Expenses and Considerations for Mainland Companies Establishing Subsidiaries in Hong Kong

Guide for Mainland Chinese Companies Establishing a Subsidiary in Hong Kong Cost Breakdown and Detailed Insights

As global economic integration accelerates, an increasing number of mainland Chinese companies are choosing to expand overseas. Hong Kong, as a leading international financial center and free port, has become a preferred gateway for enterprises seeking to enter international markets. In recent years, the trend of mainland companies setting up subsidiaries in Hong Kong has continued to grow, particularly in technology, trade, and cross-border e-commerce sectors. According to data released by InvestHK in 2025, the number of new or expanded businesses established by mainland enterprises in Hong Kong increased by more than 15% year-on-year over the past year.

This figure not only reflects the strong demand among mainland enterprises for international expansion but also highlights Hong Kong’s unique advantages in terms of global business environment. However, while establishing a subsidiary may appear straightforward, the actual process involves complex legal procedures, tax arrangements, registration formalities, and associated costs-factors that often deter many businesses from proceeding.

This article provides a comprehensive breakdown of costs and operational details for mainland companies considering setting up a subsidiary in Hong Kong, based on current policies and market trends.

I. Basic Company Registration Process

Mainland enterprises typically need to follow these key steps when establishing a subsidiary in Hong Kong

1. Company Name Approval and Search

Ensure the proposed company name is available by submitting a search request to the Companies Registry. This can usually be completed within one working day through a professional secretary firm.

2. Preparation of Constitutional Documents and Shareholder Information

Draft the Articles of Association, confirm shareholder structure, appoint directors and a company secretary. Under Hong Kong law, every company must have a company secretary who is ordinarily resident in Hong Kong.

3. Submission of Registration Documents and Business Registration Certificate

Submit Form NNC1 and supporting documents to the Companies Registry, and apply for a Business Registration Certificate BRC from the Inland Revenue Department IRD. The entire process generally takes between 3 to 5 working days.

4. Opening a Corporate Bank Account

After registration, companies must open a local bank account. Due to stricter anti-money laundering regulations in recent years, banks have tightened requirements for non-resident clients. It is advisable to prepare all necessary documentation in advance and schedule appointments with banks.

II. Detailed Cost Breakdown for Setting Up a Subsidiary

The total cost of establishing a limited liability company includes government fees, professional service charges, and miscellaneous expenses. Below is an estimated breakdown based on early 2025 figures for a standard LLC

Item Estimated Cost HKD Notes

-

Company Registration Fee 1,070 Includes first-year business license fee

Business Registration Certificate 250 Valid for 1 or 3 years

First-Year Secretary Service Fee 2,000-6,000 Varies by provider

Registered Office Rent Year 1 2,000-8,000 Must be a real office address

Stamp Duty Calculated by capital Typically 0.1%, minimum HKD 100

Bank Account Opening Fee 0-2,000 Varies by bank

First-Year Accounting Audit Fees 3,000-10,000 Depends on business complexity

In total, initial setup costs for a mainland enterprise entering Hong Kong range from approximately HKD 10,000 to 30,000. If opting for a one-stop agency service, additional administrative fees may apply.

Starting in 2025, Hong Kong introduced several pro-business reforms, such as allowing electronic document signing and streamlining registration procedures, further lowering entry barriers for foreign investors.

III. Taxation and Compliance Essentials

Hong Kong operates under a territorial taxation system, meaning only profits sourced from within Hong Kong are subject to taxation. The corporate profits tax rate is 16.5%, significantly lower than the 25% applicable in mainland China-making it particularly attractive for cross-border trading firms.

Notably, in July 2025, the Inland Revenue Department launched the SME Tax Simplification Scheme, offering automatic tax filing for companies with annual profits below HKD 2 million.

Additionally, under the Companies Ordinance, all Hong Kong-registered companies must submit an Annual Return and audited financial statements each year. While compliance incurs unavoidable costs, it is essential for maintaining good corporate standing and credit reputation.

IV. Frequently Asked Questions and Recommendations

1. Is a Local Director Mandatory?

No. A Hong Kong company must have at least one natural person director, but this individual does not need to be a Hong Kong resident or hold residency rights. However, appointing a local contact is recommended for smoother operations.

2. Can a Virtual Office Address Be Used?

No. The Companies Registry requires a physical office address. Renting a real office space or using an address provided by a secretary firm is mandatory.

3. What Is the Difference Between a Subsidiary and a Branch Office?

A subsidiary is a separate legal entity and bears its own liabilities, whereas a branch is not independent and the parent company assumes full responsibility. Most businesses prefer subsidiaries for risk mitigation.

4. How Can Operational Costs Be Controlled?

Consider selecting affordable yet reliable secretary services and registered office providers. Utilizing cloud-based accounting systems can reduce bookkeeping costs. Leveraging Hong Kong’s free port status also helps optimize import/export tax planning.

V. Conclusion

With the ongoing development of the Guangdong-Hong Kong-Macao Greater Bay Area, Hong Kong’s strategic role as a bridge connecting mainland China with global markets continues to strengthen. For mainland enterprises aiming to expand internationally and enhance their global brand image, establishing a subsidiary in Hong Kong is a compelling strategic move.

However, successful incorporation is only the beginning. Ongoing compliance, effective tax planning, and robust risk management are equally critical. It is strongly advised that companies conduct thorough research and consult professional advisors before making decisions, ensuring smooth establishment and sustainable growth in the Hong Kong market.