Hong Kong’s finance chief, Paul Chan delivered the 2022-23 Budget on 23 February. With a worsening COVID-19 outbreak rapidly taking over the city, the HK Government will roll out an anti-pandemic fund totalling HK$64 billion with another HK$20 billion to support residents and businesses hammered by a worsening public health crisis.

The latest Budget focuses heavily on relieving people’s hardship, supporting enterprises and enhancing economic resiliency. The following are the highlights of the Budget the BRIDGES team has chosen which are of the biggest interests of yours:

Supporting the Enterprises

Ease the operating pressure of businesses, enhance the cash flow support and safeguard jobs with:

• Reducing profits tax for the year of assessment 2021-22 by 100%, subject to a ceiling of HK$10,000

• Providing a rates concession for non-domestic properties for four quarters of 2022 23, subject to a ceiling of HK$5,000 per quarter in the first two quarters and a ceiling of HK$2,000 per quarter in the remaining two quarters for each rateable property

• Waiving the business registration fees for 2022-23, and extending the waivers/concessions of the existing 34 groups of government fees for 12 months

• Continuing to waive 75% of water and sewage charges payable by non-domestic households, subject to a monthly ceiling of HK$20,000 and HK$12,500 respectively per household

• Continuing to grant the 75% rental or fee concession currently applicable to eligible tenants of government premises and eligible short-term tenancies

• The Special 100% Loan Guarantee under the SFGS will increase the maximum loan amount per enterprise from the total amount of employee wages and rents to 27 months with the loan ceiling raised to HK$9mn, and extend the maximum repayment period to 10 years

• To help small and medium sized exporters secure export financing from banks, the Hong Kong Export Credit Insurance Corporation (ECIC) will launch the Export Credit Guarantee Programme, which will guarantee up to a maximum limit of $50 million of the export financing for their policyholders. In addition, to encourage exporters to take larger orders from overseas buyers, the ECIC will introduce the "Flexible Indemnity Ratio" arrangement later this year to enhance insurance coverage for exporters

Relieving People’s Hardship

With some of the one-off measures to provide support for members of the public who are affected by the epidemic:

• Reducing salaries tax and tax under personal assessment for the year of assessment 2021-22 by 100%, subject to a ceiling of HK$10,000

• Providing a rates concession for domestic properties for four quarters of 2022-23, subject to a ceiling of HK$1,500 per quarter in the first two quarters and a ceiling of HK$1,000 per quarter in the remaining two quarters for each rateable property

• Granting each eligible residential electricity account a subsidy of HK$1,000. This measure will involve an expenditure of about HK$2.8bn and benefit around 2.8mn residential households

• A round of consumption vouchers valued at HK$10,000 will be disbursed to each HK permanent resident and new arrivals aged 18 or above. The first round will start around April

• The 100% Personal Loan Guarantee Scheme will extend until the end of April next year. The maximum loan ceiling will increase to HK$100,000. In addition, the maximum repayment period will extend to 10 years

Wrap up

As businesses and the economy in HK are set to face a turbulent first half of the year, these measures might soothe the difficult period. “I forecast that HK’s economy will put up a better performance in the second half of this year and achieve growth of 2.0-3.5 per cent in real terms for the year as a whole,” said Chan.

If you have questions regarding how the Budget will affect your business operation or tax issues, please feel free to contact us by emailing info@bridges.hk or calling +852 2159 9666 to chat with our professional team.

With the pandemic turmoil of the European and American economy, many global businessmen have pivoted to explore further in Asian countries. Among the different choices, Hong Kong is always the one winning entrepreneurs’ hearts. Wanna know the reasons behind?!
 

Easy Procedure

Forming a HK limited company is very straightforward, especially if you're doing it with a professional service provider. BRIDGES team has served countless start-ups and SMEs in setting up their company with our all-in-one package (no hidden costs at all) for many years. Let us share a few tips and you will find establishing your own company has never been easier.

STEP 1: Collecting the required documents (please refer to the list below) for registration at the HK Companies Registry :

There are 2 types of Required Documents:

Type I. If the Director / Shareholder is an individual:

> Copy of all Directors & Shareholders’ passports / HKID

> Copy of all Directors & Shareholders’ addresses proof

* The Director & Shareholder can be the same person, which means it only takes 1 person to complete the process.

Type II. If the Director / Shareholder is a corporation:

> Copy of Business Registration (BR) Certificate

> Copy of all Directors’ passports

> Copy of  registered office’s address proof

> Articles of Association

> Meeting minutes of agreeing to appoint Directors / Shareholders for this Company

* If the Director is a corporation, it is required to appoint at least one individual Director to comply with the new Companies Ordinance. 

STEP 2: Pay and go!

Once your incorporation payment is confirmed, we will get on preparing the Government paperwork for you to sign.

STEP 3: Submitting your signed documents to Government :

Even if you are aboard, we will help submit all signed application documentations to the Government for swift processing. In fact, by the time you reach this step, you are already halfway through setting up your own company.  Our team would get it all done for you, like approaching different Government departments to file the required paperwork. For a ready-made (shelf) company, it takes around 2 working days to process; for an all-new company, it would take around 1 week or less to process.

STEP 4: Opening bank account :

You may ask: ‘How can I finish all company setup and bank account opening procedures if I cannot fly to HK?’ The good news is BRIDGES is now able to provide remote incorporation. From business consultation to business set-up, everything can be settled via the Internet. For bank account opening, indeed many traditional banks require physical presence and it usually takes a one-month appointment in advance. However, now with the pandemic, you might consider utilising fintech platforms to facilitate your business transaction especially if you are trading in multiple currencies.

The three reliable bank account alternatives in HK (BRIDGES' business partners) - Airwallex, Statrys and Currenxie - do not require the physical presence of applicants and offer more than 10 different currencies. For more details, please refer to "Traditional Bank Account Alternatives to Run Business".

Bank Account Opening Preparation

The assessment criteria of international banking are getting stricter, including HK’s banking and financial system. Therefore, a thorough preparation before the bank appointment always helps. If you managed to fly to HK, we will help arrange an appointment with bankers in advance on your behalf. What’s more, sets of the certified true copy are included in our package already for presenting to the bankers. Before the appointment, our experienced specialists will advise you of the documents needed to prepare (e.g. passport copy, residential address proof, business plan, business proofs, etc.), so that the whole process could be sped up and the situation of missed documents is minimised. Some banks can even offer our clients pre-screening to let you know whether your provided documents are sufficient for the bank appointment. In general, the assessment time will be around 2 - 4 weeks provided that all required supporting documents are submitted to the bank for review. We work closely with HSBC, Hang Seng Bank, DBS, OCBC Wing Hang Bank, China Citic Bank, etc. and we will guide you through to smooth out the whole process.

Favourable Taxation in HK

HK is famous for having a rather simple and low tax regime. There are two main taxes: Corporate Profits Tax (8.25% to 16.5%) and Personal Salaries Tax (15%), and there is no dividend tax in HK. Generally after 18 months of your limited company incorporated, you will receive the 1st Profits Tax Return. When your company is in good hands like us where there is an in-house Accounting Team able to assist your business with all accounting work, audit arrangement and getting prepared for local tax compliance, you can rest assured that all these essential functions will be handled properly and timely in a legitimate way.

HK Incorporation vs. Singapore Incorporation

Both HK and Singapore are popular jurisdictions in Asia for international businessmen. However, forming a Singapore company requires foreign entrepreneurs to partner up with a local Singapore citizen, while there is no limit on the nationality of the director(s) in setting up a HK company.  It means no matter what your nationality is, you can freely form your own company in HK without the need to include a HK citizen as your company’s stakeholder, giving you more flexibility in the company structure.

How HK Serves as a Stepping Stone into China?

For expats who want to set foot in China, they have to set up a special type of entity named Wholly Foreign Owned Enterprise (WFOE) according to the China policy. From our experience, if you own a Hong Kong limited company as a shareholding company, it would be way more beneficial to use it informing your WFOE due to the close economic partnership between HK and Mainland China i.e. under The Closer Economic Partnership Arrangement (CEPA). Not to mention financing in HK is much more accessible than in China, and all major international banks are located in HK, leading to a high standard system in terms of technology and security. In contrary to China, there are no restrictions or approvals needed to receive or transfer funds / foreign currencies in HK as you might know.

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If you have any further questions on setting up your own company, please feel free to email our company incorporation team, at info@bridges.hk to know more about our practical advice. 

BRIDGES’ webinar on “How to build your brand on Instagram and the subsequent actions for long-term business planning” was successfully held on 15 September. Below is an overview of business incorporation basics that are often confusing to some. We have summarised the most asked questions here which will answer yours.

Q1: What is the difference between Business Registration Certificate (BR) and Certificate of Incorporation (CI)?

Answer: BR is obtained via the Business Register under the Inland Revenue Department (IRD) of Hong Kong. It is a document that shows a company is valid and legally registered. It should be displayed at the company’s premises and be renewed every year.

As for CI, it is issued by Company Registry which includes information of registration number, certificate type, official company name and establishment date. However, only limited companies are issued with this certificate.

Q2: When should the business owner apply for business registration?

Answer: The Business Registration law requires every individual who owns a business in Hong Kong, to apply for BR within one month from the commencement of such business, regardless of its form and size. In short, an Instagram store is also obliged to apply for a BR. However, if the average monthly turnover of the registered business (for a business mainly generates profit from sales of service) doesn’t exceed HK10,000, the registration fee is waivable.

Q3: What is the application procedure of BR and how long does it take?

Answer: The business owner could submit the application form in person to the Business Registration Office, by post or online. BR application can also be submitted simultaneously along with the CI application in Company Registry. The Certificate can be grounded on the same day of application.

Bridges Powered by Equiom provides a one-stop-shop company incorporation service, all the processes and other relevant document submissions will be handled by the knowledgeable team if any.

Q4: What is the difference between limited company and unlimited company?

Answer: The former is limited liability for shareholders of the company as all risks of business operation, the latter is unlimited liability for the owner of the company as all risks of business operation and liabilities should be borne by Proprietor or Partner.

A limited company is arguably the most common company type for trading business in Hong Kong. Mainly because such entity facilities business expansion by enabling business owners to issue new shares to shareholders, which makes bringing in investment an easy task. Moreover, since annual statutory audit is mandatory for all limited companies, it is easier to secure bank loans for this entity type than the others as it offers a more transparent financial reflection of the business.

Q5: Is Mandatory Provident Fund (MPF) a must for self-employed persons?

Answer: Yes. Whether you are a sole proprietor or a partner of a partnership business, it is compulsory to get an MPF. If the Director of a limited company needs to handle daily operations (usually known as Executive Director) and receives a salary like other employees in the company, they must contribute to the MPF.

However, a Non-Executive Director - a member of the board of directors in the company but not part of the executive team – who receives remuneration for serving as a director of the company, needs not to contribute to the MPF.

More questions? Contact Bridges company incorporation team by calling +852 2159 9666 or email info@bridges.hk today.