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1、AN INTRODUCTION TODoing Business in Hong Kong2024This Investing Doing Business in Hong Kong guide was produced by a team of professionals at Dezan Shira&Associates,with Zhou Qian as technical editor,and Gigi Wong,Katrina Huang,and Sandy Zhang,and Jennifer Lu as contributors.Creative design of the gu

2、ide was provided by Miguel Enrico Anciano.2024 Dezan Shira&Associates DisclaimerThe contents of this guide are for general information only.For advice on your specific business,please contact a qualified professional advisor.Copyright 2024,Asia Briefing Ltd.No reproduction,copying or translation of

3、materials without prior permission of the publisher is permitted.VISIT US ON FACEBOOKFOLLOW US ON TWITTERDezanShiraChinaBriefingVISIT US ON LINKEDINTHE DOING BUSINESS IN ASIA GUIDES SERIESAvailable to Download Now:ASEAN Guide China Guide India Guide Indonesia Guide Singapore Guide Vietnam Guide Chin

4、a Super City Clusters Dubai Guide Doing Business in Hong Kong PortalOur latest online Doing Business in Hong Kong Portal consists of 100+guides,videos,publications,and tools that are practical and easy to navigate,covering:Why Hong Kong,Regions to Invest,Sector Insights,How to Setup,Tax,Audit and Ac

5、counting,HR,Recruitment,PEO,and Payroll,News,Events,and more.3AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024About Dezan Shira&AssociatesDezan Shira&Associates is a pan-Asia,multi-disciplinary professional services firm,providing legal,tax and operational advisory to international corporate inve

6、stors.Operational throughout China,India,and ASEAN,our mission is to guide foreign companies through Asias complex regulatory environment and assist them with all aspects of establishing,maintaining,and growing their business operations in the region.With more than two decades of on-the-ground exper

7、ience and a large team of lawyers,tax experts,and auditors,in addition to researchers and business analysts,we are your partner for growth in Asia.4AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024The Peoples Republic of China regained sovereignty over Hong Kong from Britain in 1997,from which poi

8、nt it has been a Special Administrative Region(SAR)of the country.However,the way in which the city is governed is still fundamentally different from the Chinese Mainland a fact that is reflected in its slogan of“One Country,Two Systems”.Hong Kong is largely autonomous from China,and foreign compani

9、es will quickly discover that the rules of doing business in the Mainland simply do not apply in Hong Kong,and vice versa.For this reason,Hong Kong has long served as a dominant“gateway”to the Chinese Mainland.Its geographical proximity to the Chinese mainland,low taxes,business-friendly environment

10、,free flow of capital,rule of law,independent judiciary,and robust intellectual property protection have made it an ideal place for foreign investment.Despite the hardships of the pandemic,Hong Kong remains strong as ever and will continue to function as a free global financial hub,strengthened by t

11、he development of the Guangdong-Hong Kong-Macao Greater Bay Area(GBA).This publication,designed to introduce the fundamentals of doing business in Hong Kong,was created in April 2024 using the most up-to-date information at the time.It was compiled by Dezan Shira&Associates,a specialist foreign dire

12、ct investment practice that provides corporate establishment,business advisory,tax advisory and compliance,accounting,payroll,due diligence,and financial review services to multinationals investing in emerging Asia.Since its establishment in 1992,Dezan Shira&Associates has grown into one of Asias mo

13、st versatile full-service consultancies with operational offices across China,Hong Kong,India,Singapore and Vietnam,as well as liaison offices in Italy,Germany and the United States,and partner firms across the ASEAN region.Dezan Shira&Associates experienced business professionals are committed to i

14、mproving the understanding and transparency of investing in emerging Asia.PrefaceALBERTO VETTORETTIManaging PartnerDezan Shira&AssociatesCONTACTDezan Shira&Associates H5AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Doing Business in Hong Kong 2024 introduces the fundamentals of investing in Hon

15、g Kong.Compiled by professionals at Dezan Shira&Associates in April 2024,this comprehensive guide is ideal for businesses looking to enter the Hong Kong market as well as companies who already have a presence here and want to stay updated with the most recent and relevant policy changes.To be more s

16、pecific,the below topics have been updated:Incorporation and business registration:We incorporate updates to the business registration process,including changes in the business registration fee for the 2024-25 period.Intellectual property protection:We have revised the patent registration section to

17、 include the application process for standard patent(O)in Hong Kong.Additionally,weve updated the procedures for applying standard patent(R)and short-term patent.Tax reductions proposed in the Budget Plan 2024-25:We have updated relevant chapters to reflect the tax measures introduced in Hong Kongs

18、2024-25 Budget.These measures include reductions in profits tax,salaries tax,and tax under personal assessment for the year of assessment 2023/24.New two-tiered standards tax rates of salaries tax:We introduce the new two-tiered tax rate regime for salaries and tax under personal assessment,effectiv

19、e from the 2024 to 2025 assessment year onward.Updated foreign-sourced income exemption(FSIE)scheme:We include the expanded coverage of foreign-sourced disposal gains introduced in December 2023.Alignment with BEPS 2.0 Pillar Two rules:We present the latest updates regarding the implementation of th

20、e global minimum effective rate in Hong Kong,as outlined in the 2024-25 Budget Plan speech.Double taxation treaties:We have updated the table of countries or regions with signed Double Taxation agreements(DTAs)or DTAs under negotiation with Hong Kong.Standard of continuous contract:We introduce the

21、proposed amendment to the standard of continuous contract,which will expand the benefits under the Employment Ordinance to more employees.Abolition of Mandatory Provident Fund(MPF)offsetting arrangement:We discuss the abolition of the MPF offsetting arrangement that will take effect on May 1,2025.Th

22、is is designed to enhance employee protection and ensure fair treatment during employment termination.Potential amendments to the data laws:We list some potential amendments to the data protection laws based on proposals in the data offices annual review reports.Whats New in This Guide?6AN INTRODUCT

23、ION TO DOING BUSINESS IN HONG KONG 2024A highly dynamic city that serves as a gateway to the Chinese Mainland and Asia,Hong Kong is the ideal base for your investment in Asia.Hong Kongs business-friendly environment,low taxes,rule of law,free economy,independent judiciary,modern infrastructure,I&T c

24、apabilities,and robust intellectual property protection allow businesses and individuals to succeed in this most competitive and international city.Why Hong Kong?Why Choose Hong Kong for Your Business?Largely autonomous political system under the“One Country,Two systems”Excellent legal and dispute r

25、esolution services under rule of lawWorld-class infrastructure with sophisticated support servicesActive participation in the global transition to a green economyProximity to markets in Asia,including the Chinese MainlandA leading international financial hub and a prime location for financial servic

26、esOpen,fair,and efficient business environmentLow,simple,and competitive tax regimeImproving data privacy protectionHighly skilled and multicultural talent poolHong Kong is allowed to retain its capitalist economic system and own currency,legal system,legislative system,and governmental system for 5

27、0 years till 2047.Hong Kongs strict maintenance of the rule of law and judiciary independence,its common law tradition,and its established English Chinese bilingual legal system has made it an ideal hub for dispute resolution worldwide.Hong Kong provides some of the most advanced business infrastruc

28、ture in the world.The city is easily accessible with efficient and affordable public transport systems.Hong Kong pledges to reach carbon neutrality by 2050.It has been trying to lead by example and making it easier for green bond issuers to come to Hong Kong to raise funds.Hong Kong enjoys an ideal

29、location in Asia that enables businesses to tap into the various opportunities in the Guangdong-Hong Kong-Macao GBA and throughout the rest of the region.Hong Kongs financial markets operate under effective and transparent regulations that are in line with international standards.The absence of exch

30、ange controls,corruption-free government,free flow of information,capital,and talents,and low taxation has enabled Hong Kong to maintain a free and efficient environment for business activities and commerce.Hong Kong enjoys one of the most tax-friendly systems in the world.It adopts the territorial

31、basis of taxation and does not have any turnover taxes,making it a favorable location for profit shifting and conducting re-invoicing.Hong Kong has been ramping up efforts to improve data privacy protection within its jurisdiction.The Personal Data(Privacy)Ordinance,Cap 486 was amended in 2021 to co

32、pe with new privacy challenges.Hong Kong has a diverse talent pool,equipped with the skills and knowledge to drive business in Hong Kong and beyond.The HKSAR government is also ramping up efforts in pooling more high-quality talents in 2024.7AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Politic

33、al systemThe Hong Kong Special Administrative Region(HKSAR)was established on July 1,1997,after Great Britain returned it to the Peoples Republic of China(PRC).HKSAR is currently ruled by the Basic Law of the HKSAR the constitution adopted by the National Peoples Congress of the PRC on April 4,1990.

34、Under the Basic Law,Hong Kong is allowed to retain the social,economic and legal systems present at the time of the handover for a 50 year period under the principle of“One Country,Two Systems”.Additionally,the Basic Law designates a system of governance led by the Chief Executive,who is the head of

35、 the HKSAR,and the Executive Council,which assists the Chief Executive in policy-making issues.Legal systemDue to its previous status as a British colony,Hong Kongs legal system is largely influenced by English common law.The constitutional framework for Hong Kongs legal system is provided by the Ba

36、sic Law approved by the National Peoples Congress,which supplements the common law.The independent judiciary under the Basic Law ensures that Hong Kong remains within the common law system.The Court of Final Appeal is the highest court in HKSAR and is headed by the Chief Justice.Furthermore,reflecti

37、ng its status as a Special Administrative Region,the HKSAR legal system is separated from the one governing the PRC under the principle of“One Country,Two Systems.”The PRC national laws will be applied to Hong Kong only if they are listed in Annex III to the Basic Law,after consultation with the Hon

38、g Kong Basic Law Committee.For example,in June 2020,the PRC Law on Safeguarding National Security in Hong Kong was added to Annex III.Economic system Hong Kongs economic system is defined as a free market economy and characterized by minimum intervention from the government.HKSAR is service oriented

39、,and especially strong in the financial services,international trade,and tourism sectors.Additionally,it has strong economic links to the Chinese Mainland and other major economies in the Asia Pacific region.The absence of exchange controls,corruption-free government,and free flow of information,cap

40、ital,and talents has enabled Hong Kong to maintain a free and efficient business environment for business activities and commerce.Further,Hong Kong has a good reputation due to its“free port”and straightforward customs clearing procedure.The city has no tariffs on imported goods,no import quotas,no

41、dumping tax laws,and applies excise duties on only four commodities hard alcohol,tobacco,oil,and methyl alcohol.Moreover,Hong Kong does not impose taxes on dividends generated from doing business in the region.8AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Free trade and low taxation have helpe

42、d Hong Kong become one of the worlds freest economies and among the easiest places in the world to do business.Financial systemThe Hong Kong financial system is composed of four different financial regulators,each one governing different parts of the financial sector.These include the Securities and

43、 Futures Commission(SFC,an independent body set up to regulate the securities and future markets),the Mandatory Provident Fund Schemes Authority(MPFA,a statutory body set up to assist Hong Kongs workforce to accumulate savings for their retirement),the Insurance Authority(IA,a body set up to protect

44、 the interests of policyholders and promotes the general stability of the insurance industry),and the Hong Kong Monetary Authority(HKMA,the governments agency responsible for maintaining monetary and banking stability).Despite the HKMAs role as the currency board and de facto central bank,it does no

45、t print currency notes itself.Instead,it grants Hong Kong dollar printing privileges to HSBC,Standard Chartered Bank,and the Bank of China.Under the Linked Exchange Rates System(LERS),the Hong Kong dollar has been pegged to the US dollar since 1983,at a rate of HK$7.80 to US$1,which has helped maint

46、ain monetary stability.Through the exchange rate system,the HKMA authorizes note-issuing banks to issue new banknotes,as long as an equivalent amount of US dollars is deposited with the HKMA.Tax regimeHong Kong offers one of the most tax-friendly systems in the world.It imposes only three kinds of d

47、irect taxes profits tax(for incorporated body),salaries tax(for personal income),and property tax(for income sources from Hong Kong property).There are also generous allowances and deductions to reduce the burden of taxpayers.Data privacy protection Like other major economies,Hong Kong has been ramp

48、ing up efforts on improving data privacy protection within the jurisdiction.In Hong Kong,the Personal Data(Privacy)Ordinance,Cap 486 of the Laws of Hong Kong(PDPO)protects the privacy of individuals in relation to personal data,and was recently amended in 2021 to cope with new privacy challenges and

49、 address public concerns.When the PDPO was drafted,reference was made to the relevant requirements under the 1980 OECD Privacy Guidelines and the European Union(EU)Directive 95/46/EC.It may be noted that the EUs GDPR,in effect since 2018,contains significant new regulatory provisions 9AN INTRODUCTIO

50、N TO DOING BUSINESS IN HONG KONG 2024impacting data protection and introduced major changes to its 1995 Directive.However,these new requirements are not found under the PDPO.Geographical proximity to China and the Greater Bay AreaHong Kongs geographic position enables businesses to easily tap into t

51、he various opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area(GBA)and the Chinese Mainland market.Hong Kong enjoys a highly active and cooperative business relationship with the Mainland.It is both the countrys leading conduit for foreign investment and its primary offshore capital rais

52、ing center the city,as one of the worlds largest IPO markets,is expected to attract more Chinese companies to list amid tensions between the US and China.The Mainland and Hong Kong Closer Economic Partnership Agreement CEPA provides Hong Kong products and services easier access to the vast Mainland

53、market.The CEPA goes beyond Chinas WTO commitments,eliminating tariffs and allowing earlier or preferential access to some services sectors.Overseas companies can also benefit from CEPA.For trade in goods,foreign investors can set up production lines in Hong Kong to produce goods that meet the CEPA

54、rules of origin(ROO)requirements.For trade in services,companies incorporated in Hong Kong by foreign investors can make use of CEPA as long as they satisfy eligibility criteria of a“Hong Kong Service Supplier”.In the financial sector,Hong Kong and the Chinese Mainland have made remarkable progress

55、in opening new channels to enhance their financial connectivity,such as establishing the Shanghai-Hong Kong Stock Connect,Shenzhen-Hong Kong Stock Connect and Bond Connect,Mainland-Hong Kong Mutual Recognition of Funds arrangement,and the two-way cross-boundary Wealth Management Connect in the GBA.T

56、hus,Hong Kongs status as an international financial hub is expected to be further strengthened under the GBA development plan.10AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 202410AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Table of ContentsPreface04Whats New in This Guide?05Why Hong Kong?06

57、Part 1|Establishing and Running a Business13What are my options for investment?14Hong Kong companies14Branch offices15Representative offices16Sole proprietorship16Partnership17Restrictions on foreign investment18How do I establish a business?19Requirements and steps to set up a company in Hong Kong1

58、9Opening a bank account in Hong Kong21Intellectual property23What are the key compliance requirements?28Annual compliance requirements28New regime of significant controller register29Compliance of anti-money laundering and counter-terrorist financing requirements for trust or company service provide

59、rs30New inspection regime31How do I make changes to my company?33Dormant company33Changing a company name3311AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 202411AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Changing the companys Articles of Association34How do I deregister my company?35How do

60、I solve legal disputes?37Alternative Dispute Resolution(ADR)37Litigation38Part 2|Tax,Audit,and Accounting40What are the major taxes in Hong Kong?41Key features of Hong Kongs taxation system41Salaries tax41Profits tax 44Property tax49Hong Kongs principle of taxation based on territorial source50New r

61、ules on foreign source income exemption51What are the key compliance requirements?55Accounting standards55Bookkeeping requirements55Financial reporting requirements56International taxation58Hong Kongs new transfer pricing regime58AEOI reporting60BEPS 2.061Hong Kongs double taxation agreement network

62、61Part 3|Human Resources and Payroll67What obligations do I have as an employer?68Employers mandatory obligations68Other payroll obligations70Salaries tax in Hong Kong72Employer72Employee72Case study7312AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 202412AN INTRODUCTION TO DOING BUSINESS IN HONG KO

63、NG 2024Visa requirements and procedures in Hong Kong75Visitors visa75Employment visa75Employee leaves and vacations77Statutory holidays77Annual leave78Sick leave79Maternity leave80Paternity leave81Other Leave81Terminating an employee82Types of termination82Termination payments84Long service payment8

64、5Part 4|Cybersecurity and Data Protection87What are the major cybersecurity and data protection laws?88What are some of the key compliance requirements?90Purpose and manner of collection90Accuracy and duration of retention91Use of data91Data security91Openness and transparency92Access and correction

65、92Exemptions921What are my options for investment?How do I establish a business?What are the key compliance requirements?How do I make changes to my company?How do I deregister my company?How do I solve legal disputes?Establishing and Running a Business14AN INTRODUCTION TO DOING BUSINESS IN HONG KON

66、G 2024Foreign investors can carry on business in Hong Kong through multiple business vehicles,including:A company incorporated in Hong Kong A branch office registered in Hong Kong of the foreign corporation A representative office established in Hong Kong Sole proprietorship PartnershipWhile some op

67、tions are more commonly adopted than others,investors are advised to choose the most appropriate business structure based on the pros and cons of each option.Hong Kong companiesForeign investors can establish their presence in Hong Kong by setting up a Hong Kong company.Companies incorporated in Hon

68、g Kong can be limited or unlimited and can be public or private.To be more detailed,there are five types of companies that may be formed under the Companies Ordinance(Cap.622):Private companies limited by shares(private limited company)Public companies limited by shares(public limited company)Compan

69、ies limited by guarantee without a share capital Private unlimited companies with a share capital(private unlimited company)Public unlimited companies with a share capital(public unlimited company)What are my options for investment?Limited companyCompany limited by sharesPrivate limited companyPriva

70、te unlimited companyPublic limited companyPublic unlimited companyCompany limited by guarantee without a share capitalUnlimited company 15AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024A company limited by guarantee does not have share capital,but the liability of its members is limited by the a

71、mount of assets they have undertaken to contribute.This is the type of company that is most suitable for nonprofit activities,such as operating a nonprofit research institute.It is not a suitable structure for a business undertaken for profit making purposes.A company limited by shares has a share c

72、apital that is divided into a number of shares.The shares are issued to shareholders and the liability of its shareholders will be limited to the unpaid subscription price for the shares.This is most suitable for a company that carries on a business for profit making purposes.A private limited compa

73、ny is a company limited by shares which:restricts the ability of its members to transfer shares;limits the number of members to 50(not including employees or former employees);and does not issue invitations to the public to subscribe for shares or debentures of the company.It is the most dominant ty

74、pe of business entity in Hong Kong,accounting for 99 percent of all companies incorporated in Hong Kong.Most small to medium sized companies are set up as private limited companies due to its many advantages,such as its separate legal entity,its limited liability to members,its positive image among

75、banks and investors,and the convenience of ownership transfer.A public limited company is a company whose shares and debentures are offered to the public.If a company is a limited liability company but does not fall into the scope of a private limited company or a company limited by guarantee,then i

76、t is a public limited company.Many public companies are listed on the Stock Exchange of Hong Kong Limited and the statutory requirement for a public company is much stricter as it raises capital from the public.A medium to large private limited company may decide to transfer the company structure to

77、 that of a public limited company(and thereby expanding its share base)when they achieve significant growth in the industry.An unlimited company is one where the liability of its members is not limited.This business structure is rarely adopted by investors.Branch offices A branch office has no separ

78、ate legal identity and is treated as an extension of the overseas parent company in Hong Kong.As such,the overseas parent company is liable for all the debts and liabilities of the branch office.A foreign corporation wishing to establish a Hong Kong branch office must register with theCompanies Regi

79、stry as a non-Hong Kong company under Part XVI of the Companies Ordinance(Cap.622)and obtain a Business Registration Certificate.GIGI WONGManagerBusiness Advisory ServicesHong Kong Office“The statutory requirement for a public company is much more stricter than for a private one.As such,for most pur

80、poses,the private limited company is the most popular option for foreign investors.”16AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024In general,branch offices of foreign companies registered in Hong Kong are subject to similar legal and tax requirements and consequences as companies incorporated

81、 in Hong Kong.The business activities that can be carried on in Hong Kong and the profit tax rate are the same for branch offices of foreign companies and locally incorporated companies.While this option is generally not recommended for that parent company assumes larger liability for branch offices

82、,foreign investors may prefer a branch over a subsidiary considering:A branch office might be more tax efficient for the parent company under certain circumstances,such as when losses incur in the Hong Kong branch.Generally,the transfer of the shares of a foreign company operating a branch in Hong K

83、ong are not subject to stamp duty in Hong Kong.A branch office is subject to limited compliance requirements under the Companies Ordinance.A branch office is not required to conduct separate audit.A branch office can be terminated easily by notifying the Companies Registry.Representative officesLike

84、 a branch office,a representative office also has no separate legal identity,and the overseas parent company shall bear full responsibility for its debts and liabilities.Nevertheless,a representative office is not allowed to conduct any profit generating business activities(or else it is required to

85、 register as a branch office).It can only engage in promotion,liaison,and market research activities.Representative offices need not be registered with the Companies Registry but are required to file for a Business Registration Certificate with the Inland Revenue Department.Foreign investors who see

86、k to study the market in Hong Kong may prefer representative offices over branches considering representative offices are exempted from filing profit tax returns if it does not conduct profit-generating businesses in Hong Kong.Sole proprietorshipA sole proprietorship is the easiest and simplest form

87、 of business that is owned and operated by a sole person.It has no separate legal identity,and the sole proprietor is entitled to all the profits from the business and is personally responsibly for all the liabilities.The only procedural step in establishing a sole proprietorship is to obtain a Busi

88、ness Registration Certificate.In addition to easy setup,the sole proprietorship has certain tax advantages.The sole proprietor can elect for“Personal Assessment”in their tax return filed for the tax year,so that the profits from the sole proprietorship will be assessed under the salaries tax scheme,

89、which are subject 17AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024to generous allowance and deductions and the progressive rate of which may be lower than the corporate tax rate.Moreover,the business losses of the sole proprietorship can be offset against other income of the proprietor.On the o

90、ther hand,sole proprietorship is considered to be the riskiest business form as the sole proprietor shall bear joint liability for the debt that the business incurs.There is no protection of their personal assets.Thus,sole proprietorship is generally not recommended for investors.PartnershipPartners

91、hip is a form of business where two or more people carry on business in common with a view of sharing profits.There are two types of partnerships in Hong Konggeneral partnership and limited partnership.In a general partnership,every partner is personally liable for the businesss debts and liabilitie

92、s.In addition,a general partner can be held responsible for the actions of other partners in the business.The only procedural step in establishing a partnership is to obtain a Business Registration Certificate.In a limited partnership,there should be one or more general partners,who are responsible

93、for the management of the partnership and liable for all its debt,and one or more limited partners,who are liable for the debts of the partnership within the amount they contribute to the capital of the partnership.A limited partner is not allowed to manage or control the partnership.A limited partn

94、ership is required to be registered with the Companies Registry and obtain a Business Registration Certificate.Partnerships are generally easier to set up,maintain,and dissolve as compared to companies.There are fewer compliance requirements imposed on partnerships.Besides,partnerships might be more

95、 efficient in attracting talents as employees with skills,knowledges,and expertise have the chance to be promoted to partners.18AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Restrictions on foreign investmentHong Kong does not subject foreign investments to special regulatory regimes or require

96、ments per se.However,on the basis of public interest,there are restrictions on voting control by non-Hong Kong residents and corporations in the broadcasting sector.Such restrictions are set out in the Broadcasting Ordinance(Cap.562)and the Telecommunications Ordinance(Cap.106).The governments speci

97、al industrial-land policy features somewhat more complex rules,but it is still less demanding than the policies of many other Asian investment centers.Television The Broadcasting Ordinance states that foreign ownership of a Hong Kong company with a license to broadcast domestic free television requi

98、res written consent from the Broadcasting Authority at three thresholds:Shareholding of 5-10 percent;Shareholding of 10-15 percent;or Shareholding of over 15 percent.In addition,if foreign entities in aggregate hold over 49 percent of voting control in such a company,their votes shall be subject to

99、a formula as outlined in the Broadcasting Ordinance.Companies with a license to broadcast domestic free television must be Hong Kong companies,and may not be the subsidiary of another company.These restrictions do not apply to paid television,or non-domestic television.RadioForeign shareholding in a

100、 company with a sound-broadcasting license may not exceed 49 percent.Sound-broadcasting licenses can only be given to Hong Kong companies.Such companies may not be the subsidiary of another company.RELATED SERVICESDezan Shira&Associates provides pre-investment market intelligence to foreign companie

101、s looking to establish a business in Hong Kong.For more information,please contact our experts at 19AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Requirements and steps to set up a company in Hong KongFor the purpose of this guide,we only introduce the setup requirements and process of a privat

102、e limited company in this chapter,as it is the most popular option for foreign investors.The registration of a company in Hong Kong usually starts with the creation of the company name and ends with the issue of a business registration certificate.During the whole process,there are mainly two govern

103、ment departments involved,namely the Companies Registry and Business Registration Office under Inland Revenue Department.The detailed procedures are set out below.Step 1:Selecting a company nameA company may be registered with an English name,a Chinese name,or an English and Chinese name.But a compa

104、ny name with a combination of English words/letters and Chinese characters are not allowed.Investors can look up whether the desired name already registered(or if there is a similar name already registered)in the Companies Registry.Also,the name may not infringe upon other parties intellectual prope

105、rty rights.This can be searched on the website of the Intellectual Property Department.Moreover,a limited company must include the word“Limited”at the end of its name unless a special application is submitted for not including the word“limited”to the Companies Registry.Step 2:Deciding the organizati

106、onal structure,amount of capital,company secretary,and registered office addressAfter selecting a company name,the investor should decide the member of the board of directors of the intended company.The first shareholder(i.e.,founder member)should obtain a written consent from the director.At the sa

107、me time,the investor should determine the amount of capital and the number of shares to be issued to the first shareholder(s).The Companies Ordinance(Cap.622)does not impose any restrictions on the minimum and maximum amounts of capital.It is the sole discretion of the investor to determine the amou

108、nt of capital for the company based on the need of the operation and whether an extra license is required for the intended business activity.Since March 3,2014,par values are not attached to shares.The Articles of Association(“AA”)should only state the number of shares and the amount of capital.The

109、investor should contribute whatever amount stated in the AA immediately after the company is registered.How do I establish a business?It should be noted that since March 3,2014,all companies registered in Hong Kong should appoint at least one natural person to act as its director.However,there are n

110、o restrictions on the nationality of the director.20AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024The investor should also decide the company secretary,the designated representative of the significant controllers register,and address of the registered office before registration.If there are two

111、 or more directors,one of the directors could act as company secretary.However,if the investor will be the sole director of the intended company,another person should be appointed to act as company secretary.A written consent to act as company secretary should be obtained.The investor could also eng

112、age the service of a professional firm,duly registered in Hong Kong,to provide company secretarial service with a fixed annual fee.The address of the registered office should be located in Hong Kong.There is not other particular limitation on the registered office address,but a postal box number can

113、not be used as registered office address of a Hong Kong company.If the founder does not plan to lease a physical office,he can utilize the service of a professional firm.But it should be ensured that the service provider must possess a TCSP license.Step 3:Preparing registration documents and registe

114、ring with the Companies RegistryIn this step,the investor should prepare the registration documents,including mainly the AA,the incorporation form,and a Notice to Business Registration Office,and submit the aforesaid documents to the Companies Registry for registration.At the same time,the investor

115、should pay the application fee for incorporation and business registration fee and levy.The application fee for incorporation is HK$1,720(subject to a 10%reduction for incorporation through the“e-Registry”portal).The business registration and levy fee is HK$2,200 for one-year certificate and HK$5,87

116、0 for three-year certificate,in the period from April 1,2024 to March 31 2025.Investors can choose to register for one year or three years.If the documents are prepared in accordance with the prevailing laws and regulations,the Companies Registry will issue the Certificate of Incorporation together

117、with the Business Registration Certificate,which signifies that the company legally exists.Requirements of Acting as Company Secretary and Designated RepresentativeThe secretary of a company may be:An individual-must ordinarily reside in Hong Kong;or A body corporate-must have its registered office

118、or a place of business in Hong Kong.A companys designated representative must be either:A director,employee,or member of the company who is a natural person resident in Hong Kong;or An accounting professional,a legal professional,or a person who possesses a Trust or Company Service Provider(TCSP)lic

119、ense.21AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Generally,companies can be fully registered online if the founder members are individuals and the individual user accounts have been registered with the e-Registry,but investors can also file a paper company registration.Excluding the time ne

120、eded to prepare the registration documents,the whole registration process will take one to five working days.Note that some business activities may require additional permits,certificates,and approvals,the details of which can be checked on the Business License Information Service under the Trade an

121、d Industry Department.Step 4:Making company chop and printing the AA(Optional)After the company is officially incorporated,the investor could find a service provider to make the company chop and print the AA.After March 3,2014,the new Companies Ordinance(Cap.622)has simplified the execution of docum

122、ents by companies.It is now optional for companies to keep and use the common seal and the AA of the company can be in electronic form.Opening a bank account in Hong KongIn Hong Kong,while a bank account is not mandatory for company establishment,it is crucial for business operations.However,many in

123、vestors believe it is more difficult to open an account in Hong Kong now as compared to before.This is mostly because financial regulations have been tightened in order to combat the designation of the city as a tax heaven.Common issues faced by investors relate to producing required documents and c

124、onditions on maintaining fixed deposits.For many banks,it is common to impose a monthly charge for failing to maintain a balance above a certain minimum amount.It is therefore important for foreign investors to understand the procedures and documents required.The internal practices of the bank may v

125、ary from one to another,but generally the following procedures can be expected:Most banks will require an initial appointment,via phone,email,or physical visit;Following this,a preliminary review is usually conducted by phone interview,electronic questionnaires,or physical meeting with directors,or

126、by sending supporting documents to bank manager;If the preliminary review is passed,both parties will meet to sign the relevant bank application forms and documents,as well as pay the initial deposit and application fee:Deposit differs according to the bank and is subject to change from time to time

127、.Signatories also differ according to the bank and time.While some banks accept certified and true copy of shareholders ID,others require the director/shareholder/beneficial owner/nominee to be physically present.In most cases,banks require the same number of people present as that forms quorum in a

128、 board meeting according to the AA to satisfy their Know Your Customer procedure.22AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024 At this stage,the bank manager will send the application for the department review,which normally takes approximately one to two months.It is not uncommon for the re

129、view department to require further supporting documents before finally opening a new bank account on your behalf.Generally,the following documents are required during the application:Company documents:Business Registration Certificate,Certificate of Incorporation,AA,and NNC1 form.Proof of business:D

130、ocuments required varies from bank to bank,but generally include evidence of the nature of the business,experience in the industry etc.For example,issued/received invoices,business plan description,agreement with suppliers,bank reference letter,and website.Personal documents:Passport and residency p

131、roof(for example,utility bill,electricity bill,or bank statement which are issued within three months and include the holders address and name).Source of Funds:The bank would ask for the source of fund of the investment to the Hong Kong company.For example,investors bank statements.Please note that

132、when a company is marked as a shell company,it will be subject to a higher level of scrutiny.Here,a shell company is understood to be a corporation that does not conduct business activities itself,but channels funds for group companies.To open a bank account for a shell company,the identity document

133、s of the beneficial owners is required as well.Once the bank account has been approved,the investor will receive the bank account number,bank cards,and access codes.Virtual banks and money service operators In addition to traditional banks,another emerging option is using virtual banks,which have no

134、 physical branches and focus on digital services.This concept is still very new to Hong Kong and for now,the HKMA only granted eight licenses for virtual banking.These banks are a good alternative for tech-savvy people and remote operations.However,it should be noted that some banks cater only to Ho

135、ng Kong residents.Advantages of virtual banks include better rates and lower fees,integrations with enterprise software,a high set up convenience,and a heavy focus on small-and medium-sized enterprises(SMEs).Disadvantages include less personal relationship development,lack of ATM network,deposit inf

136、lexibility,and unavailability of specific services.GIGI WONGManagerBusiness Advisory ServicesHong Kong Office“Companies that have a physical office or employee located in Hong Kong usually have a much higher chance of success.”There are no strict requirements for a bank account to be registered in H

137、ong Kong.The company may choose to explore an offshore bank account if they deem it appropriate.23AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Another digital banking solution are money service operators.They usually offer services,such as dedicated payment instructions,the ability to receive

138、money via domestic or international bank transfers,and linking to third party services or currency exchange.For foreign SMEs operating in Hong Kong,virtual banks could offer a more convenient and cheaper service.This is particularly true for business owners who operate subsidiaries in Hong Kong that

139、 primarily function as holding companies.But it should be noted that the virtual banking industry is still very new and growing and as of now,not reliable enough for companies.Nevertheless,the market is expanding,and this might be a valuable option in the future.Gradual improvements to the banking e

140、nvironmentThe HKMA has announced that it has taken steps to improve its internal banking environment taking the time to engage with various stakeholders to gather details of specific incidents relating to difficulties around bank account opening.As a result,the HKMA has cautioned financial instituti

141、on against a one-size-fits-all approach and encouraged them to take a risk-based approach that differentiates the“risk levels of individual customers in accordance with their backgrounds and circumstances”.The situation is improving,but there is still a long way to go.Hong Kong needs to continue to

142、ease its administrative red-tape in order to stay competitive with other international financial hubs in the region,such as Singapore which like Hong Kong,serves as a financial gateway to Asia,but benefits from a more relaxed banking environment for foreign businesses.Intellectual propertyHong Kong

143、offers a high level of protection for intellectual property(IP).According to the 2022 World Competitiveness Yearbook published by the International Institute for Management Development in Lausanne,Switzerland,Hong Kong is ranked the 10th globally on the criterion of“intellectual property rights”.It

144、is also a major global IP trading hub.Hong Kong recognizes several different classes of IP,including trademarks,patents,designs,copyright,trade secrets,plant variations,domain names,and lay-out designs of integrated circuits.Registering a trademarkFor the benefits of a registered trademark,an applic

145、ation for registration must be made to the Trade Marks Registry,Intellectual Property Department(IPD).Registration only covers the territory of the Hong Kong SAR.Registration of a trademark in Hong Kong does not affect the Chinese Mainland,and vice versa.24AN INTRODUCTION TO DOING BUSINESS IN HONG K

146、ONG 2024To register a trademark in Hong Kong,the investor should first investigate whether the trademark is already registered.This can be done online on the Trademark Online Search System(https:/esearch.ipd.gov.hk/nis-pos-view/#/).The investor can also use the Search and Preliminary Advice services

147、 provided by the Trade Marks Registry by simply completing Forms T1 and submitting the appropriate fee.If the trademark is available,the application to register a trademark can be made online through the IPD E-Filing System,or it can be filed physically with the Trade Marks Registry by filling Form

148、T2,with a graphic representation of the trademark attached.The application fee is HK$2,000 to apply to register a trade mark in one class of goods or services and HK$1,000 for each additional class of goods or services.After filing,the Trade Mark Registry will examine whether the application meets t

149、he requirements laid out in the Trade Marks Ordinance(Cap.559)and the Trade Mark Rules(Cap.559A),including the following:The trademark needs to be distinctive;It cannot be a description of the goods or services the investor is providing or seeking to provide;It cannot be an industry or business term

150、;and The trademark has not been registered or applied for by another trader.Provided that the application is complete and correct,the trademark registration can be completed within three months,upon which it will be published in the Hong Kong Intellectual Property Journal.If the IPD objects the regi

151、stration,it will notify the investor in writing.The applicant will have six months to ratify the application.A further period of three months extension may be granted.Registering a patentPatents protect the inventor or the owner of an invention by giving them the legal right to prevent others from m

152、anufacturing,using,selling,or importing their patented invention,within a particular jurisdiction for a limited period.An invention which is new,involves an inventive step,and is industrially applicable is patentable in the Hong Kong SAR if it is not an excluded subject-matter or activity.Examples o

153、f excluded subject-matters are discoveries,scientific theories,and surgical methods for treatment of the human body.Applying for a patent elsewhere in the world or in other regions of China does not automatically give you protection in Hong Kong.Investors need to file an application with the Patents

154、 Registry of the IPD.25AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024There are two types of patents in the Hong Kong SAR:standard patent(O or R);and short-term patent.Patent inventors or owners who seek a longer patent protection term of up to 20 years for their invention may apply for a standa

155、rd patent,by filing their application either via the“original grant patent”route directly in the Hong Kong SAR(“standard patent(O)”)or the“re-registration”route for a standard patent(“standard patent(R)”)on the basis of a corresponding patent application for the same invention previously filed with

156、a designated patent office outside the Hong Kong SAR.Alternatively,the patent inventors or owners may choose to seek a short-term patent having a relatively shorter protection term of up to 8 years.Before applying for a patent in Hong Kong,the applicants should conduct a prior search to ensure the i

157、nvention is“new”.This can be done online on the Patent Online Search System The applicants are also advised to carefully assess whether their inventions are worth patenting and prepare the patent specifications.The application of a standard patent(O)involves both a formality examination and substant

158、ive examination.In general,there is no time limit for filing a standard patent(O)unless the invention has been disclosed or the applicant intends to claim priority from a first application.The Patents Registry will do an initial examination and accord a date of filing for the application,following w

159、hich an examination on formality requirements will be conducted and a notice to correct any deficiencies will be issued within two months.In the absence of any identified deficiencies or their subsequent rectification,the Patents Registry will proceed to publish the standard patent(O)application.Thi

160、s publication will be advertised in the Hong Kong Intellectual Property Journal within 18 months from the date of filing the application or the earliest date of priority claimed(if applicable).Further,within three years after its date of filing or the earliest date of priority claimed(if applicable)

161、,the applicant needs to file a request with the Registrar of Patents for substantive examination of a standard patent(O)application,during which the patentability of the underlying invention will be examined.In instances where the Registrar of Patents deems an application as not meeting examination

162、requirements,they may issue an examination notice,a subsequent examination notice,or potentially a provisional refusal decision.The applicant is then required to respond within specified timeframes.Upon examination,if the standard patent(O)application is deemed satisfactory,the Registrar of Patents

163、will proceed to grant and publish the patent.Furthermore,the grant will be publicly announced via a notice in the Hong Kong Intellectual Property Journal,and a certificate of grant for the patent will be issued.26AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024The application for a standard paten

164、t(R)undergoes formal examination and consists of two phases.In the first phase,the applicant must file a request to record within six months following the publication of the designated patent application in the three designated patent offices(the domestic route),or within six months after an interna

165、tional patent application has entered its national phase in the designated patent office(the PCT route).The three designated patent offices are the China National Intellectual Property Administration(CNIPA),the European Patent Office(EPO),and the United Kingdom Intellectual Property Office(UKIPO).Wi

166、thin two months after the request,the Patents Registry will notify the applicant of any issues with the application.If there are no issues,or if they have been rectified,the request will be published in the Hong Kong Intellectual Property Journal.The second phase involves filing a request for regist

167、ration and grant of the Chinese,European,or UK granted patent in Hong Kong.This should be completed within six months after the publication of the request to record or the grant of the patent by the designated patent office.The grant of a short-term patent is also based on formal examination.There a

168、re two routes available:the domestic route or the PCT route.For short-term patent application through the domestic route,there is generally no time limit for filing,unless the applicant wishes to claim priority from a first application.For short-term patent application through the PCT route,the appl

169、ication must be filed within six months after the international application has entered its national phase in China,or within six months after the date of issuance of an official notification by the CNIPA stating that the international application has entered the national phase in the office.Within

170、two months after submitting the application,the Patents Registry will examine it and notify the applicant of any issues.If there are no issues or if they have been corrected,a short-term patent for the invention will be granted and published in the Hong Kong Intellectual Property Journal.To be noted

171、,the patent proprietor or any other person with reasonable grounds or legitimate interest may request the Registrar to conduct post-grant substantive examination of the patent to determine its validity.Registering a designThe Registered Design Ordinance(Cap.522)defines designs as“features of shape,c

172、onfiguration,pattern or ornament applied to an article by any industrial process,being features which in the finished article appeal to and are judged by the eye”.Registered designs protect only the appearance of products,for example the look of a computer monitor.Registration of the design does not

173、 protect the way in which the product relating to the design works.27AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Designs can be registered and protected if the designer can show that they are new at the filing date of the application,or the priority date(if claimed).A design is new if it has

174、not been previously registered,or has never been published or disclosed before.To file for the registration of a design,the applicant needs to submit the prescribed form,provide a representation and statement of novelty,and pay the registration fee.If the application is in order,the Designs Registry

175、 of IPD will publish the registration in the Hong Kong Intellectual Property Journal.The design will be protected for a maximum of 25 years from the filing date,and needs to be renewed every five years.CopyrightUnlike the other IP rights in Hong Kong,copyright arises automatically and does not need

176、to be registered.It differs from design in that design protects the shape of an object.A copyright applies to the following:Literary,dramatic,musical,or artistic work;Sound recordings,films,broadcasts,or cable programs;and The typographical arrangement of published editions.With the copyright,the ow

177、ner has the exclusive right to:Copy the work;Issue or make available copies of it to the public;Rent out copies of it to the public;Perform the work;Broadcast the work;and Make an adaptation to the work.Others are restricted from copying the work,which is defined as reproducing the work in any mater

178、ial form.The protection for copyright differs from that of registered design in that copyright only protects against reproduction of the works,whereas a registered design also protects against the independent creation of a new design that is not substantially different from the registered design.The

179、 threshold to prove a copyright infringement is also higher than for a registered design.For copyright infringement,the owner needs to show there is a reproduction in material form,whereas for registered design infringement,the designer needs to establish that the design is the same as or not substa

180、ntially different from the registered design.The owner of a copyright may seek a court injunction to prevent the reproduction and distribution of copyrighted materials,as well as claiming financial compensation.28AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024What are the key compliance requirem

181、ents?Annual compliance requirementsThe compliance burden for a Hong Kong private limited company is actually very low.That said,there are still a few annual compliance requirements,including:Renewal of Business Registration Certificate:A local private limited company needs to renew its business regi

182、stration in time.The renewal can be done annually or once every three years,depending on whether the certificate is valid for one year or three years.The Business Registration Office of the Inland Revenue Department will send a renewal demand note to registered businesses approximately in the middle

183、 of the month preceding the commencement month of the renewal Business Registration Certificate.The demand note will specify a payment due date,which is about four weeks after the business registration expiry date.The company is required to renew the business registration certificate before the paym

184、ent due date.Filing of annual return with the Companies Registry:A local private limited company must deliver its annual return to the to the Registrar of Companies for registration within 42 days after the anniversary of the date of the companys incorporation in that year.The annual return(Form NAR

185、1)should contain particulars of the company,such as the address of the registered office,shareholders,directors,company secretary,etc.,as of the made-up date of the return.Accounting and financial reporting obligations:Businesses are required to perform accounting at least once per year.Every compan

186、y must prepare annual financial statements,including the Profit&Loss Statement(Income Statement)and the Balance Sheet.These statements provide an overview of the companys financial performance and position.While small private companies may be exempt from statutory audits,larger companies are usually

187、 required to have their financial statements audited by a certified public accountant(CPA).As part of the accounting process,companies must also calculate their taxable profits and comply with tax filing requirements.Filing of annual tax return with Inland Revenue Department:Businesses liable for pr

188、ofits tax must complete the Profits Tax Return along with supplementary documents,including financial statements and tax computations.These documents need to be filed with the Inland Revenue Department by the specified due date.A newly registered business typically receives its first Profits Tax Ret

189、urn approximately 18 months after the date of commencement of business or the date of incorporation.The annual process of issuing Profits Tax Returns in bulk occurs on the first working day of April each year.Generally,the Profits Tax Return,any required supplementary forms,and other relevant docume

190、nts should be filed within one month from the date of issue.Extensions may be available under certain circumstances.Holding annual general meeting:Every company incorporated in Hong Kong must hold an annual general meeting(AGM)once per year.The AGM should be held within nine months of their financia

191、l year-end,or within 18 months from the date of incorporation for newly registered businesses.Shareholders must receive at least 21 days notice before the AGM.Under the amended Companies Ordinance(Cap.622),companies can conduct AGMs virtually or in hybrid formats,making compliance with the AGM requi

192、rement more flexible and convenient.29AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024New regime of significant controller registerUnder the Companies(Amendment)Ordinance 2018(“the Amendment Ordinance”),all companies incorporated in Hong Kong(except listed companies)need to comply with the signif

193、icant controllers register requirements starting from March 1,2018.Some of the key requirements prescribed by the Amendment Ordinance include:Identify and ascertain a person/persons who has/have significant control over the company;Maintain a significant controllers register to be accessible by law

194、enforcement officers upon demand;Designate at lease one person as its representative to provide assistance relating to the companys significant controllers register to the law enforcement officers;Keep the significant controllers register at the companys registered office or a prescribed place in Ho

195、ng Kong;and Keep the significant controllers register updated.Failure to comply with the significant controllers register requirements set forward in the Amendment Ordinance could qualify as a criminal offense.The company and every responsible person in breach of the Amendment Ordinance could liable

196、 for a fine levied at HK$25,000,and where applicable,a further daily fine.A significant controller is a person or legal entity who meets one or more of the following conditions:Holds,directly or indirectly,more than 25 percent of the companys issued shares or a right to share more than 25 percent of

197、 the capital or profits of the company;Holds,directly or indirectly,more than 25 percent of the voting rights of the company;Holds,directly or indirectly,the right to appoint or remove the majority of the board of directors of the company;Has the right to exercise,or actually exercises,significant i

198、nfluence or control over the company;or Has the right to exercise,or actually exercises,significant influence or control over the activities of a trust or a firm that is not a legal person,but whose trustees or members satisfy any of the above four conditions in relation to the company.To identify a

199、 significant controller,companies can review their register of members,articles of association,shareholders agreements or other relevant agreements,and issue notice(s)to any person who is believed to be the significant controller and any person who is believed to know the identity of the significant

200、 controller and obtain their required particulars.30AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Compliance of anti-money laundering and counter-terrorist financing requirements for trust or company service providersAccording to the Anti-Money Laundering and Counter-Terrorist Financing Ordinan

201、ce(Cap.615)(AMLO)issued by the Companies Registry,starting from March 1,2018,person carries on trust or company services are required to possess a TCSP license.In general,TCSP licensees are required to:Take all reasonable measures to mitigate the risk of money laundering and terrorist financing;and

202、Ensure that,among other things,the anti-money laundering and counter-terrorist financing requirements under the AMLO are complied with.To fulfil the above-mentioned obligations,TCSP licensees must assess the money laundering and terrorist financing risk of their businesses,develop,and implement poli

203、cies and procedures on:Risk assessment;Customer due diligence measures;Ongoing monitoring of customers;Suspicious transactions reporting;Record keeping;and Staff training.Accordingly,companies are required to provide the due diligence documents to the service provider(TCSP licensee)due to this new r

204、equirement.31AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024New inspection regimeA new inspection regime is being implemented under the Hong Kong Companies Ordinance(Cap.622),which provides additional protection to the personal information of directors and other relevant individuals who appear o

205、n the Companies Register.Under the new inspection regime,(a)correspondence addresses instead of usual residential addresses(URAs)of directors and(b)partial identification numbers(IDNs)instead of full IDNs of directors,company secretaries,and other relevant persons like liquidators,will be made avail

206、able on the Companies Register for public inspection.Meanwhile,companies can withhold the URAs and full IDNs(except the first part)on the registers where the information is maintained from public inspection.(The first part of the IDN is decided by an established rule,which is usually the first half

207、of the sequence number if the IDN is an even number,or the part that begins with the first character in the sequence and ends with the character that falls on the middle of the sequence if the IDN is an odd number.)The URAs and full IDNs are regarded as“Protected Information”under the new inspection

208、 regime.Previously,the URAs and full IDNs of any companys director,company secretaries,or other relevant persons could be accessed by the public.By replacing URAs and full IDNs with correspondence addresses and partial IDNs,the protection of personal information will be enhanced.At the same time,it

209、will ensure the transparency of the Companies Register by allowing the public to access it for the purposes stipulated under the Companies Ordinance(Cap.622).Since substantial modifications are being made to the integrated Companies Registry Information System(“ICRIS”),the new inspection regime will

210、 be implemented in three phases.The respective commencement dates of each phase are August 23,2021(phase 1);October 24,2022(phase 2);and December 27,2023(phase 3).Under phase 1,companies may replace URAs of directors with correspondence addresses and full IDNs of directors and company secretaries wi

211、th their partial IDNs on their own registers for public inspection.Under phase 2,Protected Information on the Index of Directors on the Companies Register will be replaced with correspondence addresses and partial IDNs for public inspection.Documents containing Protected Information that are filed f

212、or registration after the commencement of this phase,i.e.,October 24,2022 will not be provided for public inspection,except for“specified persons”upon application.Under phase 3,data subjects(i.e.,individuals whose URA and full IDNs are contained in documents filed with the Companies Registry before

213、the new inspection regimes commencement)can apply to the Companies Registry for withholding their Protected Information contained in documents registered with the Companies Registry from public RELATED SERVICESDezan Shira&Associates provides compliance assistance to foreign companies operating in Ho

214、ng Kong.For more information,please contact our experts at .32AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024The Companies(Amendment)Ordinance 2023 The Companies(Amendment)Ordinance 2023(“the Amendment Ordinance”)comes into operation on April 28,2023.The Companies Ordinance(Cap.622)provides that

215、 a company must hold an annual general meeting within the prescribed time.A company may also hold a general meeting out of its own initiatives from time to time as necessary.The manner of holding a general meeting is governed by the provisions in the Companies Ordinance(Cap.622)and the Companies(Mod

216、el Articles)Notice(Cap.622H)as well as provisions of the companys own AA.The Amendment Ordinance seeks to modernize the Companies Ordinance(Cap.622)and the Companies(Model Articles)Notice(Cap.622H)to expressly cater for the scenario of companies holding fully virtual general meetings without the req

217、uirement for presence of members at any physical locations,as well as a mixed mode of such virtual general meetings and members attending at physical location(s),i.e.,hybrid general meetings.inspection and replace such information with their correspondence addresses and partial IDNs.Same as phase 2,

218、only specified persons can apply to the Registry for access to the Protected Information of directors and other persons.To meet the requirements of this new regime,and if data subjects and Hong Kong registered companies want to withhold their Protected Information from public inspection,they should

219、contact their service provider to update their personal information accordingly and make corresponding applications.33AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024How do I make changes to my company?Dormant companyA dormant company is a company that has no significant accounting transactions d

220、uring a fiscal year.“Accounting transaction”,in relation to a company,means a transaction that is required to be entered in the companys accounting records,excluding a transaction arising from the payment of any fee that the company is required by an Ordinance to pay.A company can become dormant whe

221、n it passes a special resolution(resolution approved by at least 75 percent of shareholders),and the resolution is delivered to the Registrar of Companies.If a company is dormant,many of its compliance requirements are reduced or lifted.The company no longer needs to:Hold annual general meetings;Del

222、iver annual returns*;Prepare financial statements and Directors Reports;Appoint auditors and undergo annual audits;or Publish financial statements to the shareholders before general meetings.Despite all the benefits,a dormant company still needs to maintain a registered office,corporate secretary,de

223、signated representative of significant controller(s),fulfill annual business registration,and comply with the taxation requirements of the Inland Revenue Department.A company ceased to be dormant if the company passes a special resolution declaring that the company intends to enter into an accountin

224、g transaction and the resolution is delivered to the Registrar of Companies or there is an accounting transaction in relation to the company.Changing a company nameTo change the company name,the company needs to pass a special resolution,a resolution that is passed by a majority of at least 75 perce

225、nt.The special resolution and the AA as altered need not be delivered to the Companies Registry,but a“Notice of Change of Company Name”(Form NNC2)should be filled and delivered within 15 days after the passing of the special resolution together with the required fee(HK$295)either electronically thro

226、ugh the“e-Registry”portal(www.eregistry.gov.hk)or in hard copy form to the Shroff on the 14th floor of the Queensway Government Offices.*However,a private company is still required to deliver an annual return for the year in which it declares itself to be dormant if the effective date on which the c

227、ompany becomes dormant falls after the 42nd day after the anniversary of its date of incorporation.34AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Electronic Certificate of Change of Name will normally be issued within an hour by email.But if the Form NNC2 is delivered in hard copy,the Certific

228、ate of Change of Name will normally be issued within four working days,and has to be collected in person.The change of name will be effective from the date on which the Certificate of Change of Name is issued.Please note that the intended company name should not be the same as or too similar to a na

229、me appearing in the index of company names kept by the Registrar of Companies,or in conflict with a trademark in the Trademark Register maintained by the Intellectual Property Department.Or else the change may be rejected by the Registrar,or the company may be subject to a change of name direction b

230、y the Companies Registry after change of name.Changing the companys Articles of AssociationA company may alter most of its AA except:Articles on the liability of its members as stated in Section 83 and 84(1)of the Companies Ordinance(Cap.622);Articles that are inconsistent with any rights attached t

231、o shares in a class of shares(for company with shared capital)or any rights of a class of members(for company without a share capital);and Articles related to the contributions of members of a company limited by guarantee under Section 84(2)of the Companies Ordinance(Cap.622)other than to increase t

232、he specified amount.Under most circumstances,the alteration of the AA can only be done by passing a special resolution.Within 15 days after the alteration is made,the following documents are required to be delivered to the Companies Registry:A copy of the special resolution for alteration of the AA;

233、A notice of alteration in the relevant specified forms,namely Forms NAA1,NAA2,NAA3,or NAA4;A certified copy of the AA as altered(for Forms NAA1,NAA2,and NAA3);and Other relevant documents required to be delivered with the specified forms for registration as appropriate.To be noted,the holders of at

234、least five percent of the shares or five percent of the companys members can appeal to the court to cancel an alteration of the objects of a company.35AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024A private company or a company limited by guarantee,other than those companies specified in Sectio

235、n 749(2)of the Companies Ordinance(Cap.622),may apply for deregistration when it is defunct.To do so,the following conditions need to be met:All shareholders agree to the deregistration;The company has not yet commenced operations or business,or has ceased operations or business during the three mon

236、ths before the application;The company has no outstanding liabilities;The company is not involved in any ongoing legal proceedings;The company holds no assets consisting of any immovable property situated in Hong Kong;and If the company is a holding company,its subsidiaries assets do not consist of

237、immovable property situated in Hong Kong.Before the company can be deregistered,it first needs to obtain a letter of“Notice of No Objection to a Company being Deregistered”(Notice of No Objection)from the Commissioner of Inland Revenue Department(IRD),the Hong Kong tax office.Directors and sharehold

238、ers,or a person authorized by the company,can apply for such a letter.To apply for this letter,the applicant has to fill in a form,retrievable from the tax office website,and pay a prescribed fee.With the Notice of No Objection,the investor should then apply for deregistration with the Companies Reg

239、istry within three months.To apply for deregistration,the investor has to fill in the designated form and pay a fee.The Notice of No Objection needs to be included in the submission.Where the applicant is a company,it must designate a natural person to give notice to the Companies Registry.The dereg

240、istration will then be published in the Gazette on the website of the Government Logistics Department.If no objections are made within the following three months such as by alleged creditors the Registrar may deregister the company by publishing in the Gazette another notice declaring it to be dereg

241、istered on the date of publication of that other notice.Former directors must keep the books and papers of the company for six years after deregistration.How do I deregister my company?36AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024 Deregister a Company in Hong KongAssess whether the Company f

242、ulfils the conditions of deregistration12345678Confirm the date of cessation of business,if applicable Officially dissolved by deregistration Confirmation of tax clearance with the IRDLead time:case by case Application of deregistration with the Companies Registry Lead time:around 1 monthPreparation

243、 of last audit,if applicable Lead time:case by caseApplication of Notice of No Objection to a Company Being Deregistered with the IRD Lead time:around 1 monthPublication of Gazette for the proposed deregistrationLead Time:5 months 37AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Located in the c

244、enter of Asia,Hong Kong prides itself as an ideal location for dispute resolution not only in Asia,but also worldwide.Given its geographic and economic proximity to the Chinese Mainland,Hong Kong acts as a bridge for cross-border disputes that involve this region.Thanks to Hong Kongs reputation for

245、its strict maintenance of the rule of law and judiciary independence,its common law tradition,and its established English-Chinese bilingual legal system,Hong Kong has also become an ideal hub to resolve international disputes for foreign investors doing business in Hong Kong.Below we introduce the c

246、ommon dispute resolution methods in Hong Kong.Alternative Dispute Resolution(ADR)Alternative Dispute Resolution(ADR)is a voluntary and private dispute resolution process in which the parties agree to appoint a neutral third party to assist them to settle or resolve their dispute.Under the new High C

247、ourt and District Court rules,which came into effect on April 2,2009,the courts are required to actively manage cases and facilitating dispute resolution.Such case management includes,where appropriate,encouraging the parties to use procedures alternative to litigation to resolve their dispute,i.e.,

248、ADR.ADR has certain advantages over litigation.In addition to cost and time saving,parties have more control over how the dispute is solved.Because of its confidential nature,it can sometimes preserve business relationship between the disputed parties.Unlike litigation in open courts,trade terms are

249、 not disclosed to the public.Mediation and arbitration are the most commonly used forms of ADR.MediationMediation is a voluntary,confidential,and private dispute resolution process in which a neutral person,the mediator,helps the parties to reach their own negotiated settlement agreement.The mediato

250、r has no power to impose a settlement,other than the power of persuasion.A successful mediation results in an agreement signed by the parties.Despite being widely supported and recognized as having the potential to resolve disputes in a quick,cheap,and confidential way,mediation remains under-utiliz

251、ed when compared to arbitration.ArbitrationArbitration is a private process where disputing parties agree that one or several individuals can make a binding decision about the dispute after receiving evidence and hearing arguments.In an arbitration,the arbitrator investigates the legal rights and wr

252、ongs of a dispute and makes a decision.Once the arbitrator has arrived at a decision,it is binding on parties,whether they agree with it or not.This is how arbitration is different from mediation.How do I solve legal disputes?38AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Arbitration is very m

253、uch like the way a court case is decided by a judge,except that the process does not take place in a court room,and it is not open to the public.As a leading seat of arbitration,Hong Kong maintains several the worlds top arbitral institutions,such as:Hong Kong International Arbitration Centre(HKIAC)

254、;The International Court of Arbitration of the International Chamber of Commerce(ICC-ICA);China International Economic and Trade Arbitration Commission(CIETAC);China Maritime Arbitration Commission(CMAC);Permanent Court of Arbitration(PCA);and The Hong Kong Maritime Arbitration Group(HKMAG).For part

255、ies who wish to commence an arbitration to resolve disputes,there must be a valid arbitration agreement,and as an arbitration friendly jurisdiction,Hong Kong adopts a broad definition of what constitutes a valid arbitration agreement.It could be a clause in the main contract,or a separate agreement

256、made prior to or after the dispute happens.Among others,an arbitration agreement should set out how a party commences arbitration and the procedural guidelines of the arbitration.It must be made in writing or recorded in any written form to be enforceable in Hong Kong.Arbitral awards made in Hong Ko

257、ng can be enforced in all state parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.Besides,in order to complete the network for recognition and enforcement of arbitral awards,the HKSAR has respectively entered into reciprocal arrangements with the Mainla

258、nd and the Macao SAR.In 2019,HKSAR and the Chinese Mainland,signed the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region,according to which parties to arbitral pro

259、ceedings seated in the HKSAR and administered by designated arbitral institutions may apply to the Mainland courts for interim measures,including property preservation,evidence preservation,and conduct preservation.Notably,Hong Kong has become the first jurisdiction outside the Chinese Mainland wher

260、e,as a seat of arbitration,parties to arbitral proceedings administered by its arbitral institutions would be able to apply to the Mainland courts for interim measures.Litigation Court litigation is the traditional legal dispute resolution method,commonly adopted in Hong Kong.Generally,people have n

261、o preference between litigation and arbitration,rather,they choose the best dispute resolution method based on a particular scenario.For example,litigation is usually preferred in insolvent related cases,intra-company dispute,debt enforcement,as well as cases where the enforcement is anticipated to

262、be problematic because the counterparty is not located in an arbitration-friendly jurisdiction.39AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024With a legal system that is based on common law,the litigation process in Hong Kong is generally an adversarial one,during which opposing parties act as

263、 adversaries seeking to convince the court or tribunal that their version of events or their legal submissions should prevail over those of the other side.This provides international parties with the familiarity of a legal system.Civil procedures are mostly governed by legislation,including the High

264、 Court Ordinance and Rules of the High Court,the District Court Ordinance,and Rules of the District Court.To commence litigation in Hong Kong,the party has first to identify the appropriate court,based on the nature and amount of the claim.For commercial disputes,it would often be the District Court

265、 or the Court of First Instance of the High Court,in which a party would commence an action.In addition to the above,complicated commercial cases(e.g.,construction of mercantile documents,export or import of the merchandise,insurance,banking,etc.)will be directed by the court to the Commercial List,

266、which is developed by the Chief Justice to facilitate the disposal of actions involving commercial matters.The matters are heard before a Commercial List judge,most of whom have expertise in commercial disputes and are bilingual so that they can understand the complexity of the case in both Chinese

267、and English.Corporate insolvency and shareholder disputes are generally handled in an informal companies list headed by a judge experienced in such matters.The courts follow the doctrine of precedents,by which a lower court is bound to follow the ratio decidendi(i.e.the legal precept applied by the

268、Court in resolving the issues before the Court)of a judgment by a superior court.Court decisions are generally made public and accessible online via the Judiciarys website at https:/www.judiciary.hk/en/judgments_legal_reference/judgments.html.If an applicant succeeds in his application for judicial

269、review,the Court has the discretionary power to grant a form of final relief appropriate to the circumstances,including an order of mandamus(to perform an act),prohibition,or certiorari(to bring up and quash a decision),an injunction,a declaration(as to legal rights),or an award of damages,as the ca

270、se may be.Subject to relevant law and procedures,appeals from decisions of the Court of First Instance in civil proceedings can be brought to the Court of Appeal and the Court of Final Appeal,which is the apex of the Court system.The Court of Final Appeal is vested with the“power of final adjudicati

271、on”by the Basic Law.As for enforcement outside Hong Kong,the Supreme Peoples Court of China and the Department of Justice at Hong Kong SAR have signed the Arrangement between Mainland and the HKSAR on Reciprocal Recognition and Enforcement of the Decisions of Civil and Commercial Cases under Consens

272、ual Jurisdiction(the Arrangement)on January 18,2019.The Arrangement makes provisions about the scope,procedures,and means of reciprocal recognition and enforcement of court decisions on civil and commercial cases.At the time of writing,the Arrangement has yet to become effective.2What are the major

273、taxes in Hong Kong?What are the key compliance requirements?International taxationTax,Audit,and Accounting41AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 20242JENNIFER LUPartner Hong Kong Office“Hong Kong doesnt have any turnover taxes,including sales tax or value added tax,making it a favorable lo

274、cation for various business activities.”According to the Basic Law of Hong Kong,the taxation system of the Chinese Mainland is not applicable to Hong Kong,which essentially means that Hong Kong enjoys an independent taxation system.Because the city only imposes three direct taxes,Hong Kong has one o

275、f the simplest tax systems in the world.There are also generous allowances and deductions to reduce the burden of taxpayers.Apart from direct taxes,certain indirect taxes are also collected,such as stamp duty and betting duty.One thing to be noted is that Hong Kong doesnt have any turnover taxes,inc

276、luding sales tax or value added tax,making it a favorable location for various business activities.In this part of the guide,we first introduce the unique features of Hong Kongs taxation system and then concentrate on its three direct taxes,which constitute a major part of the governments fiscal rev

277、enue.Tax administration is charged by the Inland Revenue Department(IRD).The tax assessment year usually runs from April 1 to March 31 each year.A company may also choose its fiscal year at its own discretion.Key features of Hong Kongs taxation systemTaxes in Hong Kong are only levied on a territori

278、al basis,unlike most countries which apply both residential jurisdiction and territorial jurisdiction in determining tax liability.That is to say,only income arising in or derived from Hong Kong is taxable,whereas worldwide income is not taxable,irrespective of the residence status of the taxpayers.

279、That said,some foreign-sourced passive income could be regarded as arising or derived from Hong Kong starting from January 1,2023 under the Foreign-Sourced Income Exemption(FSIE)regime,though tax exemption on profits tax can apply if certain conditions are met.Besides,there is no comprehensive syste

280、m of income taxation in Hong Kong.Instead,a taxpayer is liable for tax on three different types of income.If an income fails to fall within any of the three specific tax provisions,then it shall not be subject to tax.Salaries taxAll individuals earning income arising in or derived from Hong Kong fro

281、m an office,employment,or pension are subject to salaries tax in Hong Kong.Tax payable is calculated at a progressive rate on the“net chargeable income”or at a standard rate on the“net income”(before deduction of the allowances),depending on which is lower.It is further reduced by the tax reduction,

282、subject to a maximum.What are the major taxes in Hong Kong?NET CHARGEABLE INCOMETOTAL INCOME DEDUCTIONS ALLOWANCES=NET INCOMETOTAL INCOME DEDUCTIONS=42AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Tax RatesProgressive rates(Year of Assessment 2018/19 onwards)Net chargeable income(HK$)RateTax(HK

283、$)On the first 50,0002%1000On the next 50,0006%3,000On the next 50,00010%5,000On the next 50,00014%7,000Remainder17%Standard rate of tax(year of assessment 2017/18 onwards)15%Two-Tiered Standard rates*of Tax(year of assessment 2024/25 onwards)On the first HK$5,000,000 of net income15%Remainder16%*Le

284、gislative amendments are required for implementing the tax measures as proposed by the Financial Secretary in the 2024-25 Budget.AllowanceYear of assessment 2023/24 onwards,in HK$Basic allowance132,000Married persons allowance264,000Child allowance(For each of the 1st to 9th child)130,000For each ch

285、ild born during the year,the child allowance will be increased by130,000Dependent brother or sister allowance(for each dependent)37,500Dependent parent and dependent grandparent allowance(for each dependent)Parent/grandparent aged 60 or above or is eligible to claim an allowance under the Government

286、s Disability Allowance Scheme50,000 Parent/grandparent between the age of 55 to 6025,000Additional dependent and dependent grandparent allowance Parent/grandparent aged 60 or above or is eligible to claim an allowance under the Governments Disability Allowance Scheme50,000 Parent/grandparent between

287、 the age of 55 to 6025,000Single parent allowance132,000Disabled dependent allowance(for each dependent)75,000Personal disability allowance75,00043AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Deductions(Maximum Limits)Year of assessment 2023/24 onwards,in HK$Expenses of self-education100,000El

288、derly residential care expense100,000Home loan interest100,000Mandatory contribution to recognized retirement schemes18,000Approved charitable donations(income-allowable expenses-depreciation allowance)x percentage35%Qualifying premiums paid under Voluntary Health Insurance Scheme(VHIS)policy(for ea

289、ch insured person)8,000Qualifying annuity premiums and tax deductible MPF voluntary contributions 60,000Domestic rent deduction*100,000Maximum tax reductionsSalaries tax for the year of assessment 2023/24*is further reduced by a one-off tax reduction of 100 percent,subject to a ceiling of HK$3,000 p

290、er case.For single taxpayers,the ceiling is applied to each individual;for couples jointly assessed,the ceiling is applied to each married couple(that is,capped at HK$3,000 in total).Married persons may elect personal assessment separately to reduce tax liability.The tax reduction will only be appli

291、cable to the final tax for the year of assessment 2023/24,but not to the provisional tax of the same year.Therefore,taxpayers are still required to pay their provisional tax on time despite the reduction measure.Provisional salaries taxSalaries tax is chargeable on the assessable income for each yea

292、r of assessment.As the assessable income for any particular year cannot be known until after the end of the year concerned,a provisional tax charge has to be raised.When the assessable income for the year of assessment is subsequently ascertained,an assessment will be made and the provisional salari

293、es tax paid will be utilized to offset the tax liability under the assessment.The tax payer can apply in writing for holding over of the whole or part of the provisional salaries tax on the grounds as specified in the Inland Revenue Ordinance(Cap.112).*Legislative amendments are required for impleme

294、nting the tax measures as proposed by the Financial Secretary in the 2024-25 Budget.44AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Profits taxAny party,including corporations,partnerships,trustees,and organizations involved in any trade,profession,or business in Hong Kong,is subject to tax on

295、all profits arising in or derived from Hong Kong(excluding profits arising from the sale of capital assets).Profits tax is levied based on assessable profits,which is determined by excluding deductions and tax-exempt incomes.It is further reduced by the tax reduction,subject to a maximum.Profits tax

296、 rateNormal rate Generally,profits earned by a corporation are taxed at a standard rate of 16.5 percent,whileprofits earned by unincorporated businesses are taxed at a standard rate of 15 percent.Starting from the year of assessment 2018/19.the two-tiered profits tax regime has been introduced,which

297、 lowers the tax rate for the first HK$2 million of assessable profits.Under the two-tiered tax regime,the first HK$2 million of profits earned by a corporation will be taxed at 8.25 percent.The remaining profits will continue to be taxed at the existing 16.5 percent tax rate.For unincorporated busin

298、esses,the first HK$2 million of profits earned will be taxed at 7.5 percent.The remaining profits thereafter will be taxed at the existing 15 percent tax rate.However,for two or more connected entities,only one of them may elect the two-tiered profits tax rates.The rest of the entities shall still b

299、e taxed at 16.5 percent for corporations and 15 percent for incorporated businesses.In order to avoid double benefits,enterprises that already benefit from preferential tax regimes,such as the corporate treasury center regime,aircraft leasing regime,etc.shall be excluded from the two-tiered profits

300、tax regime.Additionally,the assessable profits for sums received by or accrued to holders of qualifying debt instruments as interest,gains,or profits shall be excluded,as these should already be taxed at half the rate(8.25 percent or 7.5 percent,as the case may be).Two-Tiered Profits Tax Rates in Ho

301、ng KongAssessable profitsCorporationsUnincorporated businessesFirst HK$2 million8.25%7.5%Over HK$2 million16.5%15%45AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024Concessionary rateA tax rate at 50 percent of the normal profits tax rate will be applied to:trading profits and interest income rece

302、ived or derived from“short/medium term debt instruments”(issued before 1 April 2018);qualifying profits of a qualifying corporate treasury centre(for the year of assessment 2016/17 onwards);qualifying profits of a qualifying aircraft lessor or a qualifying aircraft leasing manager(for the year of as

303、sessment 2017/18 onwards);qualifying profits of a professional reinsurer or authorized captive insurer(for the year of assessment 2018/19 onwards);qualifying profits of a specified insurer or licensed insurance broker company(for the year of assessment 2020/21 onwards);and qualifying profits of a qu

304、alifying ship lessor or a qualifying ship leasing manager(for the year of assessment 2020/21 onwards).A profits tax rate at 0 percent or 50 percent of the normal profits tax rate will be applied to:qualifying profits of a qualifying ship lessor or a qualifying ship leasing manager(for the year of as

305、sessment 2020/21 onwards);and qualifying profits of a qualifying ship agent,a qualifying ship manager,or a qualifying ship broker(for the year of assessment 2021/22 onwards).Moreover,the concessionary profits tax rate for the assessable profits of(a)eligible family-owned investment holding vehicles

306、managed by eligible single family offices in Hong Kong and(b)family-owned special purpose entities earned from the qualifying transactions and incidental transactions for a year of assessment commencing on or after April 1,2022 is 0 percent.ExemptionsThe following sums can be exempted from the asses

307、sable profits of a company:Dividends received from a corporation which is subject to Hong Kong profits tax;Amounts already included in the assessable profits of other persons chargeable to profits tax;Interest on Tax Reserve Certificates;Interest on,and any profit made in respect of,a bond issued un

308、der the Loans Ordinance(Cap.61)or the Loans(Government Bonds)Ordinance(Cap.64),or in respect of an Exchange Fund debt instrument or in respect of a Hong Kong dollar-denominated multilateral agency debt instrument;Interest income and trading profits derived from long term debt instruments;Interest,pr

309、ofits or gains from qualifying debt instruments(issued on or after April 1,2018)exempted from payment of profits tax;and46AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024VISIT US ON LINKEDIN Sums received or accrued in respect of a specified investment scheme by or to the person as:A person charg

310、eable to profits tax in respect of a mutual fund,unit trust,or similar investment scheme that is authorized as a collective investment scheme under section 104 of the Securities and Futures Ordinance(Cap.571);or A person chargeable to profits tax in respect of a mutual fund,unit trust,or similar inv

311、estment scheme where the Commissioner is satisfied that the mutual fund,unit trust,or investment scheme is a bona fide widely held investment scheme,which complies with the requirements of a supervisory authority within an acceptable regulatory regime.A person is exempt from payment of profits tax i

312、n respect of the following sums:Interest(accrued on or after 22 June 1998)that is derived from any deposit placed in Hong Kong with an authorized institution,excluding interest received by or accrued to a financial institution;and Starting from the year of assessment 2009/10,interest on and any prof

313、it made in respect of Renminbi sovereign bonds.Deductions Deductible expensesGenerally,all outgoings and expenses,to the extent to which they have been incurred by the taxpayer in the production of chargeable profits,are allowed as deductions.A transfer of certain allowable head office administrativ

314、e expenses by means of a charge to a local branch or subsidiary in Hong Kong would be allowed as a deduction for Hong Kong tax purposes,to the extent to which they were incurred during the basis period for the year of assessment in the production of profits chargeable to tax.Non-deductible items Dom

315、estic or private expenses and any sums not expended for the purpose of producing the profits;Any loss or withdrawal of capital,the cost of improvements,and any expenditure of a capital nature;Any sum recoverable under insurance or contract of indemnity;Rent of or expenses relating to premises not oc

316、cupied or used for the purpose of producing the profits;Taxes payable under the Inland Revenue Ordinance(Cap.112),except salaries tax paid in respect of employees remuneration;and Any remuneration or interest on capital or loans payable to section 16AA;contributions made to a mandatory provident fun

317、d scheme in respect of the proprietor or the proprietors spouse or,in case of a partnership,to its partners or their spouses.47AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024 Expenditure on building refurbishment A person who incurs capital expenditure on the renovation or refurbishment of busin

318、ess premises is allowed to deduct that expenditure over a period of five years in equal installments commencing the year in which the expenditure is made.Expenditure on plant and machinery specially related to manufacturing,and on computer hardware and software For this kind of expenditure,a full de

319、duction is allowed during the basis period in which the expenditure was incurred.Expenditure on environmental protection facilities Expenditure on environmental protection machinery with effect from the year of assessment 2008/09,a full deduction is allowed during the basis period in which the expen

320、diture is incurred.Expenditure on environmental protection installation with effect from the year of assessment 2008/09,a deduction at 20 percent of the expenditure is allowed during the five consecutive years commencing from the year in which the expenditure is incurred;with effect from the year of

321、 assessment 2018/19,a full deduction is allowed during the basis period(instead of over five years)in which the expenditure is incurred for procuring environmental protection installations,including any part of expenditure on environmental protection installation that remains to be deducted(and is t

322、o be fully deducted)in the year of assessment 2018/19.Expenditure on environmentally friendly vehicles with effect from the year of assessment 2010/11,a full deduction is allowed during the basis period in which the expenditure is incurred.Depreciation allowances Industrial building allowances on in

323、dustrial buildings and structures Initial allowance 20 percent on the cost of construction of the premises Annual allowance four percent on the cost of construction of the premises Balancing allowance or charge will be due upon disposal of the premises Commercial buildings allowances on commercial b

324、uildings and structures Annual allowance four percent on the cost of construction of the premises Balancing allowance or charge will be due upon disposal of the premises48AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024 Plant and machinery Initial allowance 60 percent on the cost Annual allowance

325、 at rates of 10 percent,20 percent or 30 percent as prescribed by the Board of Inland Revenue in the Inland Revenue Rules,on the reducing value of the asset.Items qualifying for the same rate of annual allowance are grouped under one“pool”.A balancing allowance is available only on cessation of a bu

326、siness to which there is no successor.A balancing charge can,however,arise whenever the disposal proceeds of one or more assets exceed the reducing value of the whole“pool”of assets to which the disposed items belong.Donations Charitable donations made to approved charitable institutions or trusts o

327、f a public character or to the Government of the Hong Kong SAR,amounting in aggregate not less than HK$100 but not exceeding 35 percent(Year of Assessment 2008/09 onwards)of the adjusted assessable profits before deduction of donations,are allowable for deduction in computing the assessable profits.

328、Maximum tax reductionsProfits tax for the year of assessment 2023/2024*is further reduced by the tax reduction of 100 percent,subject to a ceiling of HK$3,000 per case.The reduction will be reflected in the final tax payable for the year of assessment 2023/24,but not to the provisional tax of the sa

329、me year.Therefore,taxpayers are still required to pay their provisional tax on time despite the reduction measure.Provisional profits tax Profits tax is chargeable on the assessable profits for each year of assessment.As the assessable profits for any particular year cannot be known until after the

330、end of the year concerned,a provisional tax charge has to be raised.When the assessable profits for the year of assessment are subsequently ascertained,an assessment will be made and the provisional profits tax paid will be utilized to offset the tax liability under the assessment.*Legislative amend

331、ments are required for implementing the tax measures as proposed by the Financial Secretary in the 2024-25 Budget.49AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2024RELATED SERVICESFor assistance navigating Hong Kongs various tax compliance requirements,please contact our tax experts at The tax pa

332、yer can apply in writing for holding over of the whole or part of the provisional tax on the grounds as specified in the Inland Revenue Ordinance(Cap.112).If the provisional tax is payable by two installments and the first installment has been settled by the due date,an application for holding over

333、of the whole or part of the second installment may be made subject to the prescribed time limit and grounds for application.Property taxProperty tax is levied on income arising from the letting of immovable property in Hong Kong,which is payable by the owner(s)at the standard rate of the year of assessment on“net assessable value”(NAV).Under the provisions of the Inland Revenue Ordinance(Cap.112),