Starting a business in
ðŸ‡ðŸ‡°Hong Kong
Checked November 4, 2026 · How we score
Corporate tax
16.5%
Top income tax
16%
Setup from
$1,000
all-in, first year
Time to form
4 days
can be done remotely
Taxes in Hong Kong
| Corporate income tax | 16.5% Two-tier profits tax for corporations: 8.25% on the first HK$2m of assessable profits and 16.5% on the rest (only one connected entity per group can claim the lower tier). Only profits arising in or derived from Hong Kong are taxed (territorial); genuinely offshore profits can be exempt on an offshore claim, but the IRD scrutinises them closely. Since 2023 the foreign-sourced income exemption (FSIE) regime taxes certain foreign passive income received in Hong Kong unless economic substance rules are met. A 15% top-up tax (HKMTT) applies from 2025 to large multinational groups. |
|---|---|
| Personal income tax (top) | 16% Salaries tax is progressive from 2% to 17% on net chargeable income but capped at a standard rate of 15% on the first HK$5m of net income and 16% above that. Only Hong Kong-sourced employment income is taxed. Property tax and profits tax apply to rental and business income. |
| Tax system | Territorial (foreign income untaxed) |
| Capital gains tax | 0%No capital gains tax, though gains from frequent trading may be taxed as business profits. |
| Dividend withholding (non-residents) | 0% |
| VAT / GST | None |
| Social security | Mandatory Provident Fund contributions of 5% each for employer and employee (capped at HK$1,500 a month) apply to employees. No payroll or social security tax for non-employees. |
Forming a company in Hong Kong
| Usual entity | Private company limited by shares (Ltd) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $1,000–$2,500 |
| Annual running cost | $1,500–$4,000 |
| Time to incorporate | 4 days |
| Form remotely as a foreigner | Yes |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | Yes |
| Business banking for non-residents | Hard |
Residency and visas
No digital nomad visa. Options include the General Employment Policy, the Top Talent Pass Scheme (very high earners and top graduates), Quality Migrant Admission and the Capital Investment Entrant Scheme (HK$30m in approved assets). Company ownership alone does not give residency, but founders can apply for a work visa for their own company if it has genuine operations.
| Digital nomad visa | No |
|---|---|
| Golden visa | Yes, from $3.9M |
| Ease of residency for founders | 3/5 (1 = easiest) |
Special tax regimes
Two-tiered profits tax
8.25% on the first HK$2m and 16.5% above for companies; unincorporated businesses pay 7.5% and 15%.
Offshore profits claim
Profits that do not arise in or derive from Hong Kong are outside the tax net. The IRD tests where profit-producing operations take place, so merely invoicing from a Hong Kong company is not enough.
Family-owned investment holding vehicle (FIHV)
0% tax on qualifying transactions for family offices with at least HK$240m under management in an eligible SPV, subject to substance.
Top Talent Pass Scheme
Two-year visa for people earning at least HK$2.5m a year or recent graduates of leading universities, without a job offer.
Pros and cons
Why founders pick Hong Kong
- No VAT, no capital gains tax and no dividend withholding tax
- Territorial system with 8.25% on the first HK$2m of profits
- Fast, low-cost company formation with no minimum capital
- Common-law legal system and strong reputation
- No foreign exchange controls
Watch out for
- Business bank accounts for non-residents are among the hardest in Asia
- Annual audit is mandatory even for small companies
- A local company secretary and registered office are required
- Offshore claims are heavily scrutinised by the IRD
- Shareholder names are visible through the Companies Registry
Best for: Trading and e-commerce companies sourcing from Asia · Consultancies with genuinely offshore clients · Holding companies and fund managers · Businesses that need credible Asian banking and arbitration
Hong Kong: common questions
What is the corporate tax rate in Hong Kong?
The profits tax rate for corporations is 8.25% on the first HK$2 million of assessable profits and 16.5% on the remainder. Only one company in a connected group can use the lower tier.
Is Hong Kong tax free?
No. Hong Kong has no VAT, capital gains tax or dividend withholding tax, but it does tax Hong Kong-sourced business profits and employment income. Profits that genuinely arise outside Hong Kong are not taxed.
How do I get an offshore profits tax exemption in Hong Kong?
You must show that the activities that produce the profit, such as negotiating and concluding contracts or sourcing goods, take place outside Hong Kong. The IRD examines contracts, staff location and bank flows, so a Hong Kong company with no real operations elsewhere will usually not qualify.
Can a non-resident open a Hong Kong company?
Yes. Incorporation can be done online with a Hong Kong company secretary and registered office, and no local director is required (at least one director must be a natural person). Opening a bank account usually needs more evidence of business substance and, in many cases, a visit.
How much does it cost to set up a company in Hong Kong?
Formation through an agent typically costs about $1,000 to $2,500 including government fees, a company secretary and registered office. Annual costs of $1,500 to $4,000 cover the secretary, business registration fee, audit and profits tax return, and higher if you need accounting.
Sources
- Inland Revenue Department (Hong Kong)
- Companies Registry (Hong Kong)
- PwC Tax Summaries - Hong Kong SAR
Compare Hong Kong
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Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.