HONG
KONG - PRIVATE LIMITED COMPANY
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Principal Corporate Legalization
Companies Ordinance (Cap 32).
Type
of Law
Common Law based on English Common Law.
Type
of Company for International Trade and Investment
Private Company limited by Shares.
Exchange
Control
None.
Procedure
to Incorporate
Submission of Memorandum and Articles of Association and a Declaration
of Compliance. A Notice of Situation of Registered Office is also required
to be filed within fourteen days of the date of incorporation.
Restrictions
on Trading
Cannot undertake banking or insurance activities or solicit funds from
or sell its shares to the Public.
Powers
of Company
A Hong Kong Company has all the powers of a natural person.
Language
of Legislation and Corporate Documents
Chinese and English.
Registered
Office Required
Yes, must be maintained in Hong Kong.
Name
Approval Required
It is not possible to reserve a name. It is essential to check that
there is no similar or identical name on the register, which would prevent
the company being incorporated.
Shelf
Companies Available
Yes.
Time
to Incorporate
Approximately 7 to 10 business days from the submission of documentation.
Name
Restrictions
A name that is similar to or identical to an existing company. A name
that constitutes a criminal offence or is otherwise contrary to the
public interest. A name that implies royal or government patronage.
Names
Requiring Consent or License
Building society, Chamber of Commerce, co-operative, imperial, Kaifong,
mass transit, municipal, royal, savings, tourist association, trust,
trustee, underground railway, bank, insurance, assurance, reinsurance,
fund management, asset management and investment fund.
Suffixes
to Denote
Limited Liability Limited.
Disclosure
of Beneficial Ownership to Authorities
No.
Compliance
Authorized
and Issued Share Capital
The standard authorized share capital is HK$ 1,000. The minimum issued
capital is two shares of par value.
Classes
of Shares Permitted
Ordinary shares, preference shares, redeemable shares and shares with
or without voting rights.
Types
of Shares
Permitted Include deferred, founders and management shares.
Taxation
Hong Kong is one of the few countries in the world that tax on a territorial
basis. Many countries levy tax on a different basis and they tax the
world-wide profits of a business, including profits derived from an
offshore source. Hong Kong profits tax is ONLY charged on profits derived
from a trade, profession or business carried on in Hong Kong. Consequently,
this means that a company which carries on a business in Hong Kong,
but derives profits from another place, is not required to pay tax in
Hong Kong on those profits. Hong Kong sourced income is currently subject
to a rate of taxation of 17.5 per cent. There is no tax in Hong Kong
on capital gains, dividends and interest earned.
The
principle of Hong Kong income tax is that it is a tax on income that
has its source in Hong Kong rather than a tax based on residence. Income
sourced elsewhere, even remitted to Hong Kong, is not subject to Hong
Kong profits tax at all. Consequently, if a Hong Kong company’s trading
or business activities are based outside Hong Kong no taxation will
be levied.
The
factor that determines the locality of profits from trading in goods
and commodities is generally the place where the contracts for purchase
and sale are effected. “Effected” does not only mean that the contracts
are legally executed. It also covers the negotiation, conclusion and
execution of the terms of the contracts.
If
a business earns commission by securing buyers for products or by securing
suppliers of products required by customers, the activity which gives
rise to the commission income is the arrangement of the business to
be transacted between the principals. The source of the income is the
place where the activities of the commission agent are performed. If
such activities are performed through an office in Hong Kong, the income
has a source in Hong Kong.
Double
Taxation Agreements
Hong Kong has no double tax agreement with any country, with the exception
of a limited treaty with the United States of America relating to shipping
matters only.
As
Hong Kong taxes on a territorial basis, this means that income derived
from a local company from outside Hong Kong will not generally suffer
double taxation in Hong Kong. Many countries which tax their residents
on a world-wide basis also provide their companies operating in Hong
Kong with unilateral tax credit relief for Hong Kong tax paid on income
derived in Hong Kong. The Hong Kong Inland Revenue allow a deduction
for foreign tax paid on a turnover basis in respect of income which
is also subject to tax in Hong Kong. Therefore, businesses operating
in Hong Kong do not generally have problems with double taxation of
income.
Withholding
taxes, currently being 5.25%, are only imposed on royalties paid to
non-resident recipients not related to the payers. If they are related
parties then a tax rate of 17.5% will be applicable.
License
Fees
The Business Registration Fee (BRF), currently HK$ 2,600, is due and
payable within one month of the date of incorporation and then annually
on the anniversary of the first payment.
Financial
Statement Requirements
A Hong Kong company must keep accounting records, which may be kept
at the registered office address or elsewhere at the discretion of the
directors. Every company must appoint an auditor who must be a member
of the Hong Kong Society of Accountants and hold a practicing certificate.
Although there is no requirement to file accounts with the Registrar,
there is a requirement to file accounts with the tax authorities.
Director
The minimum number of directors is one, who may be natural persons or
bodies corporate. They may be of any nationality, and need not be resident
in Hong Kong.
Company
Secretary
A Hong Kong company must appoint a company secretary, who may be a natural
person or a body corporate, but the company secretary must be resident
in Hong Kong.
Shareholder
The minimum number of shareholders is one.
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