Requirements for doing business in Hong Kong
Article 5 minute read

Requirements for doing business in Hong Kong

02 December 2021

If you are looking to do business in the Asia Pacific region, Hong Kong is internationally recognised as one of the best places to be. With multinational access to the region, as well as acting as a ‘gateway to China’, Hong Kong is an important channel for inbound investors looking to develop corporate relationships throughout Asia.

Considered the ‘financial hub of Asia Pacific’, Hong Kong is ranked as the second simplest jurisdiction to operate in globally, according to TMF Group’s Global Business Complexity Index 2021. A major factor behind this prestigious position is the highly structured and clear nature of HR and employment laws. For example, pension funds are mandated at a monthly saving of 5% of an employee’s salary, capped at HK$1,500 per month. This single rule makes it a very straightforward calculation for companies. Additionally, and helpfully for multinationals, Hong Kong is a jurisdiction which has fully embraced globalisation and international alignment.

A Special Administrative Region (SAR) of China, Hong Kong is a world renowned financial, trading and business centre. It has a population of over 7.5 million people, and practices free trade through a free and liberal investment regime with virtually no trade barriers or discrimination against non-local investors. There is freedom of capital movement, an established rule of law, transparent and straightforward regulations, in addition to a low tax system.

As a special administrative region of China, the city is also the preferred first stepping stone for many mainland Chinese businesses looking to pursue international opportunities and a serves as a conduit for both inbound and outbound investment.

If you are looking to set up a business in Hong Kong, here are some of the key requirements you should be aware of before making a move.

Establishing a company in Hong Kong

Hong Kong is built on its ability to harness its status as a gateway to China and the rest of Asia and is known to be business friendly. The World Bank Doing Business 2020 report ranks the jurisdiction third in the world for ease of doing business and fifth for starting a business, thanks to its minimal incorporation procedures (two), the time required (one and a half days) and associated cost.

Hong Kong is also the easiest jurisdiction in Asia Pacific for accounting and tax compliance, according to TMF Group’s Global Business Complexity Index 2021.

Accounting in Hong Kong

In the area of accounting, the jurisdiction follows the Hong Kong accounting principle, which is closely aligned with IFRS. While politically Hong Kong is part of China, the ‘one country, two systems’ policy has allowed Hong Kong to historically follow a separate legal system. There are mounting concerns that, as the US-China trade war intensifies, political tension with China and other countries around the world could also impact Hong Kong. It is a rapidly changing political landscape, and there is a risk that Hong Kong may be required to align more closely with China’s regulations, which could add significant complexity to the jurisdiction in the future, potentially deterring foreign investment.

Opening a bank account

Opening a bank account in Hong Kong can be complicated for a foreign company and this is unfortunate as it is a key aspect of doing business in the country, especially for a business is in its infancy. Reasons behind the complications include producing less or no profit, having no physical presence in Hong Kong, companies of foreign nationals, complex ownership structures, and lack of financial history for new businesses. Ways around this could be using an offshore bank, which means having a bank account in another location such as a low tax jurisdiction outside the country.


Hong Kong is working to enhance its competitive edge and maintain its economic sustainability. The advantageous budget changes for both corporates and individuals, with a particular focus on supporting innovation and developing the financial services industry, make Hong Kong an attractive place to work and invest.

Tax requirements in Hong Kong

Hong Kong has aligned its tax policy with its goal to become one of the most tax friendly environments in the world. It has just three direct taxes, capped at between 15% and 16.5%, with further allowances and deductions possible. This, and the lack of VAT, sales, dividends, estate, capital gains and withholding tax, is why Hong Kong has emerged as one of the preferred locations for global entrepreneurs. The jurisdiction has also made submitting tax returns a straightforward process. However, given the vast number of tax incentives implemented in recent years, having local support is essential to maximise tax benefits.

Customs and excise duty

Hong Kong is known for its easy customs procedures and free port status, both when importing or exporting, with duty excised on very few products. Duty is paid on liquors and tobacco, for example, but in the last few years, duty was dropped for the import of wine and beer, encouraging a thriving wine import, export and storage business.

Intellectual property

According to the World Intellectual Property Organisation (WIPO), Hong Kong ranks among the world’s top 20 centres for patents. The Customs and Excise Department is active and takes quick action against copyright piracy and trademark counterfeiting, making Hong Kong a leader in the region in the fight against IP infringements.

Contact our local TMF Group experts

TMF Hong Kong has the local knowledge to help you identify the relevant tax and accountancy aspects in Hong Kong, and face any challenge or opportunity they may pose for your business. 

Whether you want to set up in Hong Kong for the first time, or want to streamline your existing operations, we have the local knowledge to help. Talk to us today.

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