Hong Kong is one of the world’s busiest financial centers and the city attracts foreigners in their droves who are in aspire to start their own business and take advantage of the opportunities on offer and find their fortune.
Although starting a business in Hong Kong is perhaps easier than it is in many other cities throughout the world (the World Bank rates Hong Kong as the 6th easiest country in which to start a business), it is not entirely straightforward and expatriates who wish to commence operations in the city should not underestimate the challenges they may encounter.
Our comprehensive guide to starting a business in Hong Kong contains everything you need to know, from visa and sponsorship requirements through to taxes and company types.
Visa Requirements
The circumstances in which you find yourself living or working in Hong Kong will impact the type of visa you require to start your own business. Here is a basic overview of the visas that are available together with their eligibility requirements.
Visa Types
Entry for Investment
One of the most popular means of attaining a visa that will allow you to start your own business in Hong Kong is through acquiring an entry for investment visa. You can do this by:
- Registering and setting up a company in which you are the major investor, or
- Investing in a Hong Kong-based company
Eligibility criteria: In order to qualify for this visa you will need to demonstrate the following:
- A good education and/or professional qualifications
- Clean police record
- Your planned business will make a positive contribution to Hong Kong’s economy
Sponsorship: You will need a sponsor. This can be a company or individual that fulfills the following key requirements:
- Aged 18 years or older
- Hong Kong resident
- Acquainted with you
Application: You will need to complete ID 99A and your sponsor will need to complete ID 999B.
Documentation: To support your application you will be required to produce the following:
- a passport photograph
- a copy of your passport
- proof of academic qualifications and professional experience
- detailed two-year business plan
- copy of business registration (investors)
- background information on business activities (investors)
Capital Investment Entrant Scheme (CIES)
The Hong Kong Government launched the CIES in In October 2003 with a view to attracting investment entrants. Under CIES, individuals who have invested HK$10 million or more in permissible investment assets are eligible for admission into Hong Kong as capital investment entrants.
Eligibility criteria:
- A capital investment of HK$10 million into a legitimate asset class in Hong Kong
- Evidence that you can support yourself
- Evidence that you can support any dependents without public assistance
- You must be 18 years of age or above
- Clean police record
- Ability to support yourself and your dependants
Application:
Completed Form 967 will need to be submitted to the Hong Kong Immigration Department by post.
Once initial approval is granted (Approval in Principle), you will be granted a visa that allows you to enter Hong Kong as a visitor and remain in the country for up to three months. During this period of time you will be required to start investing in your business. Once you have documented proof of your investment your visa will be extended for up to two years.
Further extensions of your visa stay will follow a 2-2 year pattern and will be granted in accordance with your ability to continue to satisfy the eligibility criteria.
Documentation:
- Completed Form 967
- A copy of the personal particulars page of your passport.
- A copy of official documents showing your Permanent Residence status in your country of domicile (if any).
- Bank statements, bank reference letters, banking facilities letters etc.
- Proof of your employment (if any) like employment certificate, company reference letter etc.
- Proof of your business activities and transactions (if any) like letters of credit, bills of lading, shipment papers, contracts/agreements reached and realized.
- A copy of proof of academic qualifications like copies of diplomas, certificates, testimonials etc.
- A copy of the contract made between you and the financial intermediary (if any)
- Supporting documents of the existing investment under the scheme (if any) like statement or reference letter from the appointed financial intermediary, purchase agreement etc.
Dependant visa
If your spouse or parents have visas that allow you a dependant visa you will not need any additional visa to establish a business in Hong Kong.
Permanent Residency
If you have lived in Hong Kong as an expat for a period of seven years or more you will be eligible for permanent residency. Expats who have permanent residency will not need any type of additional visa to start their own business entity in Hong Kong.
If you are unsure as to which visa you need or would appreciate some help with the application process there are business immigration consultancies in Hong Kong that can help you.
Company Types
Limited Liability Company
The majority of people who start a business in Hong Kong opt to commence a limited liability company (LLC). To commence an entity of this nature you need a name, one or several directors, one to 50 shareholders, a company secretary, a (physical) address, and some capital. There is no legal requirement for minimum capital.
Limited companies must register with the Companies Registry in Queensway, where the necessary registration paperwork can be completed. A certificate of incorporation will be issued once the incorporation form has been approved. The application fee is HK$1720 but is subject to a refund of HK$1425 for an unsuccessful application.
Sole Proprietorship
If you plan on opening a smaller business that caries relatively little risk and will not recruit employees, then you may wish to consider a sole proprietorship. If you do pursue this option you need to be aware of the fact that you are personally liable for the business and it will therefore be your own assets on the line if the business fails or you are sued.
Partnerships
Similar to sole proprietorships, partnerships are suitable for smaller businesses and the owners of the business are personally liable for the company.
Naming Your Company
Naming your entity is a very important element of establishing a business in Hong Kong. First you will need to select a few potential names and then you can search the Hong Kong Companies registry (http://www.icris.cr.gov.hk/csci/) to find out whether those names are available. Once you have selected the name it will need to be approved.
Obtaining a Business Registration Certificate
All new businesses have to be registered with the Business Registration Office of the Inland Revenue Department within one month of its establishment. A fee of HK$2,600 is currently charged for a one year certificate, with levy.
Insurance and Pension Requirements
If you hire employees you will need to sign up for Employee Compensation Insurance and Mandatory Provident Fund (MPF) Schemes with a private company or a bank. This is a legal requirement under the Employees’ Compensation Ordinance, and is basically ensures that you have a valid insurance policy in place to cover any people that you employ. In addition to insurance, you will also need to make sure that all employees who are aged between 18-65 and employed for 60 days or more per year are covered by the Mandatory Provident Fund (MPF) Schemes Ordinance (except for persons exempted from the scheme) and be enrolled in an MPF scheme. Both of these can be arranged at a local bank.
Taxation
Hong Kong operates on a territorial taxation basis, which means that only profits and income that are gained within Hong Kong are subject to tax. The current profits tax rate that is applied in Hong Kong is 17.5% and no capital gains tax is enforced.
Government Support
The Hong Kong government actively encourage expats to commence businesses and useful help and advice can be attained from the Trade and Development Council and the Trade and Development Council Business Information Centre.
A wealth of information is also available through Invest Hong Kong.
For more information about starting a business and information for non-residents, visit: Business and Trade
Are you considering relocating to Hong Kong? Check out our guide to living in Hong Kong. It contains everything you need to know about setting up home in this amazing city, from finding somewhere to live, suitable schools and places to have fun, through to paying taxes, securing suitable visas and buying a home. Written by expats for expats, you can rest assure that our guide contains the up to date and relevant information that you need when you move to Hong Kong.
