Recent Hong Kong Business Formation Statistics: What the Numbers Say
Hong Kong hasn’t only been touted as the best place to do business in the world- the real world numbers say the same. The region has been the prime destination for investors from all around the globe and the World Bank listed it as the third easiest place to do business in the world in the 2019 Doing Business Index. In this article, we look at some important Hong Kong business formation statistics. They prove how the region has become arguably the most preferred place for business people:
Amazingly High Number of Companies
Hong Kong already had more than 1.3 million locally registered companies in 2017. After the craze, the government decided to make the screening process for applications more strict. These days, apart from a great business idea, foreign companies need to contribute significantly to the development of the local economy.
Despite the tight screening, the numbers are still increasing, According to a website stat, the number of companies in Hong Kong is now 1,383,305. The same site said the number had reached more than 1.4 million at one instance in 2018. However, some ventures may have closed or merged with others.
Remember, this number is even after the losses and the slowdown of the economy during the COVID-19 pandemic.
Hong Kong Business Formation Statistics: Tax Rates
First things first: Hong Kong is not a tax haven. It’s not a place with low corporate tax rates to entice business people to open foreign companies of every sort. Rather, Hong Kong is a genuine place to start a company. The stable government takes less from businesses to promote innovation and development.
You may not find Hong Kong in articles talking about the top 10 lowest tax rates in the world that mostly compare tax havens. Anyway, in a genuine business world, the region has very little tax.
Even after giving you the perk of operating in one of the most developed economies in the world with the best infrastructure, the government takes a corporate tax rate of only 16.5%. Remember, the tax rate is applicable if you make more than HK $2 million in a year. For less than that, you only need to pay 8.25%.
The personal income tax rate starts at 2% and goes up depending on the income. Further, the maximum is 17% of your income is more than HK $200,000 a year. Hong Kong has a territorial tax provision. This means you need to pay taxes only for the finance derived in Hong Kong. Finally, the tax is the same for both locals and foreigners
Additionally, there are no capital gains tax, VAT, withholding tax, and tax on dividends and interest. There are also no taxes on social security benefits. Thus, despite not being a ‘tax haven’, we still have to include the low Hong Kong rates in the Hong Kong business formation statistics.
The Ease of Doing Business Index
As said at the beginning of this article, the World Bank recognized Hong Kong as the third easiest place to do business, which is actually a big deal. The Ease of Doing Business analytics of the World Bank is the most effective analysis of its kind.
The analysis itself accounts for practical indicators like:
- the ease of registering a company
- dealing with construction permits
- getting electricity
- property registration
- getting credits
- protecting minority investors
- paying taxes
- trading across borders
- enforcing contracts
- resolving insolvency
- employing workers
Thus, getting a great ranking on the most comprehensive ease of doing business index means a lot. For one, if your Hong Kong business formation application gets approved, you will feel better running a company than in any other place in the world.
Registration is Easy
Those were the Hong Kong business formation statistics. Another thing that people often don’t talk a lot about is how fast it is to register a company in the territory. Of course, we are not going to tell you it’s easy as 1,2,3. After all, there is a tough screening process and the registration process itself can be confusing especially for foreigners. However, if you do everything right- including the research about the company types, the documents needed, the application, and the registration process as a whole, your company will be registered in a day or two.
Well, you should work with a Hong Kong Incorporation Service Provider. You tell them your requirements and they register your company for you.
Contact 3E Accounting to know more.