SETTING UP BUSINESS IN
HONG KONG
General Aspects
Hong Kong is one of the world’s leading international financial centres, strategically located at the heart of Asia and serving as a key gateway to Mainland China and the Greater Bay Area. With a population of approximately 7.38 million and a highly developed services-based economy, Hong Kong offers a dynamic and business-friendly environment for international investors.
The territory operates under a free-market philosophy with minimal government intervention, low taxation, and a highly transparent legal framework based on common
Legal Forms of Business Entities
law principles. English and Chinese are the official languages widely used in business and legal contexts. The local currency is the Hong Kong Dollar (HKD).
Hong Kong’s regulatory environment is considered efficient and predictable, with strong protection of property rights and open policies toward foreign investment. The jurisdiction is particularly attractive for regional headquarters, investment holding structures, financial services, trading operations, and professional services firms.
Hong Kong offers a range of legal structures for conducting business, allowing investors to select the most suitable form depending on operational scope, liability exposure, and tax considerations.
Legal form Feature
Private Limited Company
The private company limited by shares is the most commonly used structure in Hong Kong. It is a separate legal entity, with shareholders’ liability limited to their capital contribution.
Standalone legal entity; allows up to 50 shareholders. No nationality restrictions on directors or shareholders. Requires at least one director and a local resident company secretary.
Remarks
This structure is generally preferred by both local and foreign investors due to its flexibility, strong legal standing, and suitability for scaling operations and attracting investment.
Public Limited Company (PLC)
Public companies may offer shares to the public and are typically listed on the Hong Kong Stock Exchange.
Partnership Partnership structures include general and limited partnerships.
• General partners have unlimited liability
• Limited partners’ liability is restricted to their contribution
Partnerships generally lack separate legal personality and are less commonly used for international investment structures.
Utilized by larger enterprises seeking access to capital markets or institutional funding. Subject to stringent statutory, SFC, and listing compliance frameworks.
Limited Liability
Partnership (LLP)
LLPs are primarily used by professional firms (e.g., legal sector).
They provide liability protection to partners in specific circumstances but are not widely applicable across industries.
Protects partners from personal liability stemming from the professional negligence, wrongful acts, or misconduct of other partners or employees.
Branch Office A branch is an extension of a foreign parent company and does not constitute a separate legal entity.
The parent company bears full liability for the branch’s obligations. This structure may be used for continuity of foreign operations but is less common for new market entry.
Representative Office Lacks independent legal status. Limited strictly to non-commercial, promotional, liaison, or market research activities on behalf of the parent company.
Suitable for established foreign companies wanting continuity of their parent brand. However, the parent company retains full liability for all debts.
Note: Branches are generally not considered tax residents of HK and cannot leverage HK’s double-tax treaty network.
Ideal for foreign businesses exploring the local market prior to capital commitment. It is completely prohibited from profit-generating activities (cannot issue invoices, ship goods, or sign commercial contracts). Must obtain a Business Registration Certificate but does not register with the Companies Registry.
Corporations
Corporate entities in Hong Kong are governed by the Companies Ordinance.
A private limited company must:
• Have at least one director (no residency requirement)
• Appoint a Hong Kong-based company secretary
• Maintain a registered office address in Hong Kong
Organizational Questions
Topic Feature
There is no minimum capital requirement in practice, and companies can be incorporated with minimal share capital. [Hong-Kong-...ybook 2026 | PDF]
Hong Kong companies benefit from strong legal protections, well-established corporate governance frameworks, and ease of incorporation through digital processes.
Registration Authority Incorporation and corporate registrations are administered by the Companies Registry. Business registration is handled by the Inland Revenue Department (IRD) under the Business Registration Ordinance.
Remarks
All Hong Kong entities must be registered with the Companies Registry and obtain a Business Registration Certificate before commencing business. Digital incorporation is standard practice, and documentation must comply with the Companies Ordinance. Professional local support is advisable to ensure proper setup and compliance.
Key Incorporation Requirement General requirements include:
• Company name approval
• At least one director (no residency requirement)
• Appointment of a Hong Kong resident or licensed corporate company secretary
• Registered office address in Hong Kong
• At least one shareholder
• Issuance of shares
Hong Kong permits flexible corporate structuring, with no minimum capital requirement in practice. However, the company secretary must be locally based, which is a key compliance requirement. Proper structuring at the outset is important to meet regulatory, banking, and operational needs.
Foreign Ownership Policy
Hong Kong generally allows 100% foreign ownership, with no nationality or residency requirements for shareholders or directors.
Foreign investors can fully own and control Hong Kong companies. However, specific regulated sectors such as broadcasting and telecommunications may impose ownership restrictions or licensing requirements. Early regulatory assessment is recommended before investment.
Regulatory & Licensing Approvals
Depending on business activity, approvals and licences may be required from relevant authorities such as:
• Companies Registry
• Inland Revenue Department (IRD)
• Securities and Futures Commission (SFC)
• Hong Kong Monetary Authority (HKMA)
• Industry-specific regulators
Employment
Topic Feature
Employment Legislation
Working Hours
Statutory Contributions
Employment relationships in Hong Kong are primarily governed by the Employment Ordinance, which sets out minimum employment standards, statutory protections, and employee rights.
Hong Kong does not impose a statutory maximum working hour limit for most employees. Working hours, overtime arrangements, and rest days are typically governed by employment contracts.
Mandatory contributions include:
• Mandatory Provident Fund (MPF) is the national statutory retirement system.
Employer and employee each contribute 5% of relevant income (subject to caps)
While Hong Kong has a relatively liberal regulatory environment, certain industries (e.g., financial services, education, travel, and regulated trading) require prior licences. Businesses must assess compliance obligations, licensing timelines, and sector-specific requirements before commencing operations.
Remarks
Hong Kong has a well-established and employer-friendly labour framework. Employers must ensure that employment contracts, policies, and practices comply with statutory requirements to mitigate disputes and regulatory risks.
Companies must clearly define working hours and overtime policies in contracts. While flexibility exists, employers should ensure compliance with rest day entitlements and avoid excessive working practices that may create reputational or compliance risks.
MPF contributions are compulsory for eligible employees and represent a key employment cost. Employers must ensure accurate payroll calculation and timely remittance to avoid penalties.
Note: All MPF schemes were successfully transitioned to the centralized eMPF Platform as of January 29, 2026.
Leave & Termination Statutory entitlements under the Employment Ordinance include:
• Annual Leave: Progressive entitlement from 7 up to 14 days based on length of service.
• Sick Leave: Accumulative paid sick days (up to 120 days) at 4/5 of normal wages.
• Maternity/Paternity Leave: 14 weeks paid maternity leave; 5 days paid paternity leave.
• Termination: Requires notice period (typically 1 month) or payment in lieu of notice.
Employers should carefully manage termination processes to ensure compliance with statutory protections. Proper documentation of employment terms and exit processes is recommended to minimise disputes.
Employment of Foreign Nationals
Foreign nationals must obtain an appropriate employment visa issued by the Immigration Department before working in Hong Kong.
Workforce Strength Hong Kong offers a highly skilled, multilingual workforce, with strong expertise in finance, trade, logistics, and professional services.
Work visa approvals depend on qualifications, experience, and proof that the role cannot be readily filled by local talent. Early immigration planning is critical when hiring expatriates.
The availability of international talent and proximity to Mainland China make Hong Kong an attractive hub for regional headquarters and high-value business functions.
Taxation
Hong Kong is globally renowned for its low, stable, and highly simplified tax structure, administered at the territorial level by the Inland Revenue Department (IRD).
Tax Feature
Corporate Income Tax (Profits Tax)
Corporate income tax is administered by the Inland Revenue Department (IRD). Two-tier profits tax regime:
• 8.25% on first HKD 2 million of assessable profits
• 16.5% on profits above HKD 2 million
Hong Kong applies a territorial tax system, generally taxing only income sourced in Hong Kong.
Remarks
Hong Kong remains one of the most competitive jurisdictions globally from a corporate tax perspective. Careful structuring is required to determine whether income is Hong Kong-sourced, particularly for cross-border and offshore operations.
Indirect Taxes (VAT / GST)
Withholding Tax
Hong Kong does not impose value-added tax (VAT), goods and services tax (GST), or sales tax.
The absence of indirect taxes significantly reduces compliance burden and enhances Hong Kong’s attractiveness as a trading, services, and regional headquarters hub.
Hong Kong generally does not impose withholding tax on dividends and interest. Limited withholding tax may apply to certain royalties and intellectual property payments to non-residents.
The absence of withholding tax on most cross-border payments simplifies group structuring and fund repatriation. However, specific rules apply to IPrelated payments and must be carefully assessed.
Personal Income Tax (Salaries Tax)
Tax Residency Status
Tax Rates
Personal income tax is administered by the IRD. Hong Kong taxes employment income derived from services rendered in Hong Kong.
Tax exposure depends on whether employment income is Hong Kongsourced. Structuring employment contracts and location of services performed is critical for expatriates and regional roles.
Hong Kong does not have a strict statutory tax residency definition for individuals; taxation is based on source of income rather than residency.
Residency concepts may still be relevant for treaty purposes under double taxation agreements. Proper structuring is required for cross-border employees and internationally mobile executives.
Salaries tax is charged at progressive rates up to 17%, or a standard rate of 15% (whichever is lower).
Hong Kong’s low personal tax rates support talent attraction and cost efficiency for expatriate employment structures. Planning around allowances and benefits-in-kind can further optimise tax outcomes.
Compliance & Audit Requirements
Double taxation Agreements (DTAs)
Investment incentives
Annual Profits Tax Returns issued on April 1st. Audited financial statements are mandatory.
All companies incorporated in Hong Kong must have their accounts audited annually by a local Certified Public Accountant (CPA). All accounting and transaction records must be safely preserved for a minimum of 7 years.
Hong Kong maintains a broad network of Comprehensive Double Taxation Agreements with over 50 jurisdictions.
DTAs help mitigate double taxation and provide certainty on cross-border income treatment. Businesses and expatriates may rely on treaty provisions depending on source of income and tax residency status. Proper treaty analysis is recommended for international operations.
Hong Kong offers targeted tax incentives to promote strategic industries and investment activities. These include:
• R&D super deductions (up to 300%)
• Concessionary tax rates for corporate treasury centres
• Incentives for aircraft leasing, shipping, and financial services
• Tax concessions for qualifying family-owned investment holding vehicles
Eligibility for tax incentives is subject to meeting specific conditions, including economic substance requirements and regulatory approval where applicable. Proper structuring is essential to benefit from available incentives.
Conclusion
Hong Kong remains one of the most attractive jurisdictions for international business due to its low tax regime, open market policies, strong legal system, and strategic access to Mainland China and Asia-Pacific markets.
Its combination of financial sophistication, regulatory efficiency, and global connectivity makes it an ideal location for regional headquarters, investment holding structures, and cross-border operations. Foreign investors seeking a stable, transparent, and business-friendly environment will find Hong Kong an efficient platform for growth and expansion.
This guide has been prepared by ACCLIME, an independent member of Antea
ACCLIME
Unit B, 17/F United Centre 95 Queensway Admiralty, Hong Kong
Contact partner: Christophe Marquis
Tel.: +852 2151 2260
Mail: c.marquis@acclime.com
Web: https://china.acclime.com/
Antea members in China:
HONG KONG
Contact partner: Christophe Marquis
Tel.: +852 2151 2260
Mail: c.marquis@acclime.com
Web: https://china.acclime.com/
SHANGHAI
Contact partner: Christophe Marquis
Tel.: +86 21 6173 8270
Mail: c.marquis@acclime.com
Web: https://china.acclime.com/
Mallorca, 260 àtic
08008 – Barcelona
Tel.: + 34 93 215 59 89
Fax: + 34 93 487 28 76
Email: info@antea-int.com www.antea-int.com
SETTING UP BUSINESS IN HONG KONG
This publication is intended as general guide only. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied on as a substitute for such an advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, not Antea Alliance of Independent Firms neither its members accepts no responsibility for any errors or omission it may contain whether caused by negligence or otherwise, or forany losses, however caused, sustained by any person that relies upon it.
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