Hong Kong Fact-File Part 1:
Business Formation for Individuals
1.2 Hong Kong Individual Business Registration
The procedures necessary for an individual to commence
business activity
The procedures necessary for an individual to commence business
activity will vary (to a degree) according to the business
form and type. In practice though, almost all businesses will
need to register with the Inland Revenue for tax purposes,
and will need to acquire a license from the relevant licensing
authority. Businesses seeking to incorporate in Hong Kong
will also need to register with the Companies Registry, and
this must take place before commencing business.
Those seeking to establish private limited liability companies
must register with the Hong Kong Companies Registry to receive
a Certificate of Incorporation prior to commencement of business
and must have their company name approved and entered into
the business register.
The company name may be in Chinese, English or both but must
not infer that the company is linked to the government or
any public body when it is not, furthermore, the company name
will only be approved if no other business has already registered
it. Once approved, form 1(b) is required to register as a
private limited liability company.
The procedures and requirements involved in obtaining a license
will vary according to the sector, and the proposed business
size and type. The sectors for which licenses are required
are many and various, and targeted information is available
on each at www.success.tid.gov.hk
.
In terms of tax registration, this must be undertaken with
the Inland Revenue’s Business Registration Office within one
month of commencement of business activity.
Application forms for tax registration can be obtained by
e-mail at taxbro@ird.gov.hk,
in person at the Business Registration Office, 4/F Revenue
Tower, Wan Chai or the Receipt & Despatch Centre, 13/F
Queensway Government Offices.
It may be possible for a business to apply for exemption from
registration fees, depending on size and various other factors.
If a business is planning to recruit staff, no separate registration
has to be made, as there are no social security or PAYE equivalents
to be paid by the employer. However, a business must select
a Mandatory Provident Fund into which it must pay a 5% salary
contribution for all its’ employees. Staff registration into
the scheme is mandatory for all employers and must be done
within one month of commencement of employment.
An employer must inform the Inland Revenue Department of the
start date and personal details of staff. This information
will be used by the Department to send tax returns to individual
employees.
Need for tax residency in business
An individual is not required to be resident in Hong Kong
in order to establish any type of business, although a non-resident
sole proprietor must appoint a resident agent to act on his
or her behalf.
For limited liability companies, the rules are that the company
secretary, if an individual, must be resident in Hong Kong.
If the company secretary is a corporate body, it must have
a registered office or a business establishment in Hong Kong.
Registration requirements for an individual to begin
in business
Business people looking to establish an incorporated entity
in Hong Kong should first choose a company name and submit
form NC1 (for a company limited by shares), or form NC1G (for
companies not limited by shares), plus a copy of their memorandum
and articles of association, certified by a founder member.
The costs associated with this will depend on the size of
the company (either in terms of nominal share capital or number
of members); the Companies Registry provides further information
on this here: http://www.cr.gov.hk/en/faq/faq01.htm#03
An individual setting up as a sole proprietor is required
to register his/her business within one month of commencement
of trading with the Inland Revenue Department’s Business Registration
Office. Form 1(a) together with a copy of the individuals’
Hong Kong registration card, or copy of passport for non-residents
must be submitted. The Business Registration Certificate issued
on completion of registration must be prominently displayed
on the business premises. Sole-proprietor registration can
be completed within one day.
Limited companies and general partnerships must be registered
with the Business Registration Office within one month of
commencement of business activity. Copies of Hong Kong ID
cards or passports of all the partners must accompany registration
application form 1(c).
Specimens of the forms in question, along with instructions
and proof of identity requirements are accessible here: http://www.ird.gov.hk/eng/tax/bre_abr.htm
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