The most common type of company incorporated in Hong Kong is a private company limited by shares, which is a separate legal entity and brings several obligations as listed in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong).
Business Registration in Hong Kong
One such obligation after company incorporation is the registration of the entity with the Business Registration Office of the Hong Kong’s Inland Revenue Department within one month of starting the business. Though both these – company incorporations and business registration – can be done simultaneously by submitting a Notice to Business Registration Office (IRBR1), along with the Incorporation Form (Form NNC1 for a company limited by shares). This One-stop Company and Business Registration Service is a service jointly provided by the Companies Registry and the Inland Revenue Department of the Hong Kong Government.
Business Licensing in Hong Kong
Another important obligation – after the company has been registered with the Hong Kong’s Companies Registry – is the requirement of particular government licences, permits, certificates and approvals to start your business operations in Hong Kong. There is also an online service called the Business Licence Information Service to acquire these licenses, as well as the Licence Application Tracking Facility to check the application status online.
Notably, and staying true to its reputation as one of the most business-friendly regions of the world, very few business activities actually require a license to commence in Hong Kong, according to the Government’s Trade and Industry Department.
These industry sectors – requiring business licenses – are classified 1) by-products, and 2) by services, with application details and eligibility, along with the government authority to whom the application must be submitted to, varying slightly sector-by-sector.
Among the products requiring business licenses, prominent ones are – crops, chemicals, dairy, electrical equipment, firearms, fish, furniture, gas, coal, petroleum, meat, metallic, non-metallic, minerals, telecommunication equipment, and other food products.
Similarly, the specific services requiring a business license in Hong Kong include accommodation, food, arts, entertainment, recreation, construction, education, finance, money lending, insurance, health, social work, import/export, wholesale and retail trade, information and communications, mining and quarrying, professional and business services, trust and company service providers, real estate, transportation, storage, postal and courier services, water supply, and sewerage and waste management.
Do note that the above sectors may be subject to specific regulations, in addition to some general ones.
But the good thing is – and which is a major advantage of incorporating a company in Hong Kong – once your business is registered and you have obtained the necessary license – your Hong Kong company may enjoy preferential treatment while entering Mainland China, subject to fulfilling relevant certification requirements. (as per the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)
CEPA covers four broad areas:
1. Trade in Goods
Trade in goods has been fully liberalised. Products of Hong Kong that fulfill the CEPA rules of origin (ROO) can enjoy zero-tariff treatment upon importation into the Mainland.
2. Trade in Services
The Mainland and Hong Kong have basically achieved liberalisation of trade in services. Enterprises and individuals in service industries in Hong Kong can make use of preferential arrangements to carry out and expand business in most sectors in the Mainland.
Hong Kong investments and investors enjoy investment protection and facilitation in the Mainland.
4. Economic and Technical Cooperation
The two sides have agreed to enhance economic and technical cooperation in various areas with a view to catering for and supporting the development between the two places, as well as promoting the cooperation in the economic and trade areas of the “Belt and Road” Initiative and Sub-regional Cooperation.
How to benefit from CEPA
Manufacturers in Hong Kong
All goods manufactured in Hong Kong that meet the CEPA rules of origin (ROO) can enjoy zero tariff benefit upon importation into the Mainland.
Service suppliers in Hong Kong (enterprises and individuals)
Hong Kong service suppliers can make use of the liberalisation and facilitation measures to supply services in most sectors in the Mainland.
Professionals in Hong Kong
Hong Kong professionals may make use of measures such as opening up the Mainland professional qualification examinations, mutual recognition of professional qualifications, facilitating registration and practice, etc. to enter the Mainland market.
Investors from Hong Kong
Hong Kong investors can enjoy facilitation measures in investing in the Mainland and their investments are better protected, including the availability of a specified mechanism for settlement of investment disputes.
Investors from outside Hong Kong
CEPA does not impose restriction over the source of capital of beneficiaries. For trade in goods, investors from outside Hong Kong can set up production lines in Hong Kong to produce goods that meet the CEPA ROO so as to enjoy zero tariff benefit on importation into the Mainland. For trade in services, the companies incorporated and set up in Hong Kong by investors from outside Hong Kong can make use of the CEPA measures to start a business in the Mainland, provided that they satisfy the eligibility criteria of Hong Kong Service Supplier stipulated under CEPA.
The business community of Hong Kong
The Mainland and Hong Kong have been strengthening cooperation in various trade and investment facilitation areas to enhance the competitiveness of the two places. Cooperation in the economic and trade aspects of the “Belt and Road” Initiative and Sub-regional Cooperation also provide Hong Kong businesses with good opportunities for participation in the national development strategies.
Below we also give a brief idea about some of the business licenses in Hong Kong.
Applying for a restaurant license in Hong Kong
This is handled by the Food and Environmental Hygiene Department of the Hong Kong Government, which has set-up a resource centre providing all the necessary information on restaurant licensing including the requirements from the Buildings, Fire Services, and Environmental departments.
Applying for import/export license in Hong Kong
Depending on your company’s business activities, the control authority granting the import/export license in Hong Kong varies. In general though, Hong Kong follows a free trade policy. This means that it has a free port status, and follows easy customs procedures. Also, no tariff is charged on import/export of goods. The licensing requirement is just to fulfil Hong Kong’s obligations to its trading partners, and to meet certain safety, health and security needs.
Applying for a telecommunications license in Hong Kong
This is handled by the Communications Authority (CA) of the Hong Kong Government, and all licenses are granted as per the Section 7(9) of the Register of Licences and General Conditions, as published by the CA in its Gazette. These licenses may be for a Telecom Carrier, Localised Wireless Broadband, Wireless Internet of Things, Public Radio, Services-based Operations, and Class Licences.
Applying for a money service operator license in Hong Kong
This is handled by the Customs and Excise Department of the Hong Kong Government, which operates the Money Service Operators Licensing System (MSOS), providing comprehensive electronic services. These include grant/renewal of money service operator licence, changing the directors/ultimate owners/partners or new business premises, submission of periodic returns, and searching the register of licensees.
Applying for a residential care home license in Hong Kong
All residential care homes for the elderly in Hong Kong must be licensed, according to the Residential Care Homes (Elderly Persons) Ordinance (Chapter 459, Laws of Hong Kong) (the Ordinance) and the Residential Care Homes (Elderly Persons) Regulation (Chapter 459 Subsidiary Legislation). This is administered by the Director of Social Welfare, which ensure acceptable standards of services for the elderly in Hong Kong.
Applying for environmental permits and licences in Hong Kong
In Hong Kong, there are several environment protection ordinances you should be aware of, before starting your business. Even more so, if your business involved any of the controlled activities, in which case you have to apply for an environmental permit or licence. Right now, the following legislations related to environmental protection and pollution control are in place in in Hong Kong: Air Pollution Control Ordinance, Ozone Layer Protection Ordinance, Water Pollution Control Ordinance, Waste Disposal Ordinance, Dumping at Sea Ordinance, Noise Control Ordinance, Environmental Impact Assessment Ordinance, Hazardous Chemicals Control Ordinance, and Product Eco-responsibility Ordinance.