[ESTABLISHING A BUSINESS ENTITY IN HONG KONG]
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Incorporation Under a “one-stop” approach, the application documents for incorporation and business registration shall be delivered to the SFC. The Companies Registry will issue the Certificate of Incorporation and Business Registration Certificate in one go after approval is given by the SFC. Registration OFCs, whether publicly or privately offered, are required to be registered with the SFC. Same as other publicly offered funds, publicly offered OFCs are also required to obtain prior authorization from the SFC, unless an exemption applies. An OFC is required to, among other things, (i) have a board of directors, an investment manager, and a custodian; (ii) fulfil certain disclosure requirements for documents; (iii) comply with applicable investment restrictions; and (iv) comply with certain ongoing disclosure requirements. 3.7 Choice of Business Entities When choosing the type of business entity that is suitable for a particular business, regard should be given to all the relevant factors
(8) Formalities (9) Registration procedures (if required) (10) Ongoing maintenance and other compliance requirements (e.g. filing of statutory returns and forms, audit, maintenance of registers and keeping of books and records) and the fees and costs involved (11) Tax implications in Hong Kong and overseas (12) Any implications for employment matters (e.g. visa applications) (13) Transfer of ownership (14) Business exit 4. Taxation Tax Hong Kong adopts a territorial source principle of taxation. There are three principal heads of tax in Hong Kong, namely profits tax, salaries tax and property tax. There is no sales tax or value- added tax, withholding tax on dividends and interest, capital gains tax or estate tax in Hong Kong. As to profits tax, as a general principle, any persons (including corporations, partnerships, trustees, whether incorporate or unincorporated, or bodies of persons) carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. No distinction is made between residents and non- residents. Whether a business is carried on in Hong Kong and whether profits have a Hong Kong source are largely questions of fact. While the principle itself seems clear, its application in particular cases can at times be contentious. It is therefore crucial to obtain tax
including but not limited to: (1) Nature of the business
(2) Size of the business (3) Number of owners
(4) Legal status of the entity (E.g. Is the vehicle a separate legal entity? Can it own property in its own name? Does it have perpetual succession?) (5) Management of the business (6) Liability of owners (7) Formation requirements and procedures
ILN Corporate Group – Establishing a Business Entity Series
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