Improper registration for foreign enterprises in Hong Kong can lead to prosecution and fine. Partnering with local professionals can help you mitigate the risks of non-compliance. Join our webinar to find out more.
With its unique position as a gateway to China and wider Asia, Hong Kong has become a platform for Chinese enterprises looking to access the global market and attracts many foreign enterprises.
From experience, some of these foreign enterprises with business activities in Hong Kong are not always fully aware of the local registration requirements. The non-compliance may only come to light when these enterprises approach local professionals for application for Certificate of Resident Status for the purposes of claiming tax benefits under the Comprehensive Double Taxation Agreements (or Arrangement) or on other matters.
The non-compliance can lead to the risk of prosecution and fines of up to HK$50,000, with a further daily fine of HK$1,000 for continued non-compliance. Ignorance of law is no excuse.
Business to be registered
According to Section 5 of the Business Registration Ordinance (Cap 310) (BRO), those persons carrying on business in Hong Kong are required to register their business with the Business Registration Office of the Inland Revenue Department. "Business" in this sense means any form of trade, commerce, craftsmanship, profession or other activity carried on for the purpose of gain.
Every company incorporated in Hong Kong or non-Hong Kong company registered under Part 16 of the Companies Ordinance (Cap 622) (HKCO) is required to be registered under the BRO. Under the one-stop company and business registration service, any person who applies for incorporation of the local company or registration of the non-Hong Kong company at the Companies Registry (CR) will be deemed to have made a business registration application at the same time.
Representative or liaison offices operated by a foreign enterprise, or the foreign enterprises having their property let out in Hong Kong, are required to be registered under the BRO.
If the Hong Kong company or non-Hong Kong company has more than one place of business in Hong Kong (for example, the company maintains a physical office other than its registered office or operates various retail shops in Hong Kong), every place of business (such as the above physical office or every retail shop) should apply for a branch business registration.
The company may use any number of business or trading names, and each of these names is required to be registered with the Business Registration Office. This registration, however, does not offer any legal name protection for the company as registrant, which means any other person may use and register the same business or trading name with the Business Registration Office.
Failure to register
Anyone who fails to register his or her business within one month of the commencement could be liable to a fine of up to HK$5,000 and end up in prison.
The valid business or branch registration certificate must be displayed in a conspicuous place at the address where the business is carried out and should be produced for inspection upon request by the Business Registration Office.