Guide for UK Companies Setting Up in Hong Kong
- Kristina Coluccia
- Jan 24
- 4 min read
Hong Kong continues to be a leading gateway to Asia for UK companies, thanks to its pro-business environment, strategic location, and common law legal system. This comprehensive guide provides essential information for UK businesses planning to establish operations in Hong Kong, optimised for search and rich in actionable insights.
1. Why Expand into Hong Kong?
Strategic Location: Serves as a bridge between China and the rest of the world, offering easy access to Asia-Pacific markets.
Simple Tax Regime: Low corporate tax rate of 16.5%, no VAT, no capital gains tax, and no withholding tax on dividends.
Business-Friendly Environment: Ranked highly for ease of doing business and economic freedom.
Legal System: Based on English common law, offering familiarity and transparency for UK firms.
Global Financial Hub: Home to over 70 of the world’s top 100 banks and one of Asia’s most active stock exchanges.
2. Choosing the Right Business Structure
UK companies can set up operations in Hong Kong under several entity types:
Private Limited Company: Most popular choice; allows full foreign ownership, limited liability, and flexibility in management structure.
Branch Office: Not a separate legal entity; liabilities extend to the parent company.
Representative Office: Cannot engage in profit-making activities; useful for market research and initial presence.
Sole Proprietorship or Partnership: Suitable only for very small or solo ventures; less common due to unlimited liability.
3. Steps to Set Up a Company in Hong Kong
Choose a Company Name: Verify availability through the Companies Registry’s online system.
Prepare Incorporation Documents: Includes Articles of Association, directors’ and shareholders’ details.
Company Registration: File incorporation documents online or in person with the Companies Registry.
Business Registration Certificate: Apply within one month of incorporation via the Inland Revenue Department.
Open Corporate Bank Account: Choose a local or international bank; prepare certified incorporation documents, proof of business activities, and KYC compliance materials.
Register for Tax: Obtain a Business Registration Number and understand applicable profits tax obligations.
Set Up a Registered Office: Required for correspondence and statutory records.
Appoint a Company Secretary: Must be a Hong Kong resident or firm.
Maintain Compliance: Hold AGMs, file annual returns, and keep accounting records.
4. Taxation and Financial Considerations
Corporate Profits Tax: 8.25% on first HK$2 million of profits, 16.5% on excess.
No Capital Gains Tax or Withholding Tax: Encourages free capital flow.
Double Taxation Relief: With the UK and over 40 other jurisdictions.
Territorial Tax System: Only income sourced in Hong Kong is taxable.
Transfer Pricing Rules: Ensure intra-group transactions meet arm’s-length standards.
5. Hiring and Employment Regulations
Recruitment: Use job boards, recruitment agencies, and government platforms.
Employment Contracts: Clearly outline job scope, probation period, salary, benefits, and termination conditions.
Mandatory Provident Fund (MPF): Employers and employees contribute 5% of monthly income to retirement savings.
Work Visas: Employment visa applications must prove local recruitment efforts were unsuccessful; allow 4–6 weeks for processing.
Termination & Redundancy: Must comply with statutory notice periods and severance payment rules.
6. Office Space and Infrastructure
Business Districts: Central, Wan Chai, Tsim Sha Tsui, and Quarry Bay are key commercial hubs.
Lease Considerations: Standard leases are 2–3 years with significant upfront costs.
Coworking Spaces: Ideal for startups or short-term setups; providers include WeWork, Compass Offices, and The Hive.
Logistics & Telecoms: Hong Kong ranks among the top for logistics efficiency and internet speed.
7. Regulatory and Legal Compliance
Company Secretary: Must maintain statutory books and file company documents.
Annual Filings: Includes NAR1 annual return, audited accounts, and Profits Tax Return.
Intellectual Property: Register trademarks, patents, and designs with the IPD (Intellectual Property Department).
Data Protection: Adhere to the Personal Data (Privacy) Ordinance (PDPO); appoint a data protection officer if handling sensitive data.
8. Banking and Finance
Account Opening Process: Involves background checks on shareholders and directors; enhanced due diligence for UK entities.
Bank Options: HSBC, Standard Chartered, Bank of China (HK), as well as fintech alternatives like Airwallex.
Payment Gateways: For e-commerce, options include Stripe, PayPal, AsiaPay, and local Chinese gateways.
Foreign Exchange: No restrictions; highly favourable for cross-border trading.
9. Common Challenges and Solutions
Language Barrier: English is widely used in business, but legal and government documentation may still appear in Chinese; translation services are advised.
Document Authentication: UK documents often require notarisation and consular legalisation.
Cultural Differences: Understanding local etiquette and business customs enhances negotiations.
Navigating Bureaucracy: Partnering with local experts ensures smooth navigation of administrative requirements.
10. E-Commerce and Digital Business Landscape
Market Channels: Set up online stores through Shopify, WooCommerce, or local marketplaces.
Cross-Border Logistics: Hong Kong’s free port status makes it a hub for drop-shipping and B2C fulfilment.
Social Media Marketing: Leverage platforms like Facebook, Instagram, and WeChat for targeted outreach.
Cybersecurity Regulations: While Hong Kong is relatively liberal, businesses should implement best practices for IT governance.
Hong Kong offers UK companies a powerful platform for expanding into Asia, combining legal familiarity, efficient infrastructure, and economic openness. By understanding the local regulatory environment and leveraging the right local support, UK businesses can confidently navigate and capitalise on this dynamic market.
How We Can Help
At Woodburn Global, we help UK companies seamlessly establish and grow their operations in Hong Kong with tailored solutions covering entity setup, licensing, compliance, visa processing, and ongoing advisory services.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
