5 Reasons Founders Find Hong Kong Attractive for Business
Hong Kong has traditionally been a desirable location for business startups for entrepreneurs from throughout the world. Hong Kong boasts one of the most competitive and stable economies, as well as one of the lowest tax rates of any major financial center for many entrepreneurs.
Hong Kong draws a lot of investors, and the appeal is obvious. Foreign companies looking to establish operations in Hong Kong are greatly attracted by the city’s tax-friendly climate. Along with an attractive tax structure and a productive workforce, additional elements that provide firms with plenty of lucrative prospects include a stable political climate, an effective judicial system, and a pro-business environment. In addition, the jurisdiction’s advantageous location and first-rate infrastructure work together to draw investors to Hong Kong.
Here are some more justifications for starting a business in Hong Kong!
Startups in Hong Kong
In Hong Kong, the startup ecosystem is expanding and thriving, and the existence of startups also draws a lot of other organizations who want to see it flourish. There are many accelerators in Hong Kong, all of which aim to provide fledgling startups and founders with the education and resources they need to effectively establish and expand their companies. Accelerators frequently come with office space and typically offer finance, coaching, training, and network connectivity.
Benefits of launching a business in Hong Kong
On a list of the twenty startup ecosystems with the fastest global growth, Hong Kong is listed fifth. This implies that the startup community in Hong Kong is active and thriving, in addition to the diversity of accelerators and VC attention that Hong Kong has. Here are some benefits that you can expect from launching a business in Hong Kong.
Free Economy
The fact that Hong Kong’s economy is based on the ideas of free trade, a free and open market, and free enterprise is one benefit of establishing a firm there. Investments, both domestically and outside, are not constrained in Hong Kong. Foreign ownership and foreign exchange controls are both unrestricted.
Large foreign exchange reserves, the absence of public debt, a robust banking system, a powerful judicial system, a business-friendly environment, and a stringent anti-corruption programme are other elements that support the jurisdiction’s standing as a commercial destination.
Favorable taxation system
The favorable tax structure in Hong Kong is what draws the majority of overseas investment. The territorial source principle is advantageous to businesses operating in Hong Kong since it allows them to avoid paying taxes on any earnings they make outside of Hong Kong, saving them thousands of dollars. There aren’t many costs that an international corporation must pay, like capital gains tax. Additional benefits of establishing a business in Hong Kong include the absence of sales tax, VAT, and withholding taxes on income from social security benefits.
However, a Hong Kong-incorporated firm is required to pay a 16.5% profit tax for revenue and income received within the territory. 17% personal income tax is withheld from earnings over HKD 120,000.
Ready to incorporate
Because of the favorable tax structure and the city’s well-known entrepreneurial sector, incorporating a business in Hong Kong is both very easy and reasonably priced. Even remotely, you can complete your full application, and in a few days, your business will be accepted.
When establishing your business on your own, you have the option of submitting your documents in person at the Companies Registry or online through the Companies E-registry, which is accessible around the clock.
Consequently, the majority of consumers decide to appoint a qualified service provider to handle everything on their behalf. If you hire a company to handle this (such as completing the paperwork or giving you a (virtual) business address), there can be some extra costs. However, the overall costs are still modest when compared to starting a business in the majority of other offshore countries.
Easy setup
In Hong Kong, establishing a business is rather quick and simple. Within two weeks, anyone who wants to launch a business can do so. A pro-business administration has made running a business easy to the point that the region is ranked among the top regions in the world for “ease of doing business”. In Hong Kong, businesses have the benefit of low corporate taxes and tax benefits.
The government oversees numerous small- and medium-sized business support programmes. When it comes to protecting intellectual property rights, Hong Kong law is rigorous. The procedures and guidelines for forming a business in Hong Kong are clear-cut and easy to follow.
Compared to other places, starting a business has comparatively cheap overall costs. In addition, Hong Kong has a reputation for being the preferred Exhibition and Convention Centre for companies looking to establish a significant presence in the area.
Strategic and favorable Location
Hong Kong is well connected to the rest of the world and is situated in the centre of Asia. Aside from being close to and easily accessible to the largest markets on earth, Hong Kong is considered one of the best business locations in the world. Setting up a shop in Hong Kong is the best option if you want to reach the Asian Pacific market or the Mainland Chinese market.
Global business hub
Another advantage of starting your business in Hong Kong? This city is highly business-friendly.
Many foreign businesses choose Hong Kong as their headquarters because of its widespread recognition as a global commercial hub. Furthermore, unlike many other (offshore) jurisdictions, Hong Kong law permits non-residents and foreigners to serve as a company’s sole shareholder and director.
The city ranks first for having the most business-friendly tax regime in the world, according to PWC, and third on Forbes’ list of the best places to do business.
Particularly the startup scene is quite international; according to InvestHK, 35% of entrepreneurs are from countries other than Hong Kong. As with e-commerce, supply chain optimization, and logistics technology, fintech is one of today’s most dynamic industries.
Flexible office
Another advantage of starting a business in Hong Kong is the wide range of flexible office space options available, which may surprise someone unfamiliar with Hong Kong.
The cost of real estate in Hong Kong is well known. And if you’re a startup searching for office space, it might be challenging to put down a deposit in an office building (let alone sign a one-year lease) when you’re short on funds and unsure of the size of the staff in a year. The good news is that in reaction to this, a number of co-working spaces that were designed with entrepreneurs and startups in mind have started to appear all throughout Hong Kong.
The majority of co-working facilities provide the initial freedom that many small enterprises require. For instance, the majority provide both private offices and hot desks. Along with this, there are more adaptable alternatives for renting the space, like monthly memberships rather than yearly commitments.
Furthermore, you have more opportunities to interact with peers and people who share your entrepreneurial mindset because of the throng that is often drawn to co-working facilities.
Access to mainland china
The fact that Hong Kong is a gateway to Mainland China is one of the main benefits of establishing a business there. A company established in Hong Kong will have preferential access to the Mainland market as part of the CEPA. The Central People’s Government and the Hong Kong Special Administrative Region Government signed a free trade agreement, which offers exclusive incentives for access to the mainland market.
You can benefit from forming a company in Hong Kong if you want to conduct business with a Chinese partner. A company that manufactures products in Hong Kong is free to export those products to the Mainland. Therefore, no tariffs apply to any products created in Hong Kong in the People’s Republic of China.
Immigration policy
For foreign investors from 170 countries, a visa-free access regime is in effect. Arrangements for work visas for international business people interested in moving to Hong Kong. With the exception of its foreign and defense issues, Hong Kong has a considerable degree of autonomy. Starting a business in Hong Kong has benefits such as economic freedom, political stability, and pro-business governance.
A number of pro-business organizations have been established to create an environment that encourages foreign businesses to conduct business in the Mainland and Asia. The Support and Consultation Center offers advisory support for small and medium-sized businesses. Additionally, any company experiencing financial difficulties has access to government-funded support programmes.
Full ownership
The law does not impose local resident restrictions, and foreigners are eligible for 100% ownership rights of a company incorporated and domiciled in Hong Kong. A foreigner is now able to serve as the only director and shareholder. Starting a business in Hong Kong also has the benefit of not requiring a physical address in order to operate there. This implies that you can manage the company from any location in the world. Only the registered office address is required. Companies can also open multiple currency accounts with banks.
The corporation qualifies for off-shore company status if the directors are not Hong Kong citizens. In that instance, you only have to pay taxes on income produced within Hong Kong’s borders.
In Hong Kong, starting a business is fairly easy and hassle-free. This makes Hong Kong’s administrative region a desirable location for businesses.
Compliances and limited liability
The openness of Hong Kong’s law and order system is one of the city’s biggest benefits for new businesses. Hong Kong has developed into a significant arbitration hub in Asia thanks to the creation of the International Arbitration Centre.
The rights to intellectual property are protected by municipal legislation. This indicates that there are strict laws in place for registered designs, patents, copyrights, and trademarks. The Intellectual Property Department in Hong Kong has a wealth of experience in overseeing and managing all issues pertaining to intellectual property rights.
Legal actions brought on the Mainland can be shielded by a Hong Kong limited liability company. A company may profit from registered capital in China in the event of litigation. Additionally, the law protects private property.
There are numerous organizations, establishments, and infrastructure here that are created to aid startups like yours, and the community is expanding.
Summing up
Hong Kong is considered Asia’s financial hub, making it a great place for you to start a business. The whole process of setting up a business can be complicated, but with the right knowledge and assistance, you can set up your business easily. With the help of company formation firms like Startupr, setting up a firm in Hong Kong can be done with ease.
