Hong Kong

Hong Kong: Commencement of New Inspection Regime – Phase 1

On 16 August 2021, Hong Kong’s Companies Registry published external circular no.1/2021 regarding the commencement of a new inspection regime of the Companies Register (“New Inspection Regime”) commencing on 23 August 2021.

From 23 August 2021, companies may withhold from public inspection the usual residential addresses of directors and full identification numbers (“IDNs”) of directors and company secretaries as contained in the registers of directors and registers of company secretaries kept by the companies.  In such cases, companies are to make available for public inspection on their own registers correspondence addresses of directors and partial IDNs of directors and company secretaries.

According to Phase 1 of the New Inspection Regime, a Hong Kong company, in addition to providing the usual residential addresses of directors, must also provide the particulars of the correspondence address of the directors into the registers of directors, and the addresses must not be a post office box number.

Details relating to the transitional arrangements can be found at https://www.cr.gov.hk/en/publications/docs/ec1-2021-e.pdf

Source: Companies Registry, Hong Kong SAR

Newsletter

Expanding Your Business in Hong Kong

Doing Business in Hong Kong 

Hong Kong has maintained its position as part of the world’s most competitive economies with its open business environment for local and overseas enterprises. The International Institute for Management Development (IMD) World Competitive Yearbook 2020 ranked Hong Kong 5th out of 63 economies. Highlights of doing business in Hong Kong include:  

Ranked the one of the freest economies around the globe, Hong Kong is an ideal place for businesses ranging from small and medium-sized enterprises to multinational companies to grow internationally. As you may be aware, one of the requirements for setting up a limited company in Hong Kong is having a company secretary.   

How can CW help? 

Our Corporate Secretarial Department offers corporate governance and secretarial services to different types of entities, including multinationals, Hong Kong incorporated companies, and offshore companies. 

1. Business Formation 

Our experts can advise on the type of entity and walk you through the journey of the business establishment so that you can expand your business in Hong Kong at ease and be better prepared for entering the market of Mainland China by using the Mainland and Hong Kong Closer Economic Partnership Arrangement (“CEPA”). 

2. On-going Company Secretarial Services 

As a trusted service provider, we provide efficient and reliable support to businesses in compliance with laws and regulations, including company secretary, designated representative, and registered office services – but it does not end here. Our experts have in-depth knowledge that can be your governance liaison on behalf of your company. Whether you require assistance in preparing prescribed forms or minutes, reviewing corporate documents, or advising on dissolving the company, we are ready to help you.  

3. Bank Account Opening in Hong Kong 

The bank account opening procedure can be complicated. Over the years, we have been working closely with HSBC, Standard Chartered Bank, and Citibank to provide business solutions for different types of entities. Whether you wish to set up online banking or bank account opening, we can assist you in the liaison work.  

4. Human Resources Support 

To boost both productivity and commitment among the employees, you can offload some human resources processes to focus more on strategic management and business expansion.  

Retaining employees is one of the key to grow a successful business. Overseas directors and managerial staff who seek to manage and oversee their business more closely require employment visa permits to work in Hong Kong. Our experts can assist your non-local staff in the application for employment visas to better manage your business in Hong Kong. By outsourcing part of your administrative formalities, your company can have more confidence in complying with the relevant regulations and provisions. Our HR process outsourcing services include:  

  • Talent Mobility Solutions 
  • Payroll Outsourcing 
  • Entry & Mid-level Recruitment  

Why spend time or money managing an in-house HR team if you can hire professionals to manage HR functions more effectively? Start by contacting us now!  

5. Legalization 

Occasionally, a Notary Public may be required to certify the authenticity of a document. Notarization can be a tedious task which imposes some difficulties in completing most of the transactions and fulfilling requirements set by the authorities. With our connections to various law firms, we can assist you in going through the procedures of notarization, legalization, and apostille.  

6. Trademark Registration 

Trademark is a sign to distinguish the goods and services of your company from the others. If other traders use your trademark in Hong Kong, they may be liable for infringement of your trademark. Likewise, if you do not register your trademark, it is difficult to claim that you are the owner. CW can assist in the registration of your trademark in Hong Kong to protect your brand and further increase your competitiveness.  

7. Closing a Hong Kong Limited Company 

CW’s Corporate Secretarial Team has strong and experienced specialists who can advise you on closing down your company through deregistration. Work efficiently and effectively with us as we provide you the care and solutions you need! 

Hong Kong is a perfect spot for investors to consider because it has no interest tax with higher deposit revenues. We work closely with our clients to ensure compliance with the Hong Kong regulations so that their businesses can run smoothly. 

Written by Connie Pak, Company Secretarial Department, CW CPA

Newsletter

compliance

Your Simplified Annual Compliance Guide in Hong Kong

Are you considering setting up a company in Hong Kong? Perhaps you have a Hong Kong Company but find it confusing to keep up with the compliance. Has your accountant suddenly reached out to you with a new charge that you are not familiar with? This article is to clarify the basic responsibilities that your Hong Kong Limited Company shall take up every year.

 

Annual compliance in Hong Kong

Annual compliance refers to a set of responsibilities a company should assume once it has been established. You must observe these compliance requirements according to your company’s fiscal year-end and the anniversary date. In Hong Kong, every private company must comply with the obligations administered by these two government entities:

– Companies Registry

– Inland Revenue Department

 

COMPLIANCE WITH THE COMPANIES REGISTRY

The Companies Registry is the department in charge of registering local and non-local companies in Hong Kong. It maintains records of active and dissolved companies.

 

Annual Return

Every year, a company should deliver an Annual Return, which contains its particulars, such as the registered office, shareholders, directors, company secretary. If the company does not file the Annual Return after 42 days of the deadline, the company will have to pay penalties. Please see the Annual Return Form “NAR1(Private)_Specimen-e” for your reference.

Business Registration

Business Registration must be renewed upon its expiry date. Normally, if you have applied for a one-year Business Registration, we recommend preparing the renewal of the Business Registration before the anniversary of the company. Please see Business registration specimen for your reference.

Significant Controller Register (SCR)

To enhance the transparency of corporate beneficial ownership, a company

incorporated in Hong Kong must obtain and maintain up-to-date beneficial ownership information by keeping a Significant Controllers Register. The SCR register must be kept at its registered office address or a place in Hong Kong. In the latter case, the company must file a Form NR2 to the Companies Registry reporting the location of SCR. The Register should be open for inspection by law enforcement officers upon demand. Failing to do so will render the company and the responsible person of the company liable to fines.

 

COMPLIANCE WITH THE INLAND REVENUE DEPARTMENT

 

Bookkeeping

The company should prepare financial statements for each fiscal year. The periodicity of the reports will depend on the company and the need for the availability of financial information. The reports can be prepared on a monthly, quarterly, biannual, or annual basis.

Audit

Regardless of the size, companies in Hong Kong are required to audit their financial statements and present them together with a profit tax return to the Inland

Revenue Department. The audit should be performed on an annual basis.

Profits tax return (“PTR”)

Annual profits tax returns are normally issued to taxpayers on 1 April each year. Once a Profits Tax Return is issued, the company is required to lodge the completed PTR together with the profits tax computation and the duly signed audited accounts for the basis period. Please see “ebir51” regarding the format of the Profits Tax Return.

Employer’s return

Hong Kong Salaries Tax is charged on the assessable income earned by an employee or an office holder in a year of assessment that runs from 1 April to 31 March of the following year.

As an employer, the company has the following reporting obligations to the Inland Revenue Department (“IRD”) if it anticipates that the company hires an employee who is likely to be chargeable to Hong Kong Salaries Tax.

i. Commencement return – The company has to file Form IR56E within 3 months of employing the employee

ii. Annual return – The company has to file Form BIR56A and IR56B. The annual return BIR. 56A is normally issued in early April and the filing deadline of the form (together with completed IR56B, where applicable) is within 1 month from the date of issue.

iii. Cessation return – The Company has to file Form IR56F (Employee who is about to Cease to be Employed) or IR56G (Employee who is about to Depart from Hong Kong) one month before the date of termination of the Philippines employee’s employment. IR56G has to be filed in the situation when the employee leaves Hong Kong for good or a substantial period of time usually in excess of 1 month. From the date of filing IR56G and until such time the employee has made tax clearance and can produce to the company a “letter of release” issued by the IRD, the company should withhold all amounts due to be paid to the employee (including salaries, commission, bonus, reimbursement of rent/expense, gratuity, money or money’s worth included).

Please note that the company does not have a tax withholding obligation except in the situation mentioned in (iii) above when the employee is about to depart from Hong Kong.

Compliance

Our suggestions:

1. Understand the basic accounting and taxation system and practice in Hong

Kong.

2. Review in-depth the service proposal you receive from the external accounting and secretarial services provider.

3. Establish a good habit of keeping and organizing business records from day one.

4. Don’t delay the declarations and reporting. This might lead you to the loss of information and records internally and the delay in presenting information to third parties like the banks, and penalties from the authorities.

5. For companies with a large number of transactions, it is important to prepare financial reports on a more frequent basis.

6. Review your financial reports. Once you receive the financial reports from your accountants, go through the information and seek clarifications if you have doubt. A responsible service provider will be able to answer your questions swiftly.

7. Keep your company statutory and business records up to date.

8. Update your bank at least once a year on the company status. Make sure your bank account has sufficient funds for bank charge deduction.

If you have any questions regarding your company’s responsibilities or how to

prepare the information, please get in touch with us and request a free consultation.

 

Contact: Ms. Lily Xiang, Accounting Manager

Email: lily.xiang@cwhkcpa.com

Written by Luz Deneb Martínez,  Latin Department, CW CPA

Newsletter

Hong Kong Startups Support

Funding Support For Startups in Hong Kong

As an international financial center, Hong Kong has not only experiencing the typical business, but also a booming startup scene in recent years. In the 2019 Global Startup Ecosystem Report, Hong Kong is rated as a new entrant in the world’s top 25 startup hubs, listed as the third most innovative location in South East Asia, East Asia, and Oceania in the Global Innovation Index 2019. Furthermore, according to lnvestHK’s 2019 startup survey: 

  • Hong Kong has a significant increase over 2018 on all main parameters, with a total of 3,184 startups (+21 %) employing 12,478 employees (+31 %) across 92 co-work spaces, incubators, and accelerators.  
  • The group of multi-cultural startup founders, who are the backbone of Hong Kong’s startup ecosystem, continues to create job opportunities for the Hong Kong economy.  
  • The number of co-work spaces, incubators, and accelerators, which is supported by a robust network of ecosystem builders and stakeholders, has also shown remarkable growth over the years. 

WHAT DO OVERSEAS STARTUPS NEED TO KNOW ABOUT FUNDING PROGRAMS IN HONG KONG? 

 The Hong Kong government and different stakeholders participate actively in the startup ecosystem, which offers more than 70 different programs to support potential entrepreneurs with different goals and needs.  In this article, we aim at listing some interesting programs that you should know about.  

Government funding 

In recent years, the Government of Hong Kong has forged ahead with the development of innovation and technology with plentiful funding schemes. 

  • Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD) Fund 

Provide funding support to individual Hong Kong enterprises in undertaking projects to develop brands, upgrade and restructure their business operations and promote sales in the FTA markets 3 and Mainland China market, so as to enhance their competitiveness and facilitate their business development in the FTA markets and Mainland China market. 

(Source: https://www.bud.hkpc.org/en/)  

  • Partnership Research Programme (PRP) 

Launched in January 2019, PRP aims to support applied research and development (R&D) projects undertaken by R&D Centres or designated local public research institutes in collaboration with private companies.  

(Source: https://www.itf.gov.hk/l-eng/PRP.asp)  

  • Enterprise Support Scheme (ESS) 

Launched in 2015, ESS aims to provide funding support for local companies to conduct in-house research and development (R&D) work with a view to encouraging the private sector to invest in R&D. 

(Source: https://www.itf.gov.hk/l-eng/ESS.asp)  

  • Technology Voucher Programme (TVP) 

TVP subsidise local enterprises and organisations to use technological services and solutions to improve productivity, or upgrade or transform their business processes. TVP invites applications for funding all year round. 

(Source: https://tvp.itf.gov.hk/)  

  • Reindustrialisation and Technology Training Programme (RTTP) 

Reindustrialisation and Technology Training Programme (RTTP) is a funding scheme under the Innovation and Technology Fund that subsidises local companies on a 2:1 matching basis to train their staff in advanced technologies, especially those related to “Industry 4.0”.  

(Source: https://rttp.vtc.edu.hk/)  

Incubation and acceleration programs 

  • Cyberport Incubation Program 

Cyberport Incubation Programme supports entrepreneurs and start-ups with resources that aim to accelerate their growth. In addition to a range of business and professional services, incubatees get up to HK$500,000 support over 24 months.  

(Source: https://www.cyberport.hk/en/about_cyberport/cyberport_entrepreneurs/cyberport_incubation_programme)  

  • Cyberport Accelerator Support Programme 

The Cyberport Accelerator Support Programme prepares Cyberport incubatees and alumni for international markets and investors, providing up to HK$300,000 financial assistance to each successful applicant. 

(Source: https://www.cyberport.hk/en/about_cyberport/cyberport_partners/cyberport_accelerator_support_programme)  

  • Cyberport Macro Fund 

With an initial size of HK$200M, the Cyberport Macro Fund is set in place to provide seed to Series A stage funding to Cyberport digital entrepreneurs to assist them to accelerate; and promote the development of the venture capital ecosystem for digital entrepreneurs in Hong Kong. 

(Source: https://www.cyberport.hk/en/about_cyberport/cyberport_macro_fund)  

  • Incu-Tech Incubation Programme 

Incu-Tech helps technology startups kickstart their journey to productize its R&D outcomes, explore the market and scale their businesses. The 3-year programme offers comprehensive services including R&D support, mentorship, investor matching and more.  

(Source: https://www.hkstp.org/en/innovate-with-us/incubation/incu-tech/)  

  • Incu-Bio Incubation Programme 

A four-year programme managed by the Biomedical Technology Cluster, Incu-Bio supports the development of biomedical tech startups in Hong Kong. Connect with stakeholders in investment and regulatory support to devise the perfect business plan. Access cutting-edge equipment, co-working space and lab services. Cover R&D costs with financial support up to HK$6,000,000. 

(Source: https://www.hkstp.org/innovate-with-us/incubation/incu-bio/)  

  • Incu-App Incubation Programme 

Incu-App is a two-year programme designed to help startups develop new solutions from existing technology. We provide designated account managers who can give you professional guidance, so you can tap into industry expertise in content development, application platform and market support value chains through partnerships with top companies in Hong Kong. 

(Source: https://www.hkstp.org/en/innovate-with-us/incubation/incu-app/)  

  • Corporate Venture Fund (CVF) 

The Corporate Venture Fund (CVF) gives early-stage Hong Kong technology startups a chance to fully develop their ideas and create revolutionary new tech products and services. 

(Source: https://smuhk-new.ipulseclients.com/startup-resources/government-funding-scheme-and-support/hong-kong-science-technology-parks-corporation-hkstp/corporate-venture-fund-cvf)  

Besides looking for funding opportunities, overseas startups should also pay close attention to the abundant startup network, marketing campaigns, competitions and matchmaking events organized by an extensive network of stakeholders in the startup ecosystem.  A good way to keep track of Hong Kong’s startup events is to visit the Events section on InvestHK’s startmeup.hk website: https://www.startmeup.hk/upcoming-events/events-calendar/  

CW STARTUP SERVICE PACKAGE 

The unique status of Hong Kong in the international community, the increasingly close co-operation between Hong Kong and the Mainland, and the financial support from various sectors of the society have all contributed to the startup development of Hong Kong. 

Despite the fact that Hong Kong has been battered by social movements and epidemics, CW believes that it is precisely during uncertain times new forms of business start to sprout.  

While our future relies on innovation and new business models, it is equally important for business advisory firms like CW to learn how to support startups to grow in a healthy and compliant manner. Last month, CW joined Cyberport Hong Kong, Brazil-China Chamber of Commerce and Invest Hong Kong in the promotion of Cyberport Venture Capital Forum (CVCF) which took place during 3-4 November. According to the post-event report, more than 250 deal flows arranged during CVCF. Startups received ample opportunities to meet with investors and showcase their solutions.  

If you are ready to take advantage of the funding opportunities in Hong Kong to expand into Asia, CW offers an attractive service package to help you: 

  • Setting up a limited company in Hong Kong 
  • Taking care of your annual accounting and tax compliance 
  • Connecting you directly to our startup ecosystem partners  

ACCESS OUR STARTUP SERVICE PACKAGE IN THREE DIFFERENT LANGUAGES 

English

Spanish

Portuguese

Resources: 

Hong Kong Startups Support

Latest newsletter of Hong Kong Cyberport: https://www.cyberport.hk/enewsletter/v146/1460001.html 

Newsletter

Today, organizations can now select from several international and local banks to open a corporate bank account in Hong Kong. Many products and services have been tailored to address these issues by every significant bank in Hong Kong, both local and international. You need to know those things required by your bank before opening an account so that whatever the bank offers can go with your needs. 

 

Have you had a go at opening a corporate bank account in Hong Kong and had been dismissed with no clarification from the bank? The global banking system has been compelled to rebuild its activity and strategies. Compliance is characterized as the capacity to act by following some guidelines. By not complying with these guidelines, the reputation of the bank is affected.   

 

You must come prepared with the following in mind, a non-exhaustive list, and be ready to wait for some days to get approval if you want to open a bank account without having issues. And be prepared for the banks to come back with more questions and clarifications, as a direct result of anti-money laundering and counter-financing terrorism (AML/CFT) during the process of opening a new bank account for the client.  

 

Below, we list the primary reasons why people find it hard to open bank accounts in Hong Kong: 

 

COMPLIANCE REASONS 

Banks work under a lot of standards and rules that are commanded by regulators. What is more, banks ought to be severely penalized under various sanctions if they do not conform to these rules. Subsequently, it has made them excessively protective of their financial services, which causes that the procedures involved in opening a new bank account gets more complicated and difficult and takes more time. 

 

BUSINESS REASONS 

Banks are commercial organizations motivated by financial benefit. They hope to guarantee that the organizations are beneficial before contributing their time and assets. A business evaluation will be applied based on the interests that can be earned from the organizations. Along these lines, an organization’s profile is an important criterion that can influence the bank’s points of view. 

 

PRACTICAL DIFFICULTIES 

By and large, banks will demand that each organizational head come to Hong Kong or meet them face to face for the procedures involved in opening a bank account. It makes things even more difficult, especially with the outbreak of COVID-19. Then again, the application surveying can be taken half a month or every month to process the stringent assessment. What’s more, the bank evaluation plan will differ by organizations, making the selection of candidates obscure. The whole process can move faster if the banks get advice from a service provider that is well-vast in this area and prepare adequately before an interview. 

 

Most of the world’s important banks have branches in Hong Kong. Before you get involved in the opening of a corporate bank account, it is critical to consider these factors: 

 

  • The reputation of the bank 
  • Services and facilities offered by the bank 
  • Future support services like loans or trade financing  
  • Minimum requirement deposit 
  • Internet banking facilities offered and 
  • Monthly charges (if any) 

 

Despite the difficulties, most international companies appreciate the advantages of establishing a company in Hong Kong and the using of Hong Kong’s banking system to facilitate their international transactions. These advantages include: 

  • No restriction on foreign exchange remittance or free transfer of funds; 
  • Convenience in settlement of international trades; 
  • No interest in tax with higher revenues of deposits; 
  • Free conversion of currencies; 
  • Convenience in daily account operation and online bank transactions; and 
  • The ease involved in getting trade financing from international banks. 

 

As one of the world’s largest financial centers, Hong Kong is the perfect spot for making ventures and opening bank account for investors. Be that as it may, banks have various prerequisites on the procedures and information needed to open a bank account. The organization’s executive may need to invest extra energy in making inquiries to the bank for this, as he may neglect to produce the necessary information, which might lead to a lot of wasted time.  

 

CW has been working closely with a couple of international banks trying to provide solutions to foreign companies with imminent needs to operate in Hong Kong. In the past few months, our Company Secretarial Team has helped several clients open the corporate bank account without the directors’ presence. We can help you navigate through the process of applying for a corporate bank account with our expertise in dealing with the increasingly stringent customer due diligence requirements mandated by the banks. 

 

If you are interested in opening a corporate bank account in Hong Kong, please download CW service brochure (https://www.cwhkcpa.com/wp-content/uploads/2020/05/CW-Service-HK-Company-Corporate-Bank-Account-Opening.pdf) and contact Ms. May Ly (may.ly@cwhkcpa.com). 

 

Please click below link to access June 2020 South China Business Journal of American Chamber of Commerce in South China: 

AMCHAM South China – June 2020 South China Business Journal

 

Written by Company Secretary Team, CW CPA

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