Hong Kong is an international city and a financial and business hub in the Asia region. It is known being a free trade port. With a business-friendly environment, and favorable tax policies, it is an attractive destination for businesses looking to expand their operations in the region.
Setting up a business in Hong Kong is a relatively straightforward process. There are different types of business structures in Hong Kong but the most common structures are sole proprietorship, partnership or limited liability company. A limited liability company must be registered with the Companies Registry by submitting Articles of Association which essentially set out the corporate governance, as well as submitting details such as directors, shareholders and company secretary to the Companies Registry. Each of the structures has its own advantages and disadvantages, and it is advisable to choose the one that suits the business goals and purposes.
One of the advantages of running a business in Hong Kong is that the majority of the population is able to converse in English and Chinese as they are Hong Kong’s official languages, which makes communications easy and straightforward. Aside from the company structure, it is compulsory for all businesses in Hong Kong to obtain a business registration certificate from the Inland Revenue Department within one month from commencing business.
The other advantage for doing business in Hong Kong is that Hong Kong is known for its low tax rates. The current corporate tax rate is 16.5%, which is one of the lowest in the world. There is no tax on profits earned outside of Hong Kong, and companies can also enjoy various tax incentives also. Moreover, Hong Kong has no restriction in the transfer of funds between countries and hence businesses can easily transfer funds in and out of Hong Kong.
As fraud is rampant worldwide, if business intends to collaborate with a Hong Kong counterpart, it is essential and advisable to carry out due diligence investigation against a counterpart before entering into business. Most common investigations include searches such as company search, business registration search, property and other searches. The level and form of due diligence of a counterpart required will depend on the specific circumstances and the level of risks involved with the transaction. Obviously careful investigation of the economic, fiscal and financial circumstances of a business or an individual will guarantee success in running a business.
With its favorable tax policies, business-friendly environment, and advanced infrastructure, Hong Kong offers a wealth of opportunities for businesses looking to expand their operations in Asia. The city’s proficiency in English, familiarity with international business practices, and diverse business environment make it an ideal destination for companies looking to do business in the region.
Article written by
Elsa Law
Elsa Law & Co. Solicitors
Recent Comments