Company Formation Comparison Hong Kong vs Japan

Updated on Friday 28th October 2016

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Hong Kong and Japan are both appealing jurisdictions when choosing to invest in Asia. The countries are well developed, have a good economic situation and a business-friendly infrastructure. Several differences between the location of the two jurisdictions or the taxation regime can ultimately be decisive for foreign investors who wish to enter the Asian market.

Investors interested in company registration in Hong Kong should be well informed about the existing investment policies, the laws for foreign investors and the advantageous tax measures the city has to offer.

Investing in Hong Kong

Hong Kong is one of the most competitive cities in Asia and is well-known for its low taxation regime and free-trade policies. Import and export companies are very advantaged here because of the Victoria Port and close proximity to a large market, Mainland China.

Company registration in Hong Kong is very easy and the Companies Registry is able to complete a registration request in less than a few days, of all the documents and company papers, are properly submitted.

Investors who want to open a Hong Kong company can set-up a branch that will act as a direct extension of the parent company or open a subsidiary, which will be incorporated as a limited liability company in the city.

Companies in Hong Kong pay a corporate income tax rate of 16,5% and unincorporated businesses pay a lower tax of 15%. There is no surtax nor a withholding tax on dividend distributions.

Investing in Japan

Investors in Japan also have several options when deciding on the most favorable type of legal entity. They can choose between the limited liability company, the joint stock company, the partnership or the branch.

Compared to Hong Kong, Japan imposes a larger corporate tax rate, at 23,4%, for companies that exceed a certain capital. Japanese companies are also subject to an inhabitants tax, calculated according to the location and the size of the company. A local enterprise tax and a surtax are also applicable.

The choice to enter the Asian market is an important one for any international company. If you are considering opening a company in the Special Administrative Region please do not hesitate to contact our company registration agents in Hong Kong.

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