Hong Kong Key Industries, Incorporating, Employment, Payroll & Tax, and Immigration

Hong Kong Key Industries

Financial Services Industry Capabilities

• Business-friendly policies
• Transparent legal system and simple, low tax policy
• Relatively low barriers to entry
• No restrictions on capital flows into and out of the country

Tourism Industry Capabilities

• Strategic location in Asia
• Business-friendly immigration and labour laws ensuring a steady supply of multilingual hospitality talent
• With the high hotel occupancy rate in the country at 85% from the period of January to August 2016, there are opportunities in the hotel operations, travel service companies, cruises, as well as the Meetings, Incentives, Conventions and Exhibitions sectors

Trading and Logistics Industry Capabilities

• Strategic location is ideal for trading, logistics and supply chain operations
• Established trading and logistics infrastructure
• Free trade policy that does not require any customs tariffs on imports or exports with minimal exceptions

Professional and Producer Services Industry Capabilities

• Skilled local and foreign talent pool
• Demand for professional services such as business services and technical-related services
• Demand for producer services that are used by other companies in the local economy

Incorporating in Hong Kong

 Types of entities

• Sole Proprietorship is a business run by a single individual making all the decisions.
• Partnership can have up to 20 partners.
• Representative Offices can only fulfil limited functions and are not allowed to engage in profit-making activities.
• Branch Office of Parent Company can be established for a company that is incorporated outside Hong Kong that establishes a place of business in Hong Kong.
• A Local Limited Company is incorporated in Hong Kong.
  • Company limited by shares is where the members’ liability is limited by the articles of association, to the amount unpaid on the shares respectively held by them.
  • Company limited by guarantee is where there is no share capital and the liability of members is limited by the articles of association to the amount that the members respectively undertake to contribute to the assets of the company in the event of it being wound up. 

Registering a Local Limited Company

1. The company name has to be chosen while referring to the Companies Registry's (CR).
2. The application documents has to be submitted online through the Registry's electronic service portal "e-Registry" or in hard copy form to the Shroff on the 14th floor of the Queensway Government Offices.
3. After the approval, a Certificate of Incorporation and a Business Registration Certificate will be issued by the Companies Registry in electronic form for electronic applications and in hard copy form for applications delivered in hard copy applications.

Registering a Branch Office of Parent Company

1. After choosing the company’s name while referring to the CR, prepare a statutory form and certified copies of the corporate documents of the foreign company.
2. The signed statutory form and certified documents has to be submitted at the Registry.
3. Upon approval, a certificate of registration will be issued to the company.
4. Lastly, apply for a business registration certificate for the branch.

Employment Regulations

The Hong Kong Labour Department’s Employment Ordinance (EO) and Minimum Wage Ordinance (MWO) governs the terms and conditions of employment. The written contract has to be provided to the employee if the agreement is in writing. Likewise, if the agreement is made orally and the employee makes a written request for a written contract, it has to be provided before the employment is entered into. Before employment begins, the employee must be informed on terms such as the:

• Wages
• Wage period
• Notice period to terminate the contract
• Entitlement to pro-rated or full end of year payment
• Payment period

Employers have to keep the past 12 months of employees’ wage and employment records at the employer’s business location or the location where the employee is employed. After the employee’s employment has ended, records should be kept for another six months. The employment contract can be terminated by the employee or employer by providing due notice or payment in lieu of notice. The notice can be pre-agreed but not less than the required period stated in the EO.

Payroll and Tax Regulations

Social Security Scheme

 In Hong Kong, there is a social security scheme – Mandatory Provident Fund Schemes Ordinance where both the employer and the employee have to make contributions. The employee’s MPF contribution will be deducted from the employee’s salary.

Hong Kong Tax

 The Inland Revenue Department (IRD) is the main tax authority in Hong Kong.

Profits Tax

All profits derived from trade, profession or business in Hong Kong, excluding profits from the sale of capital assets are taxable. There are no distinctions between residents and non-residents. A resident may derive profits from abroad without being taxed, while a non-resident may be taxed on profits derived in Hong Kong.

Profits Tax Rate

Salaries Tax

All income derived from an office, employment or pension in Hong Kong, after deductions and allowances is taxable at progressive rates.

Salaries Tax on Chargeable Income for Year of Assessment 2017/18 onwards

Salaries Tax on Chargeable Income for Year of Assessment 2016/17

If the tax on the net chargeable income exceeds the tax charged at standard rate on net total income (income after deductions but before allowances), the lower tax amount is charged.

Standard Rate for Salaries Tax on Net Total Income

Other Taxes

• There are no tax or excise duties on exports. As for imports, they are generally tax-free except for motor vehicles for use on the road. The four types of dutiable commodities such as liquors, tobacco, hydrocarbon oil and methyl alcohol that are subjected to excise duties.
• According to the Stamp Duty Ordinance – First Schedule, there are certain documents imposed with Fixed Duty from $3 to $100 while others are with Ad Valorem Stamp Duty at a rate between 0.1% and 8.5%.
• The Property Tax is charged on the owners of land and/or buildings in Hong Kong at a 15% standard rate on the net assessable value of the property from YA 2008/09 onwards.

Immigration