A Quick Guide to Setting Up a Subsidiary in Hong Kong Tips and Best Practices

How to Quickly Establish a Branch in Hong Kong A Comprehensive Guide and Practical Tips

With the acceleration of global economic integration, more and more companies are seeking international development paths. As one of Asia’s most dynamic and open financial centers, Hong Kong has become a top destination for businesses expanding overseas, thanks to its strategic location, robust legal system, and low tax regime. For mainland Chinese enterprises in particular, setting up a branch in Hong Kong not only lays the groundwork for future global expansion but also significantly enhances brand visibility.

1. Understand the Hong Kong Market Environment

Before officially registering, it is essential for businesses to have a basic understanding of the local business environment. According to the World Bank's 2025 Doing Business Report, Hong Kong consistently ranks among the top globally, particularly excelling in areas such as starting a business, obtaining credit, and cross-border trade.

Hong Kong operates under a simple and low-tax system. The corporate profits tax stands at just 16.5%, and there is no value-added or sales tax. Moreover, income sourced outside Hong Kong is generally exempt from taxation-an important benefit for startups.

Recent reports from the South China Morning Post indicate that in the first quarter of 2025, the number of newly registered companies in Hong Kong increased by over 8% year-on-year, with a notable rise in investments from mainland China. This suggests that despite global economic uncertainties, Hong Kong remains a key hub for foreign investment.

2. Determine the Type and Process of Establishment

There are two primary ways to establish a presence in Hong Kong a Branch Office or a Subsidiary Company. Each comes with distinct advantages and disadvantages.

Branch Office

As an extension of the parent company, a branch does not have independent legal status. Its main advantages include a simpler setup process and lower costs. However, the parent company assumes unlimited liability for the branch’s debts.

Subsidiary Company

A subsidiary is a separate legal entity, making it more suitable for long-term operations or larger-scale businesses. Although the establishment process is slightly more complex, it offers better risk isolation.

If choosing to set up a branch, the general steps are

1. Company Name Search Check via the Companies Registry website whether the proposed name is available.

2. Submit Business Registration Application File Form IRBR1 Notice of a Non-Hong Kong Company with the Inland Revenue Department.

3. Prepare Charter Documents and Shareholder Information Including the parent company’s business license, director ID documents, etc.

4. Open a Bank Account It is advisable to schedule a meeting with a local bank in advance.

5. Complete Tax and Employee Registrations If hiring staff, additional filings must be made with the Labour Department and the Inland Revenue Department.

The entire process typically takes about one month, depending on how quickly documents are prepared.

3. Accelerate the Process with Professional Services

Given the involvement of multiple agencies and the complexity of paperwork, many companies choose to engage professional service providers such as secretarial firms or law firms for end-to-end support. These experts are well-versed in regulatory procedures and can assist with tasks like address registration, annual filings, and tax planning.

Prominent accounting firms such as Deloitte and KPMG offer dedicated business registration and compliance services, supporting clients from initial consultation through to full operational setup.

According to Sing Pao Financial News, over 60% of foreign-invested companies in Hong Kong opted for third-party professional assistance during their registration in the first half of 2025, significantly improving efficiency and reducing compliance risks.

4. Ensure Compliance and Ongoing Management

Successful registration is only the beginning. Companies must also focus on ongoing compliance

Annual Reporting Obligations All operating companies must submit an Annual Return to the Companies Registry and a Profits Tax Return to the Inland Revenue Department each year.

Financial Auditing Requirements Even if the branch generates no profit, statutory audits are still required.

Update of Office Address and Contact Details Any changes must be promptly reported to relevant authorities.

HR Compliance When employing local staff, companies must adhere to employment regulations, including minimum wage standards and annual leave policies.

In 2025, Hong Kong launched a digital business platform, enabling companies to complete various administrative procedures online, streamlining operations and promoting paperless transactions.

5. Leverage Policy Advantages to Expand Operations

In recent years, the Hong Kong Special Administrative Region has continuously improved its business environment by introducing various supportive measures. For example

The SME Market Development Fund allows eligible companies to apply for subsidies of up to HKD 500,000 to promote overseas market expansion.

The Technology Voucher Scheme encourages businesses to adopt innovative technologies to enhance competitiveness.

Additionally, Hong Kong serves as a crucial bridge between mainland China and Southeast Asian markets. Many mainland enterprises use Hong Kong as a stepping stone to enter ASEAN countries or other regions-a strategy often referred to as Going Global via Hong Kong-which has now become standard practice for many firms.

Conclusion

Establishing a branch in Hong Kong is a systematic endeavor that requires both strategic planning and efficient execution. By thoroughly understanding local regulations, selecting the appropriate structure, leveraging professional resources, and maintaining strong post-establishment management, companies can complete the registration process efficiently and begin operations smoothly.

For businesses aiming to expand internationally, Hong Kong remains an ideal and strategic gateway.