Top 10 Things to Know Before You Set Up a Business in Hong Kong

Hong Kong continues to stand as one of Asia’s most dynamic business hubs. Its strategic location, supportive regulatory framework, and trusted legal system make it an attractive choice for global entrepreneurs. Whether you are establishing a new company or expanding existing operations, it is essential to understand the key requirements and compliance obligations. This guide highlights the ten most important aspects to consider before incorporating a Hong Kong company.

1. Business-Friendly Environment

Hong Kong offers one of the most open and competitive economies in the world. The city permits 100 % foreign ownership, imposes no restrictions on capital movement, and provides free repatriation of profits — creating a highly supportive environment for international businesses.

2. Simple Incorporation Process

Company incorporation is highly streamlined. Through the Companies Registry’s e-Registry system, straightforward applications can be processed in about one hour after submission. In practice, allow several business days for name checks, due diligence, and document preparation — meaning most companies are fully established within about a week.

3. Understanding the Companies Registry

The Companies Registry (CR) maintains public records of all incorporated businesses. Before finalising your company name, it is advisable to use the CR’s online e-Search service to check availability and avoid conflicts.

4. Choosing the Right Business Structure

Most entrepreneurs prefer a private company limited by shares, offering limited liability and a separate legal identity. Sole proprietorships and partnerships remain options but have different compliance and liability implications.

5. Opening a Corporate Bank Account

When opening a corporate account, banks conduct stringent CDD/KYC checks. Expect to provide a clear business plan, proof of company activity (e.g., contracts or invoices), and identification for controllers and signatories. Many institutions require in-person presence. Processing time varies — typically from days to weeks, depending on business risk profiling.

6. Compliance and Reporting Obligations

Ongoing statutory duties include:

• Filing an Annual Return (Form NAR1) within 42 days of each anniversary of incorporation

• Preparing audited financial statements annually (unless your company is officially dormant)

• Maintaining a Significant Controllers Register (SCR) and appointing a designated representative

• Holding an Annual General Meeting (AGM) — unless formally waived under the Companies Ordinance

Official reference: Companies Registry – Annual Return (Private Company)

7. Taxation and the Inland Revenue Department (IRD)

Hong Kong applies a simple, territorial tax system:

• 8.25 % on the first HK$2 million of assessable profits

• 16.5 % thereafter

Only Hong Kong–sourced profits are taxable. Companies must also obtain a Business Registration Certificate (BRC). For the period 1 April 2025 – 31 March 2026, the 1-year BRC fee is HK$2,200 (levy waived).

Official reference: Inland Revenue Department – Profits Tax

8. Intellectual Property Protection

The Intellectual Property Department (IPD) provides clear procedures for registering trademarks, patents, and designs — offering legal protection and strengthening brand credibility.

9. Hiring and Employment Regulations

Employers must comply with the Employment Ordinance, which establishes rights related to wages, hours, holidays, termination, and severance. The statutory minimum wage is HK$42.10 per hour as of 1 May 2025.

Employers must also enroll eligible employees in the Mandatory Provident Fund (MPF) scheme. Employer and employee each contribute 5 % of relevant income, up to a HK$1,500 monthly cap.

Official reference: Labour Department – Employment Ordinance

10. Leveraging Government Support for Startups

Hong Kong offers tailored support for startups, including:

• Innovation and Technology Fund (ITF)

• Cyberport Incubation Programme

• Hong Kong Science & Technology Parks (HKSTP) incubation schemes

These programmes provide funding, mentorship, and infrastructure for early-stage businesses.

Conclusion: Partnering with Mirr Asia for a Seamless Start

While Hong Kong offers remarkable strategic advantages — from its legal framework to its tax system — effective company setup and compliance require precision and support. Mirr Asia specializes in helping entrepreneurs navigate incorporation, governance, compliance, and banking, so you can focus on growing your business confidently.