Procedures of formation of a
limited company in Hong Kong Procedures of formation of a
limited company in Hong Kong The characteristics of
Hong Kong Profits Tax Business records required
to be kept Document required to be
filed to the Company Registry¡@
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Every company must be incorporated with name in English or Chinese or both English and Chinese. Limited companies must end their names with the word "Limited". Normally, the certificate of Incorporation will be issued within six working days after application. Shell companies are available for instant use.
A memorandum and articles of association must be printed and together with a "Declaration of compliance" presented to the Companies Registry. A registration fee of HK$1,720 should be paid. If the company has a share capital, a capital duty is charged at the rate of HK$1 per HK$1,000.
Within one month of the incorporation of the company, a Business Registration Certificate must be obtained. The existing fee is HK$2,600 per annum.
According to the Companies Ordinance, every company must have at least 1 director and 1 shareholder. Directors should have attained the age of 18 and should not be an undischarged bankrupt. A sole director of a limited company shall not also be the secretary of the company.
A notice of situation of registered office should be submitted to the Companies Registry within 14 days of incorporation of the company.
Normally, bank accounts are opened after the approval by the directors of the company. Certified copies of board resolution, certificate of incorporation, memorandum and articles of association are generally required to be submitted to bank.
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Only profits sourced in Hong Kong are taxable here.
No tax on capital gain or dividends. No interest tax.
Corporate profits tax rate of 17.5% is the lowest in the
region.
Simple tax regime and legislation offer certainty to
taxpayers. An advance ruling service on source of profits is in place.
Tax deduction allowed for all business expenses.
Generous depreciation allowance for plant and machinery -
60% initial allowance and 10% to 30% annual allowance. Immediate write off to be allowed
for capital expenditure on plant and machinery specifically related to manufacturing, and
on computer hardware and software.
20% initial depreciation allowance and 4% annual
depreciation allowance for investment in industrial buildings. 4% annual depreciation
allowance for commercial building
Capital expenditure on refurbishment for business to be
allowed to be written-off against tax over five years.
Losses allowed to be carried forward for setoff against
future profits without time restriction.
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Taxpayers must keep sufficient records of their income and expenditure to enable their assessable profits to be readily determined. The maximum penalty for this offence would be HK$100,000. Business records must include, at minimum:
a record of the taxpayer's asset and liabilities;
a record of the day to day receipt and expenditure of money; a record of
all goods purchased and sold;
all invoices relating to the above transactions;
statement of the quantity and value of trading stock;
banking record (cheque stub, bank statement etc);
record of debtors and creditors.
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Every company must within 42 days after its anniversary date of incorporation submit an annual return to the Companies Registry. Any change of directors or shareholders would be recorded in the annual return.
Other main documents required to be filed to the Companies Registry :
Return of allotments
Notice of increase in nominal capital
Particulars of a mortgage or charge created by a company
Notice of place where register of members is kept or of any change in
that place
Notice of change of directors or secretaries or in their particulars
Notice of place where minute books are kept or of any change in that
place