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Doing Business in Hong Kong
2020 Definitive Guide

This is a Definitive Guide on Doing Business in Hong Kong 2020.  In this guide, you will find resources and useful information on HOW to do business in Hong Kong with Company Registry, Business Registry links, Benefits, and Risks of Doing Business in Hong Kong for your business plan and business feasibility report, then follow up with Cost of Setting Up a Company in Hong Kong, Business Culture, Etiquette, and other essential tips for you to have a successful start here in Hong Kong.

 

We will keep updating this Definitive Guide on Doing Business in Hong Kong.  To ensure you receive the most updated information, remember to follow us – simply send us an email at catcherbiz@outlook.com, this time, we are giving away a 100% FREE copy of this Definitive Guide enabling you a good benchmark to finalize your best location in commencing your business.

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How to use this Definitive Guide?

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  • If you have a business in mind, or you are an MNC thinking of expanding your Asia presence, very simple, select FIVE (5) key reasons (topics) that catch your eyes most and compare them with any other potential location (jurisdiction) - for example - Singapore to see which one is a better choice for you to commence your business; or
     

  • if you are planning in becoming an entrepreneur and searching for business ideas that are the best suit with your skills, professional knowledge, networks, and talents; you can take a look with our blog post on "What are the Hot Businesses to start-up in Hong Kong in 2019" first, and obtain some insights to come up with a promising business proposal to build-up further 
     

  • You should be ending with a sound business plan or feasibility report on your hand and ready to launch your business.  Of course, during the process, if you have any question in mind or need a hand on starting your business in Hong Kong, feel free to drop us an email at catcherbiz@outlook.com for further assistance

SPECIAL BLOG

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Under the increasing concerns of Doing Business in Hong Kong, especially for start-up businesses, we have prepared an exclusive review on the impact to Hong Kong in relation US-China Trade War and the Prolonged Protest in Hong Kong:

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https://www.catcherbiz.com.hk/post/protest-hk-and-us-china-trade-war-starting-business-in-hong-kong

Should I start my new business in Hong K

16 Reasons Why you should doing business in Hong Kong
 

 

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Why is Hong Kong a Good Place to Do Business?

 

This is an extended version of the answer from Quora on the same-titled question:

https://www.quora.com/Why-is-Hong-Kong-a-good-place-to-do-business

 

First thing first, according to the findings of the report by Wall Street Journal, World Economic Forum and World Bank Group; Hong Kong remains Top 10 in overall rankings among economies around the world, for detail, please see our blog post on 2019 Remains in Top Ranks - Doing Business in Hong Kong (Again, we will update this post periodically once new report was released, so, subscribe with us is important)

 

Another research report you must take a look is the one issued by HKTDC in relation to Economic and Trade Information on Hong Kong, we also extracted some of the important figures and graphic into this Definitive Guide to help you understand better about the business environment and atmosphere here in Hong Kong.

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1) Easy to start up your Business (Set Up a Private Limited Company in Hong Kong)
 

  • 100% true foreign-owned company - NO local Director / Shareholder requirements (Where Singapore Company has Local Residency Director Requirement);

  • 100% remote company set up is possible;

  • E-Registry in One (1) Day; and Paper Submission in Seven (7) Days for incorporation;

  • NO (Low) capital requirement, HKD1.00 in 1 share is enough

  • NO physical office (establishment) required as well;

  • NO pre-approval by a government authority is required in setting up a company;

  • Specific business requires top-up licensing after incorporation;

  • We have another Definitive Guide on Company Set Up here: https://www.catcherbiz.com.hk/company-set-up-in-hong-kong

2) Low Tax jurisdiction - enabling start-up business in Hong Kong
 

  • Corporate Tax Rate (Profit Tax) at 8.25% on first HKD2mil assessable profit, thereafter just only 16.5% flat rate.  Where China is 25%, and Singapore is 17% (Source: https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates)

  • Then, the Tax Scheme is simple and straight forward, there is NO

    • Sales Tax

    • VAT

    • GST

    • Capital Gain Tax

    • Dividend Tax

    • Withholding Tax

  • Furthermore, tones of Deductible Expenses allowing a company to lower the effective tax amount - Generally, all outgoings and expenses, to the extent to which they have been incurred by the taxpayer in the production of chargeable profits, are allowed as deductions. Reference can be made to section 16 of the I.R.O. (Source: https://www.ird.gov.hk/eng/tax/bus_pft.htm#a06)

  • In addition, there are reducing profits tax, salaries tax measures up-coming
    “The Financial Secretary proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2018/19 by 75%, subject to a ceiling of $20,000 per case.” (Source: https://www.ird.gov.hk/eng/tax/budget.htm)

  • As this is a simple example, for you to know low tax actually doing business in Hong Kong of a typical trading company

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Tax Calculation.JPG

  • Correct, that’s the calculation from an actual case of HKD9.3 million income trading business.  From this figure, you can tell most of the businesses at the beginning years have zero (0) tax to pay in Hong Kong, and all the profits reserved enabling our customers growing and expanding in a shorter period of time.  And remember, all these are legitimate arrangement here in Hong Kong, no tax evasion, no difficult tax planning or special application with the government in advance, and you can keep focusing in your Hong Kong business

  • Important advice, for facilitating health business growth, instead of thinking about how to pay zero (0) tax, it is always better to pay good tax so that incoming future, you can have a better figure for a good borrowing power

3) Freedom in Doing Business
 

  • Freedom is the key of business survival, especially for start-up enterprise, and the increasingly volatile political environment between countries; you want to shift easily for quick fever items and investments without any constraint from the government authorities and before the heat have gone;  

  • A company can perform multiple businesses at the same time, Trading, Investment, Restaurant, anything that you find profitable

  • Free flow of capital without restriction as soon as the money is clear and for a legitimate purpose;

  • Business Freedom is most important, you are not restricted by the government on how you do your business, you are free to hire anyone, fire anyone, choose office anywhere you like, even close your business any time you want to exit and get all your money back freely;

  • Allow me to recap that Hong Kong ranked #1 in 2019 Index of Economic Freedom, and having a score of 96.40 over 100 in Business Freedom, where even Singapore only scored 90.80 instead;

  • And therefore, it is especially suitable for Digital Nomads and Freelancer that using Hong Kong company to best utilize their skills and maximize the business opportunities available with just one single company to minimize the maintenance expenses;

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4) World-Class Banking System
 

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2019 The Global Financial Centres Index
Hong Kong Rank in Bank.JPG

5) Capturing Funds from China and Investors around the World
 

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Features of BOC Small Business Loan.jpg
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6) Business Friendly with High Efficiency
 

  • Hong Kong is a small city.  To stand out around the globe, we need to shine with something impressive, and that’s our Fast Pace and High Efficiency;

  • English and Chinese (Traditional Chinese) are mainly used in Doing Business in Hong Kong, where both are the official languages of Hong Kong that could be used in any contract, agreement for business use;

  • Most of the government application forms, websites and important documents are available in both Chinese and English, so, you don’t need to worry about any language barrier in starting your business in Hong Kong;

  • Most of the Countries have their Chamber of Commerce established here in Hong Kong, such that if you plan to start your business in Hong Kong, you may further check with them and seek for relevant assistance:
    https://www.catcherbiz.com.hk/post/2016/12/18/hong-kong-chamber-of-commerce

  • Business enabling services are commonly available with standard and efficiency with the Consulate General of your country

    • Passport and VISA matters

    • Attestation of Documents

    • Translation of Documents

    • Useful links and resources to live in Hong Kong

    • Introduction to the Local Communities

7) Friendly Business Culture and Etiquette
 

  • Hong Kong is where East Meets West.  We happily digested all cultures and etiquette from different nations, forming our unique way of doing business in welcoming and respecting one another

  • To highlight with, there are quite some differences between Hong Kong and Mainland China in terms of Business Culture and Etiquette

  • In general, Hongkongers are nice, police, and respectful to on another, you won't feel like a stranger even this is the first time you visit Hong Kong

  • We have prepared a blog post on "Business Culture and Etiquette - Doing Business in Hong Kong" illustrating some tips and practices on topics about

    • How to Bargain in Hong Kong​

    • What is the communication style of Doing Business in Hong Kong?

    • What should you do when the time of the initial greeting at business meeting in Hong Kong?

    • What is the Dress Etiquette on Doing Business in Hong Kong

    • What gifts should I present for my business partner in Hong Kong

    • What is the Business Etiquette of Dining, Drinking and Meal Events in Hong Kong

  • ​​Hong Kong is the Food Paradise, you can always find your culture food as spotlight  to get a closer relationship with your business partner in Hong Kong 

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8) Trusted Image in Doing Business
 

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9) Clean Government
 

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10) Gateway for China Business + Stepping Stone
 

  • English and Chinese are the official languages of Hong Kong, and therefore, allowing you to prepare any important contract, agreement in both languages for you to engage with a business partner in China without losing the control of the content the terms and conditions;

  • RMB(CNY) can be Freely and Unlimited remitting in-out China Region, and you can convert the currency into HKD, USD, EUR without easily without any restriction;

  • A testing platform before entering China Market

  • A Shopping Cart for China Sourcing and Purchasing

    • Many of our customers are Buyers, Buying Office, China Sourcing Agents, E-Commerce owner (Shopify, Amazon, E-Bay … etc.) in their countries, where RMB(CNY) or USD is not the major currency they use, then, by means of Hong Kong company and its corporate account, they can easily swap the currency as required, or hedging that currency as well as an easier option to conduct the business activity;

    • Further that, by using the Hong Kong company, it is easier to obtain quote response from China Supplier instead of a company they cannot reach or have no idea about; simply feels more reliable and less risk of payment default because of Small Claims Tribunal is available;

    • Also, our customers shared that using Hong Kong in arrangement the shipment and logistics to their home country is easier and cheaper; it seems those freight forwarding agents are more willing to give a discount to China/Hong Kong customers

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11) Catch the Investment Opportunities alongside China’s development
 

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Greater Bay Area Policy Areas.jpg
Greater Bay Area GDP Infographic.jpg
Greater Bay Area Property Linkage.jpg

  • One-Belt-One-Road, or the Belt and Road Initiative, Hong Kong acts as the “Super Connector” and as the platform for financing in all sorts of investment opportunities alongside the developments and wide range of business mainly on

    • Transport and Logistics Infrastructure,

    • Agriculture and Rural Development,

    • Energy and Natural Resources,

    • Manufacturing,

    • Public Utilities,

    • Urban Development, and of course,

    • The Mega Trade Opportunities through the Economic Corridor
      And herewith Investment Projects undergoing as released by HKTDC: https://beltandroad.hktdc.com/en/project-database

One Belt One Road Map.jpg

12) Investment Gateway and Headquarter of Asia Presence
 

  • Hong Kong is like the Gateway for Northern Part of Asia, such as China, Japan, S. Korea, Taiwan … etc., while Singapore is the Gateway for the Southern Part, such as Malaysia, Philippines, Indonesia, Vietnam, Cambodia … etc., and overlapping the middle part of Asia with India, Myanmar, Thailand … etc.

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Southern and Northern Asia Map.JPG

  • As both Hong Kong and Singapore are both famous top choices for Asia Headquarter in the region, then the critical considerations for you to determine the final decision would be

    • Location of convenience.  Flight time from one location to another for inspection, liaison works, business meeting … etc., 2-3 hours makes a significant difference, for example from HK to S. Korea – 3 hours 15 mins, Singapore to S. Korea – 6 hours 15 mins and that make HK a better headquarter for businesses involving S. Korea;

    • Culture Similarity.   The culture of HK is closer to China, Taiwan, Japan, and S. Korean, because of the exchanging of TV drama shows, frequently traveling to each other cities for vacation, trading of daily consumer goods and food … etc., and it makes your staff in Hong Kong more likely to create a harmonious working atmosphere with other personnel in the region;

    • Tax, Government Incentives (Benefits) and Industry.  Simplest is that the better benefits you can get in terms of setting up a holding company (headquarter) there, that’s the choice you should opt, and often this is related to the industries that contribute most GDP will give you a hint, and below you can tell that in setting up company in Hong Kong in relation to

      • Trading and logistics;

      • Financial services;

      • Professional and other producer services; and

      • Tourism;

    • These industries ​will get you the best government support, resources, incentives, tax benefits and thus, the optimum growth of your business

The Four Key Industries of Hong Kong.jpg
2018 Nominal GDP of Singapore Infographi

13) A Possible Solution for Economic Substance and Tax Haven Users
 

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14) Easy and Straight Forward Exit procedures
 

  • Normally it takes around 6-8 months to complete the Full Exit Process from having your Final Audited Report till the Completion of Deregistration, detail please see our blog post on “Deregistration”

  • Remember, you can withdraw all the money and close your Hong Kong corporate bank account upon received of the “No Objection Letter” from the Tax Department, as fast as 2-3 months upon your exit decision

  • You don’t need to worry the government authorities, banks, or any foreign currency control restricting you from remitting the huge amount of balance once-off back to your home country, or suddenly upholding a big lump sum for withholding tax or what so ever, rest assure that full and complete amount would be able to transfer out easily and straight forward

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15) World-class infrastructure
 

  • Hong Kong ranked No.5 in Worlds Top Airport 2019, serves over 100 airlines operating flights to about 180 locations worldwide, including 44 destinations on the Chinese Mainland (Source: https://www.worldairportawards.com/worlds-top-100-airports-2019/)

  • Ranked the 7th busiest container port as per the World Shipping Council, tinny Hong Kong can be competing with the ports in the World Factory - China, and you can tell how efficient and effective the port logistics of Hong Kong;

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World Shipping Council HOng KOng Busiest

  • If you are interested, you can check this HKTDC research report on the Logistics Industry in Hong Kong by HKTDC
    (Source: https://hkmb.hktdc.com/en/1X0018WG/hktdc-research/Logistics-Industry-in-Hong-Kong)

  • Besides the airport, the National High-Speed Rail Network covering all China has already commenced, and you can see from the map that Hong Kong is the starting point to connect throughout the whole China region

China National High Speed Railway Networ

16) Free Port – for doing Trading business
 

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Disadvantages of doing Business in Hong Kong
 

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Key Take-Away
 

Starting your business is an important decision, wise choose location for company set up means a huge difference in easy for start-up, profits ends in your pocket and most of all, the platform allowing you grow big and global, here below with some key take-away for you 
 

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  • Compare your local country, the main location(s) of business activities and Hong Kong, putting the pros and cons on the table and choose the best place that fit your business model most, where this article should give up a sound ground for comparison;
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  • If you think Hong Kong is the best choice, try to

    • Keep and maintain a minimal physical presence in Hong Kong, for example, you, the Director and Shareholder stay in Hong Kong for management and control, while out-sourcing the works to elsewhere;

    • Let’s say you need to create your Traditional Chinese website, you can hire freelance or agent in Taiwan for the translation work while hiring an India website design house for the building work;
       

  • Dividend Tax is Zero in Hong Kong, but keep bearing in mind your home country tax obligation.  Remember, Hong Kong company can perform multiple businesses at the same time without licensing requirement, that means even your Hong Kong company is a Trading Company, it can invest in the property market at your home country, or buying a nice Lamborghini for Director’s business use;
     

  • E-Commerce Business is a great business model that can utilize all the benefits that a Hong Kong company can bring, and you can tell that the world is more digitalize in terms of doing business, any new international business that can benefit from this e-trending should be a good business in utilizing Hong Kong as well

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Thanks for your time reading this Definitive Guide, correct, this is what CatcherBiz focusing on, to enable you with true and comprehensive resources to allow you catching the best and right timing for your business in Hong Kong, know more about CatcherBiz and how we can help boost your business with a smooth start:
 

  • If you like this article, please share it on your Facebook, Instagram, LinkedIn, and most of all, your friends that have the same ambition to start-up own business for Hong Kong, China, and Asia business opportunities.  And be remembered to bookmark this page, so that you can use this as a reference in designing your business plan:- https://www.catcherbiz.com.hk/doing-business-in-hong-kong-2019
     

  • CatcherBiz is more than just a Registered Agent, Setting Up your Hong Kong company, we are the first reliable Business Partner once you decided to start your Business in Hong Kong;
     

  • CatcherBiz is the “Business Enabler”, engaging with us will allow you a shortcut to establishing your business, thus, saving your time and money;
     

  • What “Competitive Advantage” you will get is that your Questions will be answered, just like we provide answers in Quora;
     

  • Once your company has incorporated, we will guide you to develop your own “Road Map”, ob what you need to do in the coming year, and what, how, and when we can assist you along the path, such as registering your domain and website, registering your Alibaba or Amazon account, and your tentative schedule to set up your corporate bank account … etc.
     

  • If you need time to design your business plan, it is Okay, you can simply subscribe with us first, and remember, you can receive our Definitive Guide for FREE immediately, simply input your Name and Email Address and we will get back to you as soon as possible.  Of course, if you have other inquiries, feel free to input them into the message box.

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Useful Resources

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Valued-added useful resources that best fit for your work plan in commencing your business in Hong Kong

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What is your Country talking about Doing Business in Hong Kong?

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Hesitate in choosing Hong Kong as your vehicle for commencing business and start your entrepreneur journey?  How about checking below links from reputable authorities of your country and even checking with the authority to see if it give you a greater assurance? 

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Hong Kong

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Asia Countries

 

Japan

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Korea

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Singapore

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Taiwan

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Australia

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India

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New Zealand

 

Europe and Other Countries

 

United Kingdom (UK)

              

France

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Austria

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Netherland

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Ireland

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Belgium

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Denmark

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German

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Italy

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USA

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Canada

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