What are the requirements of shareholders and directors for incorporating a limited company in Hong Kong?
The shareholders and director should over 18 years old, Hong Kong residents or non-Hong Kong residents. The shareholder and the director can be the same person.
Company should provide a Hong Kong address as a registered address, to appoint a Hong Kong resident or professional company as company secretary. Also, company should provide the copies of the shareholders and directors addresses, ID cards or passports. If the company secretary is a corporation, it should provide a copy of certificate of incorporation and business registration certificate.
There is no minimum share capital requirement. However, the standard share capital is HK$ 10,000 represented by 10,000 ordinary shares of HK$ 1.00 each. The minimum issued/paid-up capital is usually 1 share of HK$ 1.00.
Yes. But, once the company is incorporated, it is difficult to change the currency of the share capital.
Can company apply for a business registration certificate without filling in the nature of the company's business, and does it limit the expansion of other business scopes?
If the company is unwilling to indicate the nature of the business, it may not be specified. The business registration certificate does not limit the expansion of the business scopes and only covers the main business activities of the company.
Company name can be named in 繁中 or ENG, and can also contain Arabic numerals, but cannot be mixed in 繁中 and ENG.
For HK Limited Companies, an ENG company name must end with the word “Limited” and a 繁中 company name must end with the characters “有限公司”. Names must not be same as or similar to a name appearing in the Companies Registry’s ‘Index of Company Names’. Certain words and expression are subject to special approval by the Registrar of Companies before registration of the company name, such as “Trust”, “Chamber of Commerce”, etc. In addition, names must not infringe on trademarks.
The Company is required to pay the business registration certificate fee (HK$2,250) and the annual return fee (HK$105).
According to the Hong Kong Companies Ordinance, limited company should appoint a Company Secretary, in charge of arranging meetings, keeping minutes of meetings, and presenting statutory documents to governmental department, to ensure the company meets all statutory requirements.
The secretary, if an individual, must ordinarily reside in Hong Kong and over 18 years old; or if a body corporate, must have its registered office or a place of business in Hong Kong. Sole shareholder and director cannot also act as Company Secretary.
Can engage other companies to act as statutory secretary of the Company and Octocomm can provide the related service.
Every company registered in Hong Kong must have a Hong Kong address. The registered address must be a physical address and cannot be a P.O. Box. Octocomm can provide registered office address.
The Annual Return must be filed once in every calendar year (except in the year of its incorporation) within 42 days of the anniversary of the company’s incorporation date. The maximum penalty for late submission is HK$3,480.
The information of all Hong Kong registered companies, including the name, address and shareholding ratio of the shareholder and the name of the director, identity card or passport number and address are available for public.
It usually takes about 6-9 months.
Is it necessary to file an Annual Return during the application for deregistration of a Hong Kong company?
Yes, until the company is deregistered, the company is still required to adhere to compliances, including the filing of annual returns
Hong Kong company can decide its own year-end date. Generally Hong Kong company picks 31 March or 31 December as year-end date. The maximum period of the first basis period is 18 months.
The Inland Revenue Ordinance requires every person carrying on a trade, profession or business in Hong Kong to keep sufficient business records, either in ENG or 繁中, for his income and expenditure so as to enable the assessable profits to be ascertained. He must keep such records for at least 7 years. Failure to do so may render liable to a penalty of HK$100,000.
You have to provide prior year’s audited report, bank statements, sales invoices, purchases invoices, operating expenses invoices, invoices for purchase or disposal of fixed assets, inventory list for the year and all agreements signed during the year.
According to the Company Ordinance Section 379 to 387, director of a Company is required to prepare the audited financial statements annually. Therefore, preparation of audit can fulfill the requirement of tax return submission and the Company Ordinance.
Every company will receive their first Profit Tax Return from the IRD after 18 months of incorporation. Then company will receive the Profit Tax Return in April every year.
The accounts of a company should be audited by a Certified Public Accountant before submitting to the IRD together with an audited financial statements and Profit Tax Return. Octocomm can provide the related service.
A penalty of few thousand dollars or above if a Profit Tax Return is not submitted before the due date. A maximum penalty may also be applied by a district court from the IRD finally.
What is the meaning of the notification of "no Profit Tax Return to be issued in 3 years" after the first submission of Profit Tax Return?
The notification of “no Profit Tax Return to be issued in 3 years” means that the IRD will not issue the Profit Tax Return for 3 years. However, if the company recorded a profit in the financial year, it has the responsibility to apply for the Tax Return and submit it to the IRD with an audited report.
Hong Kong has an attractive corporate tax regime highlighted by low tax rates: corporations are taxed at 16.5% on assessable profits and unincorporated businesses (i.e. partnerships and sole proprietorships) are taxed at 15%.
With effect from 1 April 2018, a two-tiered profits tax rates regime applies. The profits tax rate for the first HK$2 million of profits of corporations will be lowered to 8.25%. Profits above that amount will continue to be subject to the tax rate of 16.5%. For unincorporated businesses, the two-tiered tax rates will correspondingly be set at 7.5% and 15%.
The basis period for profits tax assessment is the period of the assessment year during which the company earns profits. Generally, the year of assessment commences on 1 April and ends on 31 March of the following year.
Losses made in an accounting year can be carried forward and set off against future profits of that trade. To qualify for deduction, losses should have arisen during the course of carrying on a business in Hong Kong. Losses can be carried forward indefinitely until they are fully utilized, subject to certain conditions such as no substantial change in shareholders.
Profits Tax shall be levied according to the actual profits of the taxable year. Since the profits of one year shall be determined only after the end of year, Inland Revenue Department will levy provisional tax before the end of that year. After the profits of relevant year are assessed in the following year, the provisional tax already paid can be deducted from the Profits Tax payable of current year.