Hong Kong has the lowest tax rates in Asia and one of the lowest rates in the world.
The territory’s tradition of simple and low taxes is a major factor that contributes to its success as a preferred investment destination. Many international groups also use a Hong Kong company as a holding or trading layer for Mainland China operations—then set up a China WFOE when they need an onshore operating company.
Why set up a Hong Kong company?
Hong Kong remains a practical base for international business and a common stepping stone to the mainland: incorporation is relatively straightforward, the legal framework is familiar to overseas investors, and the tax system is territorial rather than worldwide.
Gateway to China
- Prime location for holding, sourcing, and trading with Mainland China
- CEPA and related arrangements can improve access and, in some cases, withholding treatment on dividends and royalties—confirm current rules for your structure
- A Hong Kong parent plus a China WFOE is a widely used model: HK for banking and contracts, China for local operations
Banking and currency
- Deep banking market and internet banking for day-to-day operations
- No exchange control on the Hong Kong dollar in normal circumstances
- Useful for supply-chain and treasury flows before (or alongside) a Mainland entity
Business environment
- No general restriction on business scope for a private company
- World-class infrastructure and a deep professional workforce
- Common-law commercial framework that many overseas boards already understand
Simple, territorial tax system
- No VAT, capital gains tax, or dividend withholding tax in the usual domestic system
- Profits tax generally reaches Hong Kong–source profits; offshore or foreign-source treatment depends on facts, documentation, and current IRD rules
- See annual tax filing and our offshore profits tax article for how source is assessed
Setup requirements
Company name
- The same company name is prohibited under Hong Kong Companies Registry rules.
- Either an English name or a Chinese name; or
- Both an English and a Chinese name.
Shareholder(s) and director(s)
- No nationality restriction.
- Individual and/or corporate shareholders are acceptable.
- A corporate director is acceptable, but at least one natural person must act as a director.
Company secretary and registered address
Under the Hong Kong Companies Ordinance, every company must appoint a company secretary and maintain a registered office in Hong Kong. We can provide both as part of company secretary services.
Capital requirement
- Minimum subscribed share capital is 1 share (equivalent to HKD1).
- No par value for shares.
Hong Kong company annual maintenance
Stage 1 – Renewal of company documents
To satisfy government annual charges and complete statutory renewals before due dates, we send reminders to clients and help arrange the renewal process.
Stage 2 – Accounting (e.g. audit arrangement) and taxation
We notify clients to engage our tax filing and accounting services as required.
3 key annual maintenance features
In Hong Kong, each company needs to file tax returns on an annual basis. Companies are often recommended to choose either 31 December or 31 March as the financial year-end date, aligned with common practice for Hong Kong government reporting cycles. A new company typically receives its first profits tax return later than an established filer (often after about 18 months of commencement)—plan bookkeeping from day one rather than waiting for the form.
Three key government departments for the annual maintenance of a Hong Kong limited company:
Business Registration Office (BRO)
- Renew business registration (BR)
Hong Kong Companies Registry (CR)
- Submit an annual return (e.g. AR1) each year to record current shareholder(s), director(s), and company secretary information.
Hong Kong Inland Revenue Department (IRD)
- Profits tax return (confirm current two-tier rates with the IRD or your adviser)
- Employer’s Return (e.g. IR56B) where you have Hong Kong employment
Tax rates and filing forms change over time. This page is for general information only and is not legal or tax advice—seek professional advice for your circumstances.