Hong Kong

Hong Kong is a working commercial centre rather than a registration jurisdiction, and that distinction shapes everything about how it should be used. It is the principal gateway for trade with mainland China, with the banking, logistics and professional infrastructure to support genuine operating businesses.

The tax position

Hong Kong taxes on a territorial basis. Profits are chargeable to profits tax where they arise in or derive from Hong Kong; profits sourced outside Hong Kong may fall outside the charge entirely.

Offshore profits claims are available and are used successfully, but they are examined closely by the Inland Revenue Department and are granted on evidence rather than on assertion. Where contracts were negotiated and concluded, where decisions were taken, and where the operations actually occurred all bear on the outcome. A claim that is not properly documented from the outset is difficult to sustain.

Profits tax applies at two tiers: a reduced rate on the first band of assessable profits and the standard rate above it. There is no value added tax or sales tax, no capital gains tax, and no withholding tax on dividends.

What it requires

Every Hong Kong company must maintain proper books, prepare audited financial statements annually and file a profits tax return. Audit is mandatory regardless of size, and there is no small company exemption. Companies also file annual returns with the Companies Registry and maintain a significant controllers register.

A company secretary and a registered office in Hong Kong are required.

Banking

Bank account opening is the hardest part of establishing in Hong Kong, and this should be planned for from the beginning rather than treated as a final formality.

Hong Kong banks apply demanding onboarding standards and expect a genuine connection to the territory or to Asian trade. In-person attendance by directors is usually required. Applications from companies with no Asian counterparties, no local presence and no evident reason to bank in Hong Kong are commonly declined.

Companies with real trade flows, Asian suppliers or customers, and a clear commercial rationale generally succeed. Where they do not, licensed payment institutions provide a workable alternative for many businesses.

When it fits

Hong Kong suits businesses trading with mainland China and the wider region, groups establishing a regional headquarters, and trading companies with genuine Asian supply chains.

It fits poorly as a purely nominal registration with no Asian activity — the banking system will not accommodate it, and the tax position will not withstand examination.