1. What is the incorporation package included for Hong Kong companies?
2. What are the requirements for setting up a limited company in Hong Kong?
3. Can a mainland resident or foreign resident establish a Hong Kong company?
4. How long does it take to establish a Hong Kong limited company?
5. What is the difference between shareholder and director?
6. What is the minimum number of Shareholders and Directors of a limited company?
7. After the establishment of a Hong Kong company, how to handle accounting and auditing matters every year?
8. What are the obligations and liabilities for maintaining a Hong Kong company?
9. What is Significant Controllers Register (SCR)?
10. Which companies must keep a Significant Controllers Register?
11. Who is a significant controller of a company?
12. What are the obligations for keeping of Significant Controllers Register?
13. Who has access to the Significant Controllers Register?
14. Can a Hong Kong limited company be dissolved?
15. Anything to be aware of before deregistration?
16. What is a charity in Hong Kong and what can it do?
17. How to obtain charitable status, i.e., tax exemption?
18. Why the reason for Economic Substance requirements?
19. How do I know if my company satisfies the economic substance test?
20. Which offshore jurisdiction with TIN number available?
21. What are the tax incentives for Macau corporations?

Hong Kong

1. What is the incorporation package included for Hong Kong companies?

We adopt the standard model articles of association and complete the incorporation forms (NNC1) as well as the post-incorporation documents (board resolutions, registers, and statements of significant control). The Certificate of Incorporation and the Business Registration Certificate is issued by the HK Companies Registry in 1 working day upon receipt of full payment.
We also provide our named company secretary for the first year of incorporation free of charge.

Incorporation Package:

Share certificate book
Certificate of Incorporation
Preparation of registration forms
Business Registration Certificate
2 copies of printed Articles of Association
Preparation of standard Articles of Association
Companies Registry registration fee and business registration fee inclusive
One pre-inked authorized signatory stamp; and one pre-inked round company stamp
(Folder containing the above items)

2.What are the requirements for setting up a limited company in Hong Kong?

A Hong Kong limited company can be established by a shareholder and director who is 18 years of age or above. A business ad
dress in Hong Kong must be provided as the registered address, and a Hong Kong resident or a professional company must be appointed as the company secretary.

3. What is the incorporation package included for Hong Kong companies?

Yes, there are no restrictions on the nationality of shareholders and directors for company formation in Hong Kong.

4. How long does it take to establish a Hong Kong limited company?

It takes 2-3 working days for electronic submission of incorporation documents, original certificates and company’s kit set will be ready in 7 working days.

5. What is the difference between shareholder and director?

6. What is the minimum number of Shareholders and Directors of a limited company?

At least one Shareholder and Director, the sole Shareholder can also act as the sole Director at the same time.
Corporate Director and Shareholder are allowed while at least one individual Director is appointed.
In the case that the sole Director is also the sole shareholder of a company with business operations, it is recommended to appoint a reserve Director that will act in the place of the sole Director in the event of his or her death. This is to avoid significant delays in operating the company.

7. After the establishment of a Hong Kong company, how to handle accounting and auditing matters every year?

It can be handled by a professional accounting firm in Hong Kong. Sun Chiap provides comprehensive accounting and auditing services. The company only needs to provide financial records such as invoices, bank statements, expense vouchers, salary records and other relevant information. (For details, please refer to Tax or Audit & Assurance Services)

8. What are the obligations and liabilities for maintaining a Hong Kong company?

Business Registration Certificate & Annual Return
The basic two compulsory requirements are the business registration renewal (BRC) and filing of annual return (AR) must be done on a yearly basis.

Accounting & Audit
Keeping all transactions record, prepare in time to do audit and tax filing. Audit is a yearly compulsory requirement.

Profit Tax Return & Employer’s Return
A company receives the first return 18 months from incorporation, file within 3 months. Thereafter receive subsequent returns annually, file within 1 month. If “NIL” return has been filed to the Inland Revenue Department, the next return will only be issued in the third year.

9. What is Significant Controllers Register (SCR)?

Hong Kong companies are required to keep a Significant Controllers Register following the global trend of promoting transparency of beneficial ownership of entities.
The Companies (Amendment) Ordinance 2018 introduces new requirements on the keeping of Significant Controllers Registers by companies effective 1 March 2018.

10. Which companies must keep a Significant Controllers Register?

The requirement to keep a Significant Controllers Register applies to all companies formed and registered under the Companies Ordinance or a former Companies Ordinance, namely locally incorporated companies, including (i) companies limited by shares; (ii) companies limited by guarantee; (iii) unlimited companies. Listed companies in Hong Kong and non-Hong Kong companies registered in Hong Kong, including those that have registered branches or representative office in the country, are exempted from the requirement.

11. Who is a significant controller of a company?

A significant controller of a company can be either a natural person, government entity, or a legal entity that has significant control over that company.

Definition of significant control
A person or entity is considered to have significant control if they:

(a) directly or indirectly hold more than 25% of
issued shares in a company that has share capital;
the right or rights to share in the capital or profits of a company that has no share capital;
the voting rights in a company.

(b) has the right to appoint or remove a majority of the board of directors or actually exercises significant influence or control over: a company; or
the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfies any of the conditions set out in (a) above.
 

12. What are the obligations for keeping of Significant Controllers Register?

Maintain a Significant Controllers Register regardless of whether or not the company in question has significant controllers.
Investigate and obtain information of each significant controller. Within seven days of identifying a significant controller, a notice should be sent to request confirmation and information from that person/entity.

Make sure the Significant Controllers Register is up to date.
Keep the Companies Registry updated of the location of the Significant Controllers Register.
If any of the above obligations are not met the applicable company and all responsible persons may be fined.

13. Who has access to the Significant Controllers Register?

The Significant Controllers Register will be kept as an internal record, i.e., it will not be publicly accessible. Among those who may request a copy for inspection purposes are any law enforcement officer of statutory bodies including but not limited to the Hong Kong Police Force, the Companies Registry, the Inland Revenue Department, the Hong Kong Monetary Authority, the Securities and Futures Commission, and the Independent Commission Against Corruption.

14. Can a Hong Kong limited company be dissolved?

Yes, a solvent company in Hong Kong may be dissolved by way of deregistration or members’ voluntary liquidation.
Deregistration is a simplified way comparing to liquidation. The company must meet the following conditions to go deregistration:
all the shareholders agree to deregistration

the company has never commenced business or operation, or has ceased to carry on business or ceased operation for more than 3 months before the application

the company has no outstanding liabilities including government fees and taxes; and
the application is accompanied by a written notice from the Inland Revenue confirming no objection to the company being deregistered (the “Notice of No Objection”) 

15. Anything to be aware of before deregistration?

The Company should dispose of all the property before the company is dissolved. Upon dissolution of the Company, all the property (including credit balances in the Company’s bank account) will be vested in the Government of the HKSAR as ownerless property. The whole processes of deregistration normally takes about 6 – 9 months, we strongly recommend clients to close all the bank accounts of the company before the application.

If the company has debts, the company can only apply for deregistration if its parent company or subsidiary, directors or shareholders agree to repay the debts on behalf of the company, or the company obtains consent notice from creditor to waive the debts.

16. What is a charity in Hong Kong and what can it do?

“Approved charitable donation” means a donation of money to any charitable institution or trust of a public character, which is exempt from tax under section 88 of the Inland Revenue Ordinance, or to the Government, for charitable purposes. (Section 2 of the Inland Revenue Ordinance)
Members of the public may check the list of charitable institutions and trusts of a public character, which are exempt from tax under section 88 of the Inland Revenue Ordinance as to whether the donations can be claimed for tax deduction.

According to the law, a charity is an organization set up for one of the following purposes:
(a) Relief of poverty;
(b) Advancement of education;
(c) Advancement of religion; and
(d) Other purposes of a charitable nature beneficial to the community not falling under (a), (b) or (c).

The first three purposes can apply to activities carried on anywhere in the world, for purposes that fall under (d) these will only be considered as charitable if they are beneficial to the Hong Kong community.

In General a charity in Hong Kong can only carry out business if the funds raised out of such activity are reinvested into the charity. Similarly, a charity can also own property, but it should only be used for charitable purposes.

17. How to obtain charitable status, i.e., tax exemption?

A charity (or charitable institution) is entitled to tax exemption under Section 88 of the Inland Revenue Ordinance. All charities must apply for approval to be tax exempt, i.e. Certificate of Tax Exemption, from Charitable Donations Section, Inland Revenue.

It is essential that a charity is established by a written governing instrument such as articles of association, with clauses including objects of the charity and limitation for application of funds. A company limited by guarantee is an ideal vehicle for charity because the internal operations are governed by its articles of association and the Companies Ordinance; the rules are clear leaving no doubt for members as to how the company should be operated.

18. Why the reason for Economic Substance requirements?

Under the OECD’s Base Erosion and Profit Shifting (BEPS) Inclusive Framework and the European Union Code of Conduct Group (EUCoCG) – the Forum on Harmful Tax Practices (FHTP) reviewed certain preferential tax regimes addressed to foreign investors and classified some of them as ‘harmful’ or ‘potentially harmful’. These targeted preferential tax regimes usually include:

Ring-fencing elements, whereby the domestic market doesn’t have access to these preferential tax regimes.

Companies that are benefitting from a preferential tax regime have a lack of economic substance in the jurisdiction. That is, income-generating activities are not carried out from within the jurisdiction where the company is incorporated.

Companies must report to the tax authorities whether they are carrying on one or more of activities which tends to be
geographically mobile:

1. fund management;
2. banking;
3. insurance;
4. finance and leasing;
5. distribution and service centre business;
6. headquarters business;
7. IP business;
8. shipping business; and
9. holding company business.

19. How do I know if my company satisfies the economic substance test?

Relevant entities that carry on relevant activities must satisfy the economic substance test and must therefore:

• conduct core income-generating activities (CIGAs) in relation to the relevant activity in the jurisdiction;
• be directed and managed in an appropriate manner in the jurisdiction; and
• having regard to the level of ‘relevant income’ (ie, gross income recorded in their books and records under applicable accounting standards) derived from the relevant activity carried out in the jurisdiction;
  • incur an adequate amount of operating expenditure in the jurisdiction:
  • have an adequate physical presence (including maintaining a place of business or plant, property and equipment) in the jurisdiction; and
  • have an adequate number of full-time employees or other personnel with appropriate qualifications in the jurisdiction.

20. Which offshore jurisdiction with TIN number available?

Belize
Belize passed certain acts to address the considered ‘harmful tax regimes’ identified by the OECD. Belize IBCs can now be incorporated by both residents and non-residents, can do business locally and with residents, own land in Belize and hold shares in Belize domestic companies. IBCs doing business within Belize are now subject to both Belizean income tax and stamp duty and are required to file an income tax return.

IBCs will be able to obtain Tax Identification Number (TIN) and may be required to file annual tax returns and financial statements. 

21. What are the tax incentives for Macau corporations?

Macau offers very attractive tax incentives for business.

Profits Tax
Exemption allowance for profits tax assessment is MOP$600,000.00. ( since 2014 )

Salaries Tax
30% exemption on salaries tax and the exemption allowance for its assessment is MOP$144,000.00. ( since 2011; From 2008 to 2010: MOP$120,00.00 )

The tax system of Macau has an attractive characteristic of the lowest tax rates as compared to other South East Asian countries. In fact, as the Territory is still in its developing stage, low tax rates are essential for attracting foreign, as well as local investments. The main reason why such low tax rate can be maintained is that direct and indirect taxes are not the principal components of total public revenue. In Macau, the major source of public revenue comes from revenues from franchises granted, which are actually the rent, the profit tax and other revenues collected from the gambling industry. With the gambling industry supporting most of the Territory’s revenues, the tax burden on local and foreign business and economic activities is highly bearable due to the benefits derived from low tax rate.