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Establish a Subsidiary in Hong Kong

Updated on Tuesday 03rd January 2017

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subsidiary in Hong Kong is one of the available business forms for foreign investors and entrepreneurs who choose to expand their activities. Unlike the branch or the representative office, the subsidiary is essentially a distinct legal entity that can carry on the activities of the mother company.

Our Hong Kong company formation agents can help foreign companies interested in establishing their presence here to choose between the subsidiary and the branch office.

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Hong Kong is known for its excellent infrastructure, free economy and low taxes. Its location in Asia, close to Mainland China, makes it an ideal location for businesses operating in the Asian market and worldwide. 
 
Our agents invite you to watch a short video about Hong Kong subsidiaries

Key facts about subsidiaries in Hong Kong

The subsidiary is the most popular business form chosen by foreign companies in Hong Kong. The subsidiary is a private limited liability company registered in Hong Kong treated as a separate legal entity from its parent company, thus the liabilities of the subsidiary do not extend to the parent company, as they would in the case of a branch in Hong Kong.

The subsidiary can have the same name or choose a different one and it can have the same listed activities or these can differ. However, it is important that the name of the company is approved by the Companies Registry. There is no minimum or maximum share capital for a subsidiary in Hong Kong and subsidiaries are subject to the same tax regime and tax rates applicable to private limited companies.

The basic requirements for a subsidiary include:

  •      -  at least one director;
  •       -  at least one shareholder and a maximum of 50;
  •       -  a company secretary;
  •       -  an appointed auditor who must be a member of the Hong Kong Society of Accountants and has a practicing certificate.

Our company formation specialists in Hong Kong can tell you more about the accounting requirements for subsidiaries and other types of companies.

Register a subsidiary in Hong Kong

The company registration procedure for a subsidiary includes several steps. The following documents are required for registering a subsidiary:

  • ·         - the application form, signed and completed;
  • ·         - the incorporation documents for the subsidiary;
  • ·         - The parent company’s Memorandum and Articles of Association and Certificate of Incorporation;
  • ·         - Documents for the appointed company officers: identification documents, residence proof and a bank letter;

 

registration fee and a capital fee apply. The procedure usually lasts between four and seven days. After the company is registered, a Certificate of Incorporation will be issued. After registration, any company must register at the Inland Revenue Department and obtain a Business Registration Certificate. Companies will also need to open a bank account and apply for any necessary business licenses, according to the type of activity they perform.

Requirements for Hong Kong subsidiaries after registration

After the company is registered with the Trade Register in Hong Kong, it must also register with the Inland Revenue, which is the tax authority in this country. The Inland Revenue will issue the Business Registration Certificate which will enable the subsidiary to operate in Hong Kong.

The next requirement is for the subsidiary directors or representative of the company to open a corporate bank account with a Hong Kong Bank. Our Hong Kong company formation agents can assist with the opening of the bank account. Once these requirements are complied with, the Hong Kong subsidiary may apply for the business license which will be issued by the competent authority. It must be taken into account that certain special licenses could be required, depending on the activity of the subsidiary.

Taxation of subsidiaries in Hong Kong

As mentioned above subsidiaries in Hong Kong will be treated the same as local companies in terms of taxation. The corporate tax for a Hong Kong subsidiary is 16,5%, which is one of the lowest in Southeast Asia. Apart from that, the parent company may also file for certain tax exemptions or credits depending on the double taxation agreement its home country has signed with Hong Kong.

Subsidiaries must also comply with the same accounting regulations as Hong Kong companies. They must file their tax returns within one month from their issuing by the Inland Revenue Authority. The tax authorities issue these returns on April 1st.

Our company formation consultants in Hong Kong are ready to assist you and answer any questions. Please contact us for additional information.

 

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