Answers to common Hong Kong company law tax and compliance questions

Answers to Hong Kong Company Law Tax Compliance Questions

This index groups short-answer pages by topic. Each page answers one frequently asked question about Hong Kong company law, tax or corporate compliance. Browse the sections below or use the links to jump to the specific answer you need.

Hong Kong Company Law Questions

Answers about incorporation, company structure, name rules and share capital.

How much does it cost to set up a Hong Kong company? - The government incorporation fee paid to the Companies Registry and the Business Registration Certificate fee from the Inland Revenue Department, plus any professional service fees.
Can a foreigner own 100% of a Hong Kong company? - Yes, there is no local or resident shareholder requirement and no maximum foreign ownership limit.
Do I need to be in Hong Kong to open a company? - No, incorporation can be completed remotely using electronic filing and a local corporate service provider.
How many directors does a Hong Kong company need? - At least one director who is a natural person.
Can one person be both director and shareholder? - Yes.
Can a company be a director of another company? - No, a director must be a natural person.
What is the minimum share capital? - There is no minimum share capital requirement.
Can I use my home address as a registered office? - Yes, provided it is a physical address in Hong Kong and not a post office box.
Do I need a Chinese company name? - No, an English name only is acceptable.
How do I check if a company name is available? - Search the Companies Registry online name index for free.
What words are banned in a company name? - Names that are the same as an existing name, constitute a criminal offence, are offensive, or suggest government connection without consent.
Can I change my company name after incorporation? - Yes, by filing Form NNC2 after a special resolution.
Is a shelf company faster than a new incorporation? - Yes, a shelf company has an age and history immediately, whereas a new incorporation takes several days.
Do I need a local director? - No, there is no residency or nationality requirement.
What documents do I need to incorporate? - Form NNC1 or NNC1G, Form IRBR1, and Form NNC3 for the first director.
Can I incorporate online? - Yes, through the Companies Registry e-Services portal.
What is the difference between a branch and a subsidiary? - A branch is the same legal entity as its parent; a subsidiary is a separate Hong Kong company.
Should I set up in Hong Kong or Singapore? - Consider tax rates, territorial source principle, and compliance requirements in both jurisdictions.
Do I need a business plan to incorporate? - No.
Can a minor be a shareholder? - Yes, Hong Kong company law does not prohibit it.
What happens after my company is incorporated? - You must appoint a company secretary, open a bank account, and meet ongoing compliance obligations.
How do I appoint the first company secretary? - The first secretary is appointed at incorporation or immediately after.
Can I incorporate without a company secretary? - No, every Hong Kong company must appoint a company secretary.
What is a Certificate of Incorporation used for? - It is proof of incorporation for bank accounts, contracts, and licences.

Hong Kong Tax Answers

Answers about profits tax, salaries tax, stamp duty and other tax obligations.

What is the profits tax rate in Hong Kong? - 16.5% for corporations, with a two-tiered rate of 8.25% on the first HK$2,000,000 of assessable profits.
How does the two-tiered profits tax rate work? - 8.25% on the first HK$2,000,000 and 16.5% on the remainder for corporations, with only one entity in a connected group eligible for the lower tier.
Is foreign income taxable in Hong Kong? - Generally no, under the territorial source principle, unless it is received in Hong Kong by a multinational group member and does not meet an FSIE exception.
What is the territorial source principle? - Hong Kong only taxes profits that arise in or are derived from Hong Kong.
How long does an offshore claim take? - The Inland Revenue Department reviews each claim on its merits.
When is my profits tax return due? - Generally within one month of issue, with a block extension scheme for tax representatives.
What is the block extension scheme? - The IRD publishes later filing dates for returns filed through tax representatives, based on the accounting period end.
What happens if I file my tax return late? - The IRD may issue an estimated assessment and penalties.
Do I pay tax if my company made a loss? - No, losses can be carried forward indefinitely.
Can I carry losses forward? - Yes, indefinitely against future assessable profits of the same trade.
What is provisional profits tax? - An advance payment of the estimated tax for the coming year.
Is there VAT or GST in Hong Kong? - No.
Is there capital gains tax? - No.
Is dividend income taxable? - No.
What is salaries tax and who pays it? - Tax on income from an office or employment in Hong Kong, paid by the employee.
How is salaries tax calculated? - On net chargeable income at progressive rates, or at the standard rate, whichever is lower.
What is personal assessment? - An election to aggregate all assessable income for potential tax relief.
Do I pay stamp duty on a share transfer? - Yes, at 0.1% from buyer and 0.1% from seller, plus HK$5 fixed duty.
How much is stamp duty on shares? - 0.1% each side on the higher of consideration and value, plus HK$5.
Does Hong Kong have a double tax treaty with the UK? - Yes, a comprehensive agreement providing relief from double taxation.

Hong Kong Corporate Compliance FAQ

Answers about annual returns, business registration, audit and company secretary duties.

Does every Hong Kong company need a company secretary? - Yes, under the Companies Ordinance (Cap. 622).
Can a director be the company secretary? - Yes, unless the company has only one director.
Can the sole director also be the company secretary? - No, a company with a sole director cannot have that same person as its sole company secretary.
Does a company secretary need to live in Hong Kong? - Yes, a natural person secretary must be ordinarily resident in Hong Kong.
Can a company act as company secretary? - Yes, a body corporate with a registered office or place of business in Hong Kong may act.
What does a company secretary actually do? - Maintain statutory records, file returns and advise on compliance.
How do I change my company secretary? - File Form ND2A for appointment or cessation, Form ND2B for a change of particulars.
What happens if my company secretary resigns? - You must appoint a replacement immediately.
Is a TCSP licence required to act as company secretary? - A person carrying on a trust or company service business must hold a licence.
What is a designated representative? - The person the company designates to assist law enforcement on the Significant Controllers Register.
Who can be a designated representative? - Any individual, including a director, secretary or employee.
Do I need a registered office and a company secretary? - Yes, both are mandatory.
Can I be my own company secretary? - Only if you are not the sole director.
What records must a company secretary keep? - The register of members, register of directors, register of company secretaries, register of charges and the Significant Controllers Register.
What happens if I file the annual return late? - Higher registration fees apply, from HK$870 to HK$3,480.
When is my first annual return due? - Within 42 days after the anniversary of incorporation.
Is the annual return the same as a tax return? - No. The annual return is filed with the Companies Registry; the tax return is filed with the Inland Revenue Department.
Does a dormant company file an annual return? - A private company that has declared itself dormant is exempt from delivering an annual return.
What is a Significant Controllers Register? - A register of individuals or entities holding more than 25% of shares or voting rights.
Who counts as a significant controller? - Anyone holding more than 25% of issued shares or voting rights, or exercising significant influence or control.
Where must the Significant Controllers Register be kept? - At the registered office or another prescribed place in Hong Kong.
What is the penalty for no Significant Controllers Register? - Fines and potential prosecution under the Companies Ordinance.
How do I renew my Business Registration Certificate? - Pay the fee to the Inland Revenue Department before expiry.
What happens if my Business Registration expires? - Penalties and prosecution risk.
Can I get a three-year Business Registration Certificate? - Yes, available from the Inland Revenue Department.
How do I make my company dormant? - Declare dormancy under the Companies Ordinance if there are no significant accounting transactions.
Can a dormant company have a bank account? - Yes, but the company must not have significant accounting transactions.
How do I bring a dormant company back? - Resume activity and notify the Companies Registry.
What filings does a Hong Kong company make every year? - Annual return (Form NAR1) to the Companies Registry and profits tax return (Form BIR51) to the Inland Revenue Department.
What is the deadline for the employer's return? - Filed annually on Form BIR56A, generally within one month of issue.
Do I need to display my Business Registration Certificate? - Yes, at the business premises.
What happens if I miss a Companies Registry deadline? - Higher fees and potential prosecution.
Can the Companies Registry strike off my company? - Yes, if it has reasonable cause to believe the company is not carrying on business.
How do I restore a struck off company? - By administrative restoration or court order.
Can a small company skip the audit? - No, every Hong Kong incorporated company must have audited financial statements.
Who can sign a Hong Kong audit report? - Only a practising certified public accountant from a registered HKICPA practice unit.
What is the reporting exemption? - Qualifying companies may prepare financial statements using SME-FRF and SME-FRS instead of full HKFRS.
How long must I keep accounting records? - Seven years.
Can I keep accounting records outside Hong Kong? - Yes, but accounts and returns sufficient to disclose the financial position must be kept in Hong Kong.
What accounting standard applies to a Hong Kong SME? - SME-FRF and SME-FRS, or HKFRS for Private Entities or full HKFRS depending on qualification.
When should I choose my financial year end? - At incorporation.
Can I change my financial year end? - Yes, by notifying the Companies Registry on Form NAC4.
What is the difference between bookkeeping and accounting? - Bookkeeping records daily transactions; accounting involves analysis, reporting and audit compliance.
Do I need an accountant if I use Xero? - Yes, Xero is a bookkeeping tool and cannot perform statutory audit or prepare tax-compliant statements.
What is a management account used for? - Internal decision-making, budgeting and monitoring performance.
What happens if my accounts are late? - Higher registration fees and potential IRD estimated assessment and penalties.
Does a dormant company need audited accounts? - A dormant company with no significant accounting transactions is exempt from the audit requirement.

Hong Kong Company Setup Questions

Answers about incorporation process, forms and corporate structure decisions.

Should I incorporate before or after finding customers? - Consider the liability protection and compliance costs of each approach.
Can I run two businesses under one Hong Kong company? - Yes, but each business should be separately accounted for.
Do I need a separate company for each brand? - Not legally, but separate companies can ring-fence liability for each brand.
What is the difference between a company and a business registration? - A company has separate legal personality; a business registration is a trading name registered with the IRD.
Can I convert a sole proprietorship to a limited company? - Yes, by transferring the business to a new company.
Do I need a lawyer to incorporate? - No, but professional advice is common.
What is a registered agent and do I need one? - A registered agent provides the registered office and company secretary services; most Hong Kong companies use one.
How do I choose between shares and guarantee? - For-profit businesses use shares; non-profits use guarantee.
What is the difference between an audit and a review? - An audit provides a statutory opinion; a review provides limited assurance and is not sufficient for Hong Kong statutory purposes.
Can my accountant also be my auditor? - No, the auditor must be independent.
Can my company secretary do my accounts? - Yes, provided there is no conflict of interest and the secretary has the necessary professional competence.
What is a director's report and do I need one? - Yes, it is part of the annual financial statements.
How do I prepare for my first audit? - Keep complete accounting records and engage your auditor early.
What does an auditor ask for? - Trial balance, bank statements, invoices, contracts and director declarations.
Why did my auditor qualify the accounts? - Due to insufficient evidence, disagreement with management, or material uncertainty about going concern.
What is the difference between a company secretary and a corporate secretary? - Used interchangeably; corporate secretary often implies a licensed TCSP.
Do I need a company secretary if the company is dormant? - Yes, the appointment requirement continues.
What happens if a company has no secretary for a month? - The company is in breach of the Companies Ordinance and may face prosecution.

Hong Kong Business Regulations Answers

Answers about licences, banking, employment and closing a company.

Do I need a licence to sell food in Hong Kong? - Yes, a food business licence from the Food and Environmental Hygiene Department.
What licence does a restaurant need? - A general restaurant licence or light refreshment restaurant licence.
Do I need a licence to sell alcohol? - Yes, a liquor licence from the Liquor Licensing Board.
Do I need a licence for an online shop? - Business registration is required; additional licences depend on the goods.
What licence does a travel agency need? - A licence from the Travel Industry Authority.
Do I need a TCSP licence? - If you carry on a trust or company service business in Hong Kong.
Does an employment agency need a licence? - Yes, from the Commissioner for Labour.
Do I need a licence to run a school or tutoring centre? - Yes, registered with the Education Bureau.
What licence does a beauty salon need? - Business registration and potentially a premises licence.
Do I need a Money Service Operator licence? - For money changing or remittance services, licensed by Customs and Excise.
How long does a licence application take? - Varies by licence; check with the issuing department.
What happens if I trade without a licence? - Penalties and potential prosecution.
How do I change my company's registered office? - File Form NR1 with the Companies Registry.
How do I appoint a new director? - File Form ND2A with the Companies Registry.
How do I remove a director? - File Form ND2A or Form ND4 as applicable.
How do I issue new shares? - File Form NSC1 with the Companies Registry.
How long does a company name change take? - The Companies Registry typically processes Form NNC2 within a few days.
Do I need to tell the IRD if my details change? - Yes, to update Business Registration records.
How do I change my financial year end? - File Form NAC4 with the Companies Registry.
What is the deadline for filing a change of director? - Within 15 days of the change.
How do I close a Hong Kong company? - By deregistration (Form NDR1) or liquidation.
What is the difference between deregistration and winding up? - Deregistration is for solvent companies with no liabilities; winding up is for solvent or insolvent companies.
How long does deregistration take? - Several months, including the IRD notice of no objection.
How much does it cost to close a company? - Government fees and professional fees vary.
Can I close a company with outstanding debts? - No, debt must be settled first.
Do I need a notice of no objection from the IRD? - Yes, for deregistration.
What happens if I stop filing? - The company may be struck off and directors may face penalties.
Can I reopen a company after deregistration? - Yes, by administrative restoration or court order.
Do I need a liquidator to close my company? - For liquidation, yes; for deregistration of a solvent, asset-free company, no.
How do I register a foreign company in Hong Kong? - File Form NN1 and Form IRBR2 under Part 16.
What is a non-Hong Kong company? - An entity incorporated outside Hong Kong that establishes a place of business here.
What is the deadline to register a non-Hong Kong company? - Within one month of establishing a place of business.
Can I move my company to Hong Kong? - Yes, through inward re-domiciliation under the Companies (Amendment) (No. 2) Ordinance 2025.
Do I need an authorised representative? - Yes, for a registered non-Hong Kong company.
Does my overseas parent need to file accounts here? - A registered non-Hong Kong company files Form NN3, not full accounts unless requested.
Can a Hong Kong company own a mainland subsidiary? - Yes, commonly structured as a Wholly Foreign-Owned Enterprise (WFOE).
What is a WFOE and do I need one? - A Wholly Foreign-Owned Enterprise in mainland China for direct operations there.
How is a Hong Kong branch taxed? - Only on Hong Kong-sourced profits under the territorial source principle.
What government funding is available for Hong Kong SMEs? - BUD Fund, SME Export Marketing Fund, SME Financing Guarantee Scheme and Technology Voucher Programme.
What is the BUD Fund? - A government scheme supporting branding, upgrading and domestic sales expansion.
Am I eligible for SME funding? - Check the specific scheme eligibility criteria.
How long does a government funding application take? - Varies by scheme.
Do I need audited accounts for funding applications? - Some schemes require them.
Can a startup get government funding? - Yes, subject to the scheme's eligibility criteria.
What is the SME Financing Guarantee Scheme? - Government guarantees on loans from participating lenders.