Tip 1: A business incorporated in Hong Kong may sometimes by mistake fail to comply with certain laws such as the SCR obligations. This would cause the offended company and/or each responsible person of the business to be liable of a fixed fine and a daily fine. When going through the formal process in a company incorporation in Hong Kong, one important area is about significant controllers. You must identify all the significant controllers. You should give notices to all those potential persons who may become significant controllers, and obtain their particulars. In the government system i.e. Significant Controllers Register (or SCR), you should enter all the required and up-to-date particulars. Also you would need a location or address to store this information as physical documents, as it may be required for inspection by the law enforcement officer.
Tip 2: In good practice, you must always remember the business need a designated representative person. At least one person must be designated as the representative of the company. This person is expected to provide assistance that is related to the Significant Controllers Register to the law enforcement officer mentioned above in tip number one.
Tip 3: Compliance and Taxation are required. For compliance purpose, your HK company should observe the statutory obligations under the HK Companies Ordinance. Each year, the annual tax returns must be filed with the required forms within a prescribed time period. For taxation, profit tax is payable on profits generated in Hong Kong. Fortunately for all businesses, profits that are generated from outside of Hong Kong is counted as offshore and is not counted towards the profit tax calculation. Many purchased items for the business are tax deductible. The first two million HK dollar profits of your business would be eligible for a 8.25 percent tax. Anything above the first two million HK dollar profits would have to be charged for 16.5 percent tax.
Tips 4: The company must always have a registered address (i.e. office address) that is based in Hong Kong locally. The company does not necessarily have to have a physical operation sitting in Hong Kong. This means as an owner or a small startup, you will not need to hire any staff and put them in a HK office. You can work with freelancers all over the world, around the clock. All of these are your choices when you are aiming to reduce cost but still maintain the competitiveness of your business and operations.
Bradley attended Boston University where he received a Bachelor’s degree in Economics and Political Science as well as a Master’s degree in Business Administration from Columbia University Graduate School of Business (currently attending). He loves to write about everything business related.
