A Simple Walkthrough: HK Business Registration
Hong Kong is a pro-business society. Both local and overseas persons can carry on business activities in Hong Kong, but the business holders must register their business to Inland Revenue Department (IRD) to create a business entity and fulfill their tax obligations levied on their business. A person can register more than one business at the same time.
What is business?
Hong Kong government’s definition of business
The IRD defines “Business” for the activities which are intended for interest and profit. The precise definition is based on Business Registration Ordinance. Practically, here is the scope of activities which is generally regarded as “Business in Hong Kong”:
- any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for the purpose of gain;
- any club which provides facilities, services and exclusive club premises to its members for social intercourse or recreation; and
- every company incorporated in Hong Kong under the Companies Ordinance or non-Hong Kong company that has established a place of business in Hong Kong, regardless of whether it is actually carrying on any business in Hong Kong.
- every non-Hong Kong company that has a representative or liaison office in Hong Kong, or has let out its property situated in Hong Kong, regardless of whether it has established a place of business in Hong Kong.
Why register the business?
For non-incorporate entity (i.e. sole proprietorship and partnership):
- You own your business entity with a standalone business name, you can carry on your business under the business name instead of your personal name.
For incorporated entity (i.e. all companies registered in the Companies Registry):
- Income generate from your business entity is taxed under Profits Tax regime for tax saving purpose.
Notes to Business Registration:
- When a person is only holding an property (e.g. a property owners receive rental as income) or employment (e.g. a employer of a domestic helper), this person is not regarded as carrying on any business and is not required to do business registration.
- Be reminded that Representative Office (RO) is principally different to Sole Proprietorship, Partnership and Company, this is not allowed to raise fund from any source other than its parent company, technically the owner of it should be its parent company outside Hong Kong. In view of government, the person who is appointed as is seen as carrying this business and must provide his identity to complete the registration.
- For Limited Company and Representative Office, they are also required to complete the registration to government even they are NOT carrying business activities.
- It is commonly mixed up with Branch Office with Representative Office which is exclusive for non-Hong Kong incorporated body to setting up a place of business in Hong Kong. Branch is an extensional place of business for Hong Kong incorporated body (i.e. Company). Keep in mind that Representative Office CANNOT engage in transactional operations (e.g. sales of products or services).