared to Singapore, its main competitor in Asia, Hong Kong generally offers lower operating costs and even more advantageous taxation for offshore companies.

Social Obligations in Hong Kong: A Flexible Framework

Social obligations in Hong Kong are relatively light compared to many Western countries, offering great flexibility to employers:

Social contributions: The main mandatory scheme is the Mandatory Provident Fund (MPF), a pension system where both employer and employee contribute 5% of salary, capped at a certain amount.

Paid leave: Employees are entitled to a minimum of 7 to 14 days of paid leave per year, depending on their seniority.

Sick leave: Employees accumulate paid sick leave at a rate of 2 days per month worked.

Maternity leave: Female employees are entitled to 14 weeks of paid maternity leave.

Termination: Dismissal procedures are relatively simple, with severance based on the employee’s seniority.

This flexibility in Hong Kong labor law is a major asset for businesses, allowing them to quickly adapt to market changes.

Opening a Corporate Bank Account in Hong Kong: Key Steps

Opening a corporate bank account in Hong Kong can be a complex process, but here are the main steps to follow:

1. Choose the Appropriate Bank

Research banks that best match your needs in terms of services, fees, and ease of use for non-residents.

2. Prepare Documentation

• Certificate of incorporation and company articles of association
• Identification documents and proof of address for directors and shareholders
• Detailed business plan
• Proof of source of funds

3. Submit the Application

Most banks require physical presence for account opening, although some now offer remote options.

4. Bank Interview

Be prepared to explain in detail your business, financial projections, and source of funds.

5. Account Activation

Once approved, you will typically need to make an initial deposit to activate the account.

The Most Promising Business Sectors in Hong Kong

Hong Kong offers opportunities in many sectors, but some stand out particularly:

Financial services: As an international financial center, Hong Kong excels in banking, insurance, and asset management.

Technology and innovation: The government actively supports startups and technology companies, particularly in fintech and green technologies.

Trade and logistics: Hong Kong’s strategic position makes it a major hub for international trade and logistics.

Professional services: Legal, accounting, and consulting services are in high demand, particularly to facilitate business between the West and China.

Real estate and construction: Despite high prices, the real estate sector remains dynamic, with many development projects underway.

Recruiting Staff in Hong Kong: Keys to Success

Recruitment in Hong Kong can be both a challenge and an opportunity, given the diversity and dynamism of the local labor market:

Understanding the Labor Market

Hong Kong has a highly skilled and multilingual workforce. Competition for the best talent can be fierce, particularly in the finance and technology sectors.

Recruitment Channels

• Online recruitment platforms (LinkedIn, JobsDB)
• Specialized recruitment agencies
• Professional networks and networking events
• Internship programs and partnerships with local universities

Competitive Offer

• A competitive salary
• Social benefits (health insurance, additional MPF contributions)
• Training and career development opportunities
• Good work-life balance

Cultural Considerations

Be sensitive to cultural nuances in the recruitment and management process. Hierarchy and respect are important in Hong Kong professional culture.

Conclusion: Hong Kong, A Springboard for Your International Success

Establishing a company in Hong Kong offers numerous advantages for entrepreneurs and businesses looking to establish themselves in Asia or optimize their international structure. With its advantageous taxation, favorable business environment, and strategic position, Hong Kong remains one of the best choices for an offshore company.

However, navigating the legal, tax, and cultural complexities of Hong Kong can be challenging. That’s why it’s crucial to surround yourself with experienced professionals to maximize your chances of success.