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Why Should You Start a Business in Hong Kong

4 minute read

Many investors are attracted to Hong Kong and the reason is clear. The tax-friendly environment is a big attraction for foreign businesses keen to start a business in Hong Kong. A stable political environment, productive legal system, and pro-business setup are some other factors that offer plenty of lucrative opportunities for businesses, besides an attractive tax regime and productive workforce.

In addition to this, the strategic location of the jurisdiction and high-end infrastructure combine to attract investors to Hong Kong. Here are other reasons why you should start a business in Hong Kong!


Easy to set up

Setting up a business in Hong Kong is fairly quick and easy(you can read our guide here). Anyone keen to start a business can do so within two weeks. Moreover, the pro-business administration has made operating a business user-friendly so much so that the jurisdiction has earned one of the top slots for the “ease of doing business” rankings worldwide. A business has the advantage of enjoying low corporate taxes and tax breaks in Hong Kong.

The government runs several support initiatives for small and middle businesses. Hong Kong jurisdiction is strict when it comes to intellectual property rights protection. Rules and regulations to start a company in Hong Kong are simple and straightforward.

The total cost of setting up a company is relatively low compared to doing so elsewhere.

Not only this, Hong Kong enjoys a reputation for being the favourite Exhibition and Convention Centre for businesses keen to set up a strong foothold in the region.

Tax system

A majority of foreign investors are attracted to the favourable tax system in Hong Kong. A business operating in Hong Kong benefits from the territorial source principle, which gives them the advantage to avoid taxes on any profits made outside of Hong Kong and save thousands of dollars. An overseas business does not need to incur many expenses, such as capital gains tax. On top of it, another advantage of setting up a business in Hong Kong is that there is no sales tax, VAT, or withholding tax on dividends on social security benefits.

However, for revenue and income earned within the jurisdiction, a Hong Kong-incorporated company must pay a 16.5% profit tax. For income earned above HKD 120,000, 17% personal income tax is deducted.

Strategic location

Located at the heart of Asia, Hong Kong is well-connected with the world.  Also categorised as one of the prime destinations for business in the world, Hong Kong enjoys proximity and easy access to the world’s leading markets. Whether you wish to tap into the Asian Pacific market or that in Mainland Chinese, setting up a business in Hong Kong is the best option.

Free economy

One advantage of setting up a business in Hong Kong is that the local economy is driven by the principles of free trade, free and open market, and free enterprise. In Hong Kong, there are no restrictions on investments, including both inward and outward. There are restrictions neither on foreign exchange controls nor on foreign ownership.

Other factors that strengthen the jurisdiction’s position as a business destination include sizeable foreign exchange reserves, no public debt, a sound banking system, a strong legal system, a business-friendly atmosphere, and a strict anti-corruption regimen.

Preferential access to Mainland China

One of the major advantages of setting up a business in Hong Kong is that the jurisdiction is a gateway to Mainland China. A business set up in Hong Kong gets preferential access to the Mainland market as part of the Closer Economic Partnership Arrangement. The free trade agreement was signed between the Central People’ s Government and the Hong Kong Special Administrative Region Government, providing exclusive mainland market access benefits.

If you plan to do business with a Chinese partner, you can get the benefit of starting a company in Hong Kong. A business producing goods in Hong Kong can export to the Mainland without any tariff.  That means all made in Hong Kong goods are exempt from tariffs in Mainland China.

One of the major advantages of starting a business in Hong Kong is its transparent law and order system.  The establishment of the International Arbitration Centre has helped Hong Kong become a leading arbitration centre in Asia, where disputes are resolved.

The local law safeguards the Intellectual Property Rights. This means stringent regulations are in place for trademarks, copyrights, patents and registered designs. Hong Kong has an Intellectual Property Department that has extensive experience in monitoring and handling all matters related to Intellectual Property rights.

A Hong Kong limited liability company can get protection from lawsuits filed in the Mainland. In the event of a lawsuit, a business can benefit from registered capital in China.  Not only this, the law safeguards personal capital.

Liberal immigration policy

A visa-free entry policy is applicable for overseas investors from 170 countries. Work visa provisions for foreign entrepreneurs interested to relocate to Hong Kong.

Hong Kong enjoys a high degree of autonomy in several matters, except its foreign and defense affairs. Political stability, free market, pro-business governance, and corruption-free economy are some of the advantages of starting a business in Hong Kong.

Several pro-business organisations have been set up to provide a conducive atmosphere for foreign companies to do business in the Mainland and Asia. Advisory support is available for small and medium enterprises with the Support and Consultation Centre. Additionally, any business with financial problems can get access to government-funded schemes for assistance.

Full ownership

A foreigner is eligible for 100% ownership rights of a company incorporated and based in Hong Kong and the law does not impose local residency requirements. This allows a foreigner to be the sole director and shareholder. Another added advantage of starting a business in Hong Kong is that a physical address is unnecessary to operate within the jurisdiction. This means you can run the business from anywhere in the world. You only need a registered office address. Additionally, companies can open multi-currency accounts in banks.

If the company directors are not residents of Hong Kong, the company is eligible for off-shore company status. In that case, you only need to pay taxes on the profits generated within the jurisdiction of Hong Kong.

Setting up a business in Hong Kong is fairly simple and hassle-free. This makes the administrative jurisdiction of Hong Kong an attractive destination for businesses.

Wrap Up

Incorporating in Hong Kong is a strong choice when deciding where to base yourself. Stable economy, strong workforces, and business-friendly tax policies let you get up and running sooner- so you can spend less time tangled in admin and more time growing your business. Contact us to incorporate your company in Hong Kong.


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