Setting Up Business in Hong Kong: GEOS Guide for Global Expansion

This article is apart of our weekly series associated with the The Global Subsidiary Index. The series is designed to help businesses identify the best countries for establishing a subsidiary based on key operational factors. GEOS provides a data-driven ranking of jurisdictions worldwide, assessing across 40+ criteria to bring you insights into global expansion opportunities.

Each country on the index is scored on an overall score out of 100, with each individual criterion out of 5 or 10. Higher scores indicate a more favorable environment for businesses. By leveraging these insights, companies can make informed decisions on where to establish a legal presence.

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Business setup in Hong Kong is a smart move. It positions your company at the center of one of Asia’s most connected and forward-looking markets. With low taxes, a stable legal system, and direct access to mainland China, the city offers a strong foundation for growth. But it’s not just about ease of doing business; Hong Kong is also investing heavily in innovation.

From AI and robotics to biotech and advanced manufacturing, the city is shifting toward a high-tech economy. Government-backed initiatives like Science Park and InnoHK are helping turn research into real-world impact. Add in cross-border access through the Greater Bay Area, and it’s clear why Hong Kong remains a top choice for global expansion.

In this guide, we’ll walk through what makes the city so competitive and how GEOS helps you hit the ground running.

Why Should You Expand to Hong Kong?

Hong Kong offers a clear path to regional growth. When you start in Hong Kong, the rest of Asia opens up.

Asia’s Leading Business and Financial Hub

Hong Kong ranks as one of Asia’s top business and financial hubs. With a GEOS Global Subsidiary Index Score of 75.2, it gives companies direct access to China, backed by a strong financial system and a highly competitive market.

It operates under “One Country, Two Systems,” which allows it to keep its own currency, legal system, and political structure. That setup gives businesses legal clarity while offering a gateway into the Chinese economy.

The city’s economy is affluent, with a perfect 10/10 GDP per capita score. In 2024, it ranked 5th globally in the IMD World Competitiveness Yearbook, reflecting strong infrastructure, efficient markets, and sound economic policy.

Hong Kong also tops the Fraser Institute’s global ranking for economic freedom. It leads in trade and regulation and ranks third in monetary stability. A simple tax system and open markets support a business-friendly environment.

Still, the political risk score remains low at 1/5. While the 2020 national security law brought short-term stability, companies need to monitor the growing influence of Beijing and rising U.S.-China tensions.

Economic growth has been volatile. Between 2019 and 2023, GDP swung from –6.5% to +6.5% due to unrest, the pandemic, and global uncertainty. Looking ahead, forecasts show more stability, 2.4% in 2025 and 2.2% in 2026, supported by large-scale projects like the Northern Metropolis and Lantau Tomorrow Vision.

Fiscal policy has played a key role in softening economic shocks. The deficit peaked at –5.7% of GDP in 2023 but is now shrinking. Public debt remains low at about 10% of GDP, which gives the government room to maneuver.

Externally, Hong Kong has held a current account surplus for over 25 years. That track record has helped build strong reserves, but its trade remains concentrated in a few sectors and heavily tied to China. Gross external debt is high, over 500% of GDP, but that reflects Hong Kong’s role as a global financial center, not a structural weakness.

Digital infrastructure is another strength. The city scores 5/5 for communications, offering fast internet, affordable services, and an open market that supports global operations.

Regulation remains transparent and predictable. Businesses benefit from a clear legal framework, strong rule of law, and low levels of corruption.

Challenges still exist. Income inequality is wide, the population is aging, and sustainability efforts lag behind. Even so, Hong Kong continues to offer a stable, connected base for companies expanding in Asia. Success here depends not just on opportunity, but on staying aware of the risks.

Competitive Tax & Business Incentives

Hong Kong has one of the most business-friendly tax systems in the world. Rates are low. Rules are clear. Compliance stays simple.

The corporate tax rate is 16.5%. Smaller businesses pay just 8.25% on their first HKD 2 million in profits. That’s helpful for startups and growing companies.

There’s no VAT, sales tax, or capital gains tax. That cuts paperwork and keeps costs down. Only income earned in Hong Kong is taxed. Residency doesn’t matter. Public and private companies follow the same rules. The choice of company structure directly impacts a company’s tax obligations in Hong Kong.

Hong Kong also offers tax breaks for specific industries:

• 8.25% concessionary rate for reinsurance, ship or aircraft leasing, investment management, and treasury services
• 5% patent box rate for qualifying IP income
• 0% tax on carried interest and family office income, if conditions are met

Hong Kong is also known for its simple tax structure, which is a major draw for international businesses.

New rules apply to some foreign-sourced income. Since 2023, Hong Kong may tax offshore dividends, interest, IP, and disposal gains if received by a multinational and certain conditions aren’t met.

Payroll contributions are predictable. The Mandatory Provident Fund (MPF) system requires employers and employees to each contribute 5% of their salary, capped at HKD 1,500 per month. Employees earning under HKD 7,100 are exempt.

In short, business setup in Hong Kong is relatively easy. The tax system is built to support growth.

Skilled Workforce & Favorable Hiring Regulations

Hong Kong offers a skilled and reliable workforce. Finance and sales talent is widely available. Marketing talent is more limited but still accessible.

• Finance talent scores 5/5
• Sales scores 4/5
• Marketing scores 3/5
• Financial services account for 7.5% of total employment

Hiring is simple. The city scores 10/10 for employment law simplicity. Labor rules are clear, with minimal red tape. Employers can hire and manage teams without complex procedures.

• No strict requirements for hybrid or remote work, but many companies offer it
• Clear rules for contracts, payroll, and termination
• Union complexity score: 4/5 — low union activity, minimal disruption risk

New legislation will soon expand benefits to more part-time and casual workers. Employees will qualify for benefits after working 68 hours over four weeks for the same employer.

The gig economy is also evolving. A 2023 ruling found some food delivery workers were employees, not contractors. The court looked at control, access to the app, and other factors. Companies using gig workers should review how they classify roles.

Despite some emigration, the talent pool remains strong. Many professionals from Mainland China are filling gaps. Tech skills, especially in AI and digital transformation, are in high demand.

• Low unemployment keeps the workforce stable
• Employers can adapt quickly to shifting needs
• Skilled professionals prefer cities with flexible working options

Hong Kong combines a deep talent pool with easy hiring. The rules are clear. The market is flexible. And employers have room to grow.

How to Set Up a Business in Hong Kong

Setting up a business in Hong Kong is simple if you know how the system works.

1. Choose the Right Legal Structure

Business setup in Hong Kong usually starts with a private limited company. It’s the most common structure for foreign investors because it offers limited liability and flexible management. As a separate legal entity, the company can own assets, sign contracts, and take on debt in its own name—not yours.

Most international businesses choose a limited liability company (LLC). It’s a type of private limited company that gives you legal protection while allowing operational control.

Here’s what you need to set one up:

• At least one director (can be a foreigner)
• At least one shareholder
• A local company secretary if you only have one director
• A registered address in Hong Kong
• No minimum share capital, though your declared amount can affect obligations

The setup process includes preparing legal documents, appointing the right roles, and filing with the Companies Registry. You’ll also need to meet local compliance requirements from day one. GEOS can handle the entire process for you.

Other structures, like sole proprietorships or partnerships, are easier and cheaper to set up. But they come with higher personal risk. If the business runs into debt, you could be held personally responsible.

That’s why most companies go with an LLC. It gives you the legal protection you need and a structure built for growth.

2. Register the Company

The first step in the registration process is to choose a unique company name for your proposed company. The Hong Kong Companies Registry provides guidelines to ensure company names comply with regulations and do not infringe on intellectual property rights. The intellectual property department provides a trademark register that should be consulted to check for name conflicts and potential IP rights issues.

The registration process is fast. Online applications are usually approved within an hour. Paper applications take about four working days. If you include time for preparing documents and setting up post-registration compliance, the full process takes about one to two months.

Hong Kong company registration involves several procedural steps and legal considerations, including documentation, regulatory compliance, and payment of government fees. Company incorporation is the legal process of establishing a new company in Hong Kong, requiring adherence to specific statutory requirements.

Hong Kong’s paperwork requirements are moderate and easy to follow. You’ll need to submit the required documents for company registration, also known as incorporation documents:

• The company’s articles of association (company’s articles), which are a mandatory document for company incorporation
• An incorporation form (NNC1 or NNC1G)
• A business registration form (IRBR1)

These incorporation documents are submitted to the Hong Kong Companies Registry, either online via the company’s online platform or in person. Electronic form submission is available and legally equivalent to paper filing. Company members, such as directors and shareholders, must be identified and their details submitted during registration.

A business address in Hong Kong is required for registration, but a physical office is not mandatory if you provide a registered address. The registered business address is where the company’s statutory records and documents are registered with the Companies Registry. The company’s statutory records must be maintained at the registered office address for legal compliance and official correspondence.

Both local companies and non-Hong Kong companies (foreign companies) can register in Hong Kong, but the requirements differ. A non-Hong Kong company, which is a company incorporated outside Hong Kong that establishes a business presence in Hong Kong, must submit additional documentation such as a certified copy of its charter, statutes, or memorandum and articles, and details of its directors and secretary.

A service provider can assist with registered address services, maintaining statutory records, and ensuring compliance during the registration process, especially for foreign entrepreneurs. Service providers play a key role in facilitating the incorporation of a new company and supporting ongoing compliance.

Upon approval, you will receive a valid business registration certificate and a unique business registration number from the Inland Revenue Department. Government fees, including the business registration fee and government fee for incorporation, must be paid as part of the process. Companies limited by shares will receive certificates (electronic or hard copy) upon registration.

Maintaining an up-to-date registered office address is essential for compliance with the Companies Ordinance and ensures your company receives all important documents and official correspondence. Timely disclosure of any changes to the Registrar of Companies is crucial to ensure compliance and keep public records accurate.

You can file everything online using the Companies Registry e-Services Portal, or submit them in person. Documents can also be submitted at the Queensway Government Offices, specifically at the Shroff on the 14th floor or the e-Services Centre at Queensway Government Offices. Once approved, you’ll receive a Certificate of Incorporation and a Business Registration Certificate. Both have full legal status, whether digital or printed.

3. Understand Compliance Basics

After Business setup in Hong Kong, your company must meet local compliance rules. You’ll need to:

• File an annual return
• Appoint an auditor
• Maintain clear financial records

Every company must also hold an annual general meeting (AGM) as part of its compliance obligations.

Every incorporated company in Hong Kong, regardless of size, must complete a yearly audit. Audit services must be provided by a qualified auditor, and accurate financial reporting is required for all companies. Private companies have simpler reporting requirements. Public companies must file full financial statements, including director and auditor reports.

The responsible person, such as a director or company secretary, is legally accountable for ensuring compliance with statutory requirements. Failure to comply with filing or record-keeping obligations can result in penalties, including a further daily fine for ongoing breaches.

4. Open a Business Bank Account

Opening a business account is a key step in setting up your company. Once registered, you can open a business bank account. Companies can choose between traditional banks and newer fintech providers when opening bank accounts; traditional banks may have stricter requirements and longer processing times compared to fintech solutions.

Most banks will ask for your incorporation and registration documents, ID for directors and shareholders, and a board resolution approving the account. They’ll also run checks through the Companies Registry and Business Registration Office to verify your details. Having a business account is essential for managing company finances and meeting compliance obligations.

Obtaining a Business Registration Certificate

Obtaining a Business Registration Certificate is a fundamental step in the company registration process in Hong Kong. Issued by the Business Registration Office under the Inland Revenue Department, this certificate is required for all businesses operating in the city.

To secure your Business Registration Certificate, you must submit an application to the Business Registration Office, either online through the e-services portal or in person,and pay the applicable business registration fee. The current fee is HK$2,200 for a one-year certificate or HK$5,870 for a three-year certificate.

The registration process is efficient: online applications are typically processed within 30 minutes, while paper submissions are completed in about two to three working days. Once issued, your valid Business Registration Certificate must be displayed at your business premises as proof of legal operation in Hong Kong.

This certificate is not only a legal requirement but also a key document for opening a business bank account and engaging in official business activities. Ensuring you have a valid Business Registration Certificate at all times is essential for compliance and smooth business operations in Hong Kong.

Getting Relevant Permits and Licences

Securing the necessary permits and licenses is vital for businesses in Hong Kong, especially those operating in regulated industries such as finance, food and beverage, and import/export. The Trade and Industry Department serves as a central resource, providing up-to-date information on the specific licenses, permits, and certificates required for various business activities.

Depending on your sector, you may need to apply for multiple permits from different government departments. For example, restaurants must obtain a General Restaurant Licence, Provisional General Restaurant Licence, and Liquor Licence from the Food and Environmental Hygiene Department.

To determine which permits and licenses apply to your business, consult the Trade and Industry Department’s website or work with a knowledgeable service provider. This ensures you meet all regulatory requirements and avoid costly penalties. Staying compliant with industry-specific licensing is crucial for maintaining your business’s reputation and legal standing in Hong Kong’s competitive market.

Setting Up a Registered Office

Every company in Hong Kong is required to have a registered office address. This address must be a physical location within Hong Kong and serves as the official point for receiving legal notices and correspondence from government departments. You can use your own business premises or engage a service provider to supply a registered office address if you do not have a physical office.

The registered office address must be filed with the Companies Registry during the company registration process, and any subsequent changes must be promptly reported to the Registrar of Companies.

Maintaining an up-to-date registered office address is essential for compliance with the Companies Ordinance and ensures your company receives all important documents and official correspondence. Using a reliable service provider for your registered office can help you stay organized and compliant, especially if your business does not maintain a permanent physical presence in Hong Kong.

Appointing a Company Secretary

Appointing a company secretary is a mandatory part of the company registration process in Hong Kong. The company secretary plays a crucial role in ensuring your business complies with the Companies Ordinance and other regulatory requirements. This individual or corporate entity must be a Hong Kong resident and is responsible for maintaining statutory records, preparing and filing annual returns, and overseeing financial reporting obligations.

You can appoint a company secretary directly or engage a professional service provider to handle company secretarial services on your behalf. A competent company secretary ensures that your company’s statutory records are accurate and up to date, and that all compliance deadlines are met. This is especially important for foreign entrepreneurs or businesses new to Hong Kong, as the company secretary acts as a key point of contact with government departments and helps navigate the complexities of local regulations.

Understanding the Companies Ordinance

The Companies Ordinance sets the rules for how businesses operate in Hong Kong. It covers everything from company registration to daily management and reporting. If you’re starting or running a company, understanding this law helps you stay compliant and avoid penalties.

The Ordinance outlines what’s required at every stage of a company’s lifecycle. It defines the roles of directors, shareholders, and the company secretary. It also sets expectations for how records are kept and how companies report to authorities.

One key rule is record-keeping. You need to maintain updated registers of members, directors, and secretaries. You also need to file annual returns and submit audited financial statements. The law requires you to keep a Significant Controllers Register, which tracks who really controls the company. This helps support Hong Kong’s efforts to fight money laundering and terrorism financing.

Compliance with the Significant Controller Register

By understanding the Companies Ordinance, you give your business a strong legal foundation. It keeps your operations on the right track and helps you grow with confidence.

Compliance with the Significant Controller Register is a critical legal obligation for all companies registered in Hong Kong. The Significant Controller Register is designed to enhance transparency by recording the individuals or entities that have significant control over your company.

You are required to maintain this register at your registered office and keep it updated with details such as the names, addresses, and dates of birth of all significant controllers.

The register must be made available for inspection by law enforcement officers upon request, and any changes to the information must be reported to the Companies Registry without delay. Failure to comply with these requirements can result in substantial penalties, including fines and a further daily fine for ongoing non-compliance.

Ensuring your Significant Controller Register is accurate and up to date is essential for meeting Hong Kong’s anti-money laundering and anti-terrorism financing standards, and for maintaining your company’s good standing with the Companies Registry.

Financial & Banking Considerations

Hong Kong has one of the most reliable banking systems in the world. It’s stable, efficient, and built for global business. You can move money easily in and out of the city. International transactions are fast and secure.

The Hong Kong Monetary Authority (HKMA) manages the financial infrastructure. It keeps the system safe, modern, and internationally compliant. The platform supports real-time transactions in both Hong Kong dollars and major foreign currencies. It covers banking, securities, and payment services.

There are three main types of financial infrastructure:

• Payment systems for settling transactions between banks
• Systems for holding and settling debt securities
• Cross-border services that link local and overseas markets

The HKMA also keeps improving the system. It introduced tools like the Faster Payment System, a trade repository for financial derivatives, and systems for handling investment funds.

When it comes to tax and accounting, Hong Kong is one of the easiest places to do business. The rules are simple and clear. You don’t deal with a lot of paperwork. TMF Group ranks Hong Kong as the easiest place in Asia Pacific for tax compliance—and fourth worldwide.

Still, opening a bank account as a foreign company can be tricky. Local banks have strict checks. You’ll need to provide your company documents, identity details, and business proof. Most banks also require an in-person or video meeting. It takes time and preparation.

To make it easier, work with a local partner or choose a global bank that has a branch in Hong Kong. These steps can help you get set up faster and avoid delays.

In short, Hong Kong gives you access to a world-class financial system. With the right setup, you can run international operations smoothly from day one.

Things To Consider When Expanding into Hong Kong

Expanding into a new market means thinking beyond company registration. In Hong Kong, there are practical details that affect how you hire, operate, and scale. From immigration rules to wage expectations, these are the key areas to plan for.

Immigration and Work Permits

If someone doesn’t have the right of abode or right to land in Hong Kong, they need a visa to work, study, or start a business. This includes staying beyond the standard visitor period.

The most common option for foreign workers is the General Employment Policy (GEP). To apply, the person must have a job offer and relevant skills. The role also needs to be something local candidates can’t easily fill. The process is clear, but the paperwork must be accurate. Mistakes or missing documents can delay approval.

There are also other visa options available for entrepreneurs, top talent, and graduates. Each one has specific requirements. Most are designed to support skilled workers and international business.

Cost of Living and Office Space

Hong Kong is expensive. Office space and housing cost more in key areas like Central and Mid-Levels. Rent in expat-friendly districts is high, even after recent price drops.

A two-bedroom apartment in a central location might cost HK$44,000 a month. Studios go for around HK$24,000. Less popular areas are more affordable, HK$29,000 for a two-bedroom unit and HK$16,000 for a studio.

Buying property is rare for foreigners. Stamp duty can reach 30%. Most banks don’t offer full mortgages to non-residents. A 40–60% down payment is usually required. Interest rates range from 2.1% to 3.5%, plus agent fees.

If you’re setting up an office, space in Central is the most expensive. Areas like Kowloon or the New Territories offer lower prices.

Compliance and Data Privacy

Hong Kong makes business compliance simple. Rules are clear, and filing is straightforward. Tax reporting and annual returns follow a standard format.

Data privacy is a different story. Hong Kong has strict rules under the Personal Data (Privacy) Ordinance. Updates in 2021 introduced penalties for doxxing and tighter rules on how personal data is handled.

More changes may be on the way. These include:

• Mandatory breach notifications
• Clearer data retention rules
• Fines based on revenue
• Direct regulation of data processors

Some of these are on hold, but the government plans to revisit them. In late 2024, Hong Kong also introduced a Critical Infrastructure Cybersecurity Bill. It would require certain sectors to create risk plans and boost their digital security. The bill is still under review.

If you hire foreign staff or collect personal data, stay compliant. The rules are clear, but enforcement is serious.

Talent Availability & Scaling Considerations

Salaries run high in Hong Kong. Businesses need to budget carefully, especially in sectors like finance, tech, and professional services. The talent is strong, but it doesn’t come cheap.

The median monthly wage rose from HK$19,800 in 2023 to HK$20,500 in 2024. That’s a 3.6% increase. The median hourly wage also grew, reaching HK$82.9. Wages are rising steadily year over year.

Other indicators show a similar trend:

• The Nominal Wage Index rose 3.5–3.6% in late 2024.
• The Real Wage Index, which adjusts for inflation, still grew by 0.6% to 1.8%.
• The Payroll Index per Person climbed over 3%, with real increases hitting 2%.

To stay competitive, employers often offer bonuses and perks on top of base pay. Startups and foreign businesses should expect to match local standards or risk losing out on top candidates.

Language Skills in the Workforce

Language isn’t a major barrier in Hong Kong. Most professionals are bilingual, fluent in both English and Chinese. Cantonese dominates everyday conversation. Mandarin (Putonghua) is common in regional business. English is the main language for international meetings, contracts, and professional settings.

Hiring bilingual staff is usually easy. Many switch between languages depending on the context. To support clear communication and meet some regulatory needs, it’s smart to provide key materials in both English and Chinese.

According to government data, among people aged five and over:

• 88.2% speak Cantonese
• 4.6% speak English
• 2.3% speak Mandarin
• 2.8% speak another Chinese dialect
• 2.1% speak other languages

Trilingual professionals, those fluent in English, Cantonese, and Mandarin, play a key role in businesses that trade across Hong Kong, mainland China, and Taiwan.

Unique Hong Kong Expansion Insights

Hong Kong offers a few unique advantages for global businesses. These include direct access to China, quick setup options, and a business culture where etiquette matters. Getting familiar with these can give you an edge from day one.

Gateway to Mainland China

Hong Kong gives companies direct access to the Chinese market. Closer Economic Partnership Arrangement (CEPA), its free trade agreement with the mainland, removes many barriers. It makes it easier to trade goods, offer services, and invest. For companies expanding into Asia, that’s a major advantage.

Quick Setup with Shelf Companies

Shelf companies offer a fast way to enter the market. These are already-registered businesses that let you start operating right away. You can skip the full incorporation process and get moving sooner.

Respect Local Etiquette

There’s more to business setup in Hong Kong than registering a company. How you show up matters. Relationships, manners, and attention to detail all play a role in building trust and closing deals. Understanding local business etiquette helps you make the right impression from day one.

Meetings follow hierarchy, with the most senior person speaking first. Be on time and greet everyone individually, even in large groups. Be clear and direct:

• Get to the point
• Expect questions if you’re vague
• Watch for hesitation—“no” isn’t always said directly

Trust takes time. People may want to learn more about you before doing business with you. A warm introduction helps. Also keep in mind:

• Western names are common
• Decisions come from the top
• Business gifts aren’t expected

Respect, clarity, and patience go a long way in Hong Kong.

How GEOS Simplifies Your Expansion into Hong Kong

Expanding into Hong Kong gives your business a strategic edge. You get access to a major financial hub, strong legal protections, and a clear path into the Greater Bay Area and mainland China. However, entering a new market also comes with its own complexity. That’s where GEOS comes in.

Comprehensive Entity Setup & Compliance Management

We make it easy to get started. GEOS handles the full setup process, including business registration, tax, accounting, and local compliance. You stay covered from day one, without the guesswork or delays that often come with international expansion.

AI-Powered Global Expansion Support

Once you’re up and running, Geovanna keeps things on track. She’s your AI-powered assistant, built to help you stay compliant and efficient. From filing deadlines to local regulations, Geovanna handles the details so your team can focus on growth.

Is Hong Kong the Right Fit for Your Business?

With a GEOS Global Subsidiary Index Score of 75.2, Hong Kong remains a strong pick for companies entering Asia. You get low corporate taxes, a stable legal system, and one of the world’s top capital markets, all in one location.

But there’s more to Hong Kong than finance. The city is quickly becoming a regional innovation hub. Government-backed projects like Science Park, InnoHK, and the Hong Kong–Shenzhen Innovation and Technology Park are driving growth in AI, biotech, and advanced manufacturing. These initiatives give businesses access to R&D, funding, and talent locally and across the border in Shenzhen.

If you’re looking to scale in Asia, Hong Kong offers the right mix of stability, opportunity, and speed.

📩 Reach out to GEOS for a growth plan that’s made just for your business.

This article does not constitute legal advice.