Doing Business in Hong Kong: A Practical Guide for Global Companies

Hong Kong remains a premier base for international business, offering a stable legal framework, a simple tax system, and a business-friendly regulatory environment. For many multinationals and startups alike, the city serves as a gateway to Asia’s growth markets while maintaining close ties to global capital and talent networks. This guide outlines the core advantages, practical steps to establish a presence, and the ongoing considerations for operating in Hong Kong, drawing from widely available GovHK resources and official channels such as InvestHK, the Inland Revenue Department (IRD), the Companies Registry, and the Labor Department.

Why Hong Kong continues to attract global business

Hong Kong benefits from a unique blend of features that support sustainable growth and predictable planning for business in Hong Kong. Key strengths include:

A strategic location and connectivity. Hong Kong is a major logistics and financial hub with deep links to Mainland China and other Asian markets, making it an efficient base for regional operations.
Tax efficiency and simplicity. The city operates a territorial tax system with no value-added tax (VAT) or general sales tax, and profits earned outside Hong Kong are typically not subject to Hong Kong tax. The two-tier profits tax regime further lowers tax for small to medium-sized enterprises while preserving a broad tax base.
Ease of doing business. A transparent regulatory framework, a well-established rule of law, and a straightforward incorporation process help new entities start and scale quickly.
Business-friendly infrastructure. World-class financial services, a robust IP regime, and easy access to skilled professionals support a wide range of industries from finance and professional services to tech and logistics.
Public support and funding. The government offers a variety of programs through agencies such as InvestHK and the Innovation and Technology Fund to promote innovation, export markets, and startup growth.

The tax and regulatory environment: a concise overview

Understanding the tax framework and regulatory requirements is essential for successful operations in Hong Kong. A few foundational points:

Tax system: Hong Kong taxes are generally based on territorial source principles. Profits tax applies to profits sourced in Hong Kong, while offshore profits may be exempt. There is no VAT, no capital tax, and no withholding tax on dividends or interest for most situations.
Two-tier profits tax regime: For corporations, the first HK$2 million of assessable profits is taxed at 8.25%, with profits above that amount taxed at 16.5%. For unincorporated businesses, the rates are 7.5% and 15%, respectively. This regime is designed to support small and growing businesses in Hong Kong.
Tax administration: The Inland Revenue Department (IRD) administers profits tax, salaries tax, and related levies. Companies file annual tax returns, and individuals report income through the salary tax regime. The process is designed to be predictable and efficient for compliant businesses.
Compliance framework: All Hong Kong companies must maintain proper accounting records and prepare annual financial statements in accordance with Hong Kong Financial Reporting Standards (HKFRS) or other accepted standards, and file annual returns with the Companies Registry. An appointed company secretary and an appropriate board of directors are essential for corporate governance and regulatory compliance.
Business Registration and corporate registry: A Business Registration Certificate must be obtained from the IRD to operate legally in Hong Kong. Company formation is processed through the Companies Registry, and ongoing compliance includes annual returns and updates to company information.

Starting a company in Hong Kong: a practical, step-by-step guide

Establishing a legal entity in Hong Kong is a straightforward process, with online resources and one-stop services available through GovHK and related agencies. A typical path is:

Choose a company structure and name. Most foreign businesses opt for a private limited company due to limited liability and clear governance. Ensure the name complies with the Companies Registry’s guidelines.
Prepare incorporation documents. Gather required information, including details of shareholders, directors, a company secretary, and the registered address. For local companies, a Hong Kong-registered office address is typically required.
Register the company with the Companies Registry. Submit the necessary forms and documents. Upon approval, the registry issues the Certificate of Incorporation and a Business Registration Number.
Obtain a Business Registration Certificate from the IRD. This step confirms the business is legally allowed to operate in Hong Kong and is typically aligned with the company’s incorporation timeline.
Set up tax registrations and bank accounts. Open a Hong Kong bank account and register with the IRD for profits tax and, if applicable, salaries tax for employees.
Establish governance and compliance routines. Appoint a company secretary, establish internal controls, and prepare for annual returns and audits as required by HK law.

Practical tips for fast-track setup include using a reputable corporate service provider, leveraging online tools for e-registrations, and coordinating with InvestHK for market guidance and potential partner introductions. GovHK portals and InvestHK resources provide step-by-step guidance tailored to different business profiles.

Financing, funding, and support for innovation

Access to capital and support for innovation are important considerations for many Hong Kong-based ventures. The government and its agencies offer a mix of programs designed to help businesses grow, export, and invest in new technologies:

InvestHK: The city’s investment promotion agency helps foreign companies establish a presence, connect with local partners, and navigate regulatory requirements. It also provides market intelligence and sector-specific guidance to support expansion strategies.
Innovation and Technology Fund (ITF): This fund supports R&D and commercialisation efforts across various tech sectors, helping companies adopt advanced technologies and improve competitiveness.
R&D tax incentives and relief: Government incentives encourage qualifying R&D expenditures, reducing overall tax outlays for innovative projects. The relief framework is designed to reward ongoing investment in new products, processes, and services.
Startup-friendly programs: Initiatives such as accelerator programs, and partnerships with tech parks and incubators help early-stage ventures access mentorship, workspace, and networks to accelerate growth.
Global market access: Partnerships and channels exist to help Hong Kong-based firms access Mainland China and other Asian markets, leveraging Hong Kong’s role as a gateway to the greater Bay Area and beyond.

Hiring, visas, and talent considerations

People are central to the success of any business in Hong Kong. Hiring local and non-local talent is supported by a robust framework and competitive costs in many sectors. Key points to consider:

Work visas: Non-local professionals can work in Hong Kong under the General Employment Policy (GEP) and other schemes. Employers typically sponsor work visas for qualified staff, subject to meeting criteria related to job role, remuneration, and qualifications.
Labor standards and compliance: The Labour Department oversees employment rights, wage standards, and workplace safety. Adhering to local labor laws helps maintain a healthy and productive workforce.
Talent development: Many programs support training, upskilling, and professional development, which can help sustain a skilled workforce in technology, operations, and management.

Operational considerations for day-to-day business

Beyond incorporation and compliance, operating in Hong Kong requires attention to practical aspects that affect efficiency and customer experiences:

Accounting and reporting: Businesses follow HKFRS or other accepted standards, with annual audits for company accounts. Timely filing and transparent reporting help maintain investor confidence and regulatory compliance.
Intellectual property protection: Hong Kong has a robust IP regime. Register trademarks and patents with the Intellectual Property Department to safeguard brands, inventions, and creative works.
Trade and logistics: As a free port, Hong Kong offers efficient customs clearance, reliable logistics, and access to a broad network of air and sea connections, benefiting importers, exporters, and manufacturers.
Digital and e-services: The government continues to expand digital services for business registration, licensing, and regulatory reporting, helping firms operate more efficiently and reduce administrative overhead.

Governance, compliance, and governance best practices

Strong governance protects stakeholder value and supports sustainable growth. Consider these practices as you scale:

Establish a clear corporate governance framework, including defined roles for directors and an independent company secretary where required by law.
Maintain accurate accounting records and implement internal controls to support accurate reporting and risk management.
Prepare for regulatory changes by maintaining open channels with GovHK resources, InvestHK, and the relevant authorities (IRD, Companies Registry, Labour Department).
Regularly review tax planning to align with the two-tier profits tax regime, territorial taxation principles, and any updates to incentives for R&D and innovation.

Next steps for businesses considering Hong Kong

For teams exploring a move to Hong Kong or expanding an existing operation, a practical plan can help accelerate results. Consider the following steps:

Consult GovHK and InvestHK resources to understand the specific government programs and one-stop services applicable to your industry and growth stage.
Engage with a local corporate service provider or legal adviser to prepare incorporation documents, governance arrangements, and tax registrations.
Map out a talent strategy, including work visa planning, compensation frameworks, and training programs to build a capable local team.
Develop a market-entry plan that leverages Hong Kong’s position as a gateway to Mainland China and regional markets, including logistics, partnerships, and IP protection strategies.

Conclusion: Hong Kong as a stable platform for growth

Hong Kong offers a compelling combination of tax clarity, regulatory predictability, and global connectivity that continues to attract businesses of all sizes. By leveraging the two-tier profits tax regime, a straightforward corporate framework, and GovHK-supported services, international firms can establish a resilient presence, accelerate market access, and invest in innovation. Whether you’re setting up a new company, expanding an existing operation, or exploring partnerships, Hong Kong remains a pragmatic and cost-efficient base to drive growth in Asia and beyond. For tailored guidance, consult InvestHK, the IRD, the Companies Registry, and GovHK portals to identify the most relevant programs and requirements for your business, and begin conversations with local advisers to navigate the setup with confidence.