Category: Business Insights

How to take a strategic approach to regulatory compliance in Hong Kong

How to take a strategic approach to regulatory compliance in Hong Kong

How to take a strategic approach to regulatory compliance in Hong Kong

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For long-term business success and credibility, regulatory compliance is crucial. But shifting regulatory landscapes pose a significant challenge to Asia-Pacific (APAC) businesses looking to grow throughout the region. Modern multi-country companies must ensure their compliance frameworks address the specific mandates and expectations of each jurisdiction in which they operate.

In this article, BoardRoom’s Group Director, Legal & Compliance Ai Min Lim and Hong Kong Compliance Director Davis Lau explain how businesses can take strategic action to ensure their compliance practices are aligned with the expectations of regulators, clients and partners. We will also explore the importance of building an internal compliance culture and choosing business partners that share your vision for strong compliance.

Regulatory requirements in the Asia-Pacific region

Following recent high-profile financial crime cases and the economic disruption of COVID-19, regulators across APAC are under mounting pressure to promote good governance and fair competition in their respective economies. Compliance requirements continue to change, making adaptability crucial for businesses operating across borders.

“The regulatory landscape is evolving, with companies now facing escalating regulatory demands,” says Davis Lau.

The main types of compliance

In the Hong Kong business world, compliance can be broken down into the following three categories:

Statutory compliance

The local laws or ‘ordinances’ that companies must fulfil to operate their businesses (eg. anti-money laundering laws)

Regulatory compliance

The standards and rules that govern how laws are enforced (these are enforced by administrative bodies and often have the same force as laws)

Corporate compliance

Good governance practices that are strongly encouraged by regulators but not required under law or regulation.

To continue operating and avoid penalisation, companies must comply with all relevant statutory and regulatory compliance requirements. However, the Hong Kong compliance agenda is now evolving beyond basic compliance to incorporate broader strategic issues, prevalent within the third category – corporate compliance.

Companies that take a holistic approach to compliance by pursuing all of the above categories with equal dedication will earn increased trust from their stakeholders, leading to greater competitive advantage.

Strategic compliance starts at the top

Strategic compliance

Taking a strategic approach to regulatory compliance will ensure your business not only meets but exceeds its governance goals. According to Ai Min Lim, one key strategy is to make sure your company’s compliance efforts start from the top.

“Management must recognise that they have to put resources into compliance and invest in it, because it’s not just ‘good to have’ — it’s absolutely crucial to protect the business,” she says.

Compliance cannot be driven by the Compliance Department (or equivalent) alone. It is the responsibility of the management team to set the tone and ensure that compliance is part of the company culture. The importance of compliance and the messaging around it must cascade down to staff across all levels to ensure uniform practice across the organisation.

Every member of an organisation, from the mailroom to the boardroom, needs to work together to achieve compliance. It is not just a process or policy on paper, but something that is operationalised and its importance understood at all levels of the organisation.

Build a culture of compliance

To create a compliance program that goes beyond ‘checking the boxes’, leaders need to start dismantling outdated perceptions of compliance as a burden.

Corporate workers are generally very busy with competing priorities. So with changes to regulations having a direct impact on day-to-day processes, it can be challenging for people to see compliance as a valuable part of business.

Key ways to cultivate an appreciation of regulatory compliance include:

Reinforcing the value of compliance through internal messaging
Providing compliance training at all levels, starting at the onboarding stage
Showing workers how compliance fundamentally makes their jobs easier
Appointing compliance champions in each business unit
Fostering two-way dialogue between employees and compliance officers/champions (eg. via support channels and Q&A sessions)

Once you have secured buy-in from all staff, your company’s risk of misconduct and subsequent penalisation will dramatically reduce.

Common challenges of compliance

All businesses in Hong Kong, no matter their size or industry, face similar obstacles in the pursuit of regulatory compliance. As the first step towards your compliance vision, it is important to identify these common challenges and explore how they might impact your organisation.

Keeping up with evolving requirements

According to a 2022 Regulatory Outlook report by Deloitte, the changeable nature of corporate rules across APAC means it will be increasingly difficult for organisations to maintain standard internal controls and processes. Relying on regulatory compliance management software alone is no longer an option.

For example, a new inspection regime is coming into effect under the Companies Ordinance for Protecting Personal Information. The mandatory regime applies to Hong Kong companies and registered non-Hong Kong companies (including listed companies) that must now take a number of time-sensitive actions to meet the new requirements.

To maintain ongoing compliance, companies must predict how emerging regulations may impact not only their compliance processes but also their business models and strategic direction. On top of this, they must correctly interpret the meaning of new laws, which are often expressed in complicated legal speak.

There is no one-size-fits-all approach

With local requirements varying greatly depending on the size, industry and location of your business, compliance is usually not a straightforward task.

“Compliance for a startup and compliance for a multinational corporation are very different concepts,” says Davis. This means there’s no single framework, roadmap or workflow tool available to make compliance easier. Its nuanced nature requires a tailored solution.

Fortunately, Hong Kong recognises that companies require some flexibility to implement the best governance practices to suit their circumstances. For example, while publicly listed companies are expected to comply with the Corporate Governance Code, they are allowed to deviate as long as they can provide considered reasoning in their annual report.

One-size-fits-all approach

How to stay across regulatory changes

Stay across regulatory changes

From setting the vision, devising the strategies, providing relevant training and then reporting on results, regulatory compliance requires significant resources to be effective.

Partnering with experienced providers across all business endeavours takes the guesswork out of responding to complex rules and regulations. Ultimately helping your staff understand their directive and potential implications. Plus, they can help you make strategic compliance decisions that align with changes in corporate governance and other regional-level activities.

Start implementing strategic regulatory compliance today

Strategic regulatory compliance benefits your business in several crucial ways. It protects you from reputational damage and hefty fines and promotes positive relationships with key stakeholders (including customers, staff and regulators) that will propel your business towards its goals.

Contact us to speak with a local expert about regulatory compliance in your organisation.

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Why multinationals are consolidating their taxes with one provider

Why multinationals are consolidating their taxes with one provider

Why multinationals are consolidating their taxes with one provider

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When it comes to business operations, tax and accounting are two of the most vital and complicated responsibilities. Mistakes in these areas can have serious legal repercussions, so they need to be handled with a high level of accuracy. On top of this, companies that conduct business in multiple Asia-Pacific jurisdictions need to comply with all applicable local legislation – a complex task.

In Deloitte’s 2021 Asia Pacific Tax Complexity Survey, 80% of respondents said the region’s tax systems are more intricate now than they were in 2018.

Many tax and accounting professionals aspire to engage a full-service business tax advisory firm in Hong Kong, China, Malaysia or Singapore to coordinate all their accounts in each region. However, not all businesses take this option, especially if they have expanded rapidly or are new to the region.

In many cases, organisations begin a new tax management partnership each time they branch into a new country. It is a common occurrence, with service providers offering thorough knowledge of local tax rules and regulations. But managing multiple tax advisors can be difficult.

It is not unusual for tax professionals in multi-country businesses to come up against:

  • Complicated cross-border tax implications and treaties: different statutory and regulatory compliance requirements can cause delays, confusion and penalty.
  • Communication problems: variations in language and culture can make it hard to harmonise the activities of multiple tax partners.
  • Staff attrition: staff turnover is increasing due to the great resignation.
  • Technology differences: cross-border operations can be difficult due to regional differences in technology and communication.

Is your business facing these challenges? You may benefit from consolidating your tax management with a business tax advisory service in Hong Kong, China, Malaysia or Singapore. Wherever your company is based, an experienced tax services firm will provide you with a single point of contact, making multi-country tax coordination simple.

Read on to discover the benefits of consolidating your taxes with one provider as well as tips on choosing an appropriate partner for your business.

Local expertise is invaluable

Asia-Pacific governments regularly enact new corporate rules and regulations, and companies must stay across the changing tax regimes of each country they operate in.

An experienced tax advisor can help you satisfy all local obligations while successfully managing multi-country operations. The tax rules in Hong Kong can be particularly tricky to navigate, so the advice of a knowledgeable service provider is invaluable.

Tax breaks and exemptions can easily go unnoticed if you lack access to local expertise. Outsourcing your accounting and compliance functions to a third party professional will ensure your company applies for all tax benefits and incentives it is entitled to.

Seeking a reputable tax firm in Hong Kong that has solid connections in neighbouring regions will ensure your cross-border operations are executed with professionalism and accuracy, while meeting all statutory obligations.

Effective communication

Prior to selecting a tax partner, find out whether you will have one point of contact or need to communicate with multiple individuals in different regional offices. The second arrangement is undesirable, as you would need to navigate all the same issues that come with in-house tax administration.

The best business tax advisory firms connect clients with a network of tax experts via one contact point. This scenario provides you with access to quality tax advice and services without the problems that come with coordinating multiple teams.

Communication

The advantages of working with one unified team can also have significant financial rewards. Tax benefits and incentives are maximised across your business while errors, discrepancies and miscommunication amongst suppliers are reduced. Having one point of contact will also help you align your company goals on a global level, keeping consistency and reliability throughout your business.

When handling tax across several countries, you also need to be mindful of cultural differences. The Asia-Pacific region encompasses a variety of cultures, traditions, religions and languages, so it is important to engage a trusted tax firm that can guide you through cross-border business with sensitivity and success.

A highly trained international tax advisor in Hong Kong, China, Malaysia or Singapore will be able to help you adapt your working styles to suit specific Asia-Pacific locations.

What is the meaning of tax compliance?

Authorities across the Asia-Pacific region are paying closer attention to corporate tax activities as rules and regulations tighten. No business wishes for a tax compliance audit, so understanding tax compliance meaning is imperative. Finance and account staff are required to work harder with fewer resources as budgets and employee numbers decline. This adds pressure to your internal teams as they navigate Hong Kong tax compliance.

A changing global workforce presents an additional challenge for businesses: teams and resources are frequently pushed thin as employees hunt for new jobs that offer better salaries or wellbeing programs.

Regardless, legal obligations must be followed. Companies must strive to comply with Hong Kong’s strict statutory requirements by keeping up with all tax payments. Non-compliance can have severe legal consequences.

Failure to comply can be due to a small mistake, such as overlooking a detail in statutory documents or miscalculating debts.

Ensuring adherence to changing requirements can be extra difficult if your company has business partners across the Asia-Pacific region and the world.

Compliance

When you partner with an established third-party provider that understands local tax requirements in Hong Kong and throughout the wider Asia-Pacific region, your key decision-makers will have more availability to focus on company expansion. You can enjoy peace of mind, knowing that your tax administration is compliant with evolving local laws, as well as being reported correctly and on time.

If any compliance concerns emerge, your tax partner will be able to respond quickly and capably.

Top-tier service providers undertake a comprehensive analysis of your business structure, prior to giving advice on tax administration and future planning. This approach enables your teams to take advantage of tax benefits for your business in the long term.

Selecting a premium tax advisor

Handing over your tax administration to a reputable third-party provider will save you time and money: the efficiency of your teams will improve, increasing your profitability as a result.

When it comes to taxes, cost considerations are crucial, but selecting the cheapest service provider is rarely a good move. A firm’s track record will provide a good indication of the kind of service you would receive.

It is important to ask potential tax advisors questions like:

    How large is your client base?
    How long have you been running?
    What have you achieved in the years since you opened?
    What results have you delivered for clients?
    Do you operate in multiple regions?
    Can you support my business as it grows across borders?
    What is your staff retention like?
    Do you have many long-term employees?

    If the tax services firm you are considering provides confident, positive answers to these questions, it is a good sign their performance standards are high. You can have faith they will coordinate your taxes with skill, efficiency and professionalism.

    With sought-after providers like BoardRoom, you will enjoy:

    • High accuracy: BoardRoom has a strong 50-year history of reliable service and a reputation for quality.
    • Personalised service: due to low personnel turnover rates, we always have experts on hand to promptly and properly service your needs.
    • Superior knowledge: our highly trained professionals have an in-depth understanding of local legislative landscapes across the Asia-Pacific region.

    Branch out with confidence

    It is important to ensure your present tax activities are in check, but looking ahead to your business’s tax management in the years to come is just as crucial.

    Are you already operating in multiple countries across the Asia-Pacific region? If so, you may be planning to expand into additional regions. As part of your planning, be sure to factor in the extra statutory requirements and cultural nuances you will face.

    This is why global expertise is so important when it comes to selecting a specialist tax services provider.

    As an example, BoardRoom partners with Andersen Global, a network of tax and legal professionals operating in 315 locations worldwide. Our international relationships strengthen our knowledge of cross-border corporate taxation issues.

    Entrusting your taxes to an international provider guarantees you will have the specialised legal counsel you need to expand and prosper.

    The advantages of outsourcing multiple functions

    When comparing potential advisory firms, find out whether they are able to handle several business functions alongside tax.

    Company incorporation and corporate secretarial services are closely connected to tax management, and professional administration of these functions is necessary for successful expansion. Opting for a full-service firm will save you money and time, which allows you to channel more resources into growing your business and achieving your main goals.

    As businesses expand, efficiency becomes all the more important.

    Outsourcing

    Full-service firms may also specialise in:

    Outsourcing several responsibilities to one service provider is a wise move because they already have a strong grasp of the way your business operates. They will be able to provide assistance in a range of capacities with very little hassle.

    Enhance productivity through consolidation

    Consolidating several corporate responsibilities with a single tax advisory firm has many benefits – particularly when you think about the money and time required to liaise with multiple firms throughout the region. You will enjoy significant yearly savings, especially if your partner can identify and apply for all the local tax breaks and incentives your company is entitled to.

    Premium tax outsourcing will lead to faster and smoother processes in many areas of your business.

    The task of tax administration only grows more complex. That is why engaging a skilled tax services provider is important to support your growth and ensure compliance with local statutory requirements as they evolve.

    Interested in consolidating your company’s tax functions with one service provider? Reach out to our tax team today.

    CONTACT US FOR A QUOTE

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    Hong Kong 2022-23 Budget – Key Highlights on Tax and Business-Related Measures

    Hong Kong 2022-23 Budget

    Hong Kong 2022-23 Budget – Key Highlights on Tax and Business-Related Measures

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    Delivered by the Financial Secretary, Mr Paul Chan, the Hong Kong 2022-23 Budget was announced on 23 February 2022. The expansionary budget was curated to provide immediate Covid-19 support to its people and businesses and to achieve future economic growth as the country battles with its fifth wave of COVID-19 outbreak.

    Some of the key highlights from this year’s budget includes new and extended personal and corporate tax incentives, business relief measures and long-term tax planning initiatives. As businesses make adjustments to their tax planning, BoardRoom has identified key highlights from the Hong Kong budget to help businesses minimise their tax charges and optimize their earnings.

    Download our Hong Kong Budget 2022-23 Report for a concise summary about how these implications might affect your corporate tax planning.

    DOWNLOAD THE FULL HONG KONG 2022-23 BUDGET REPORT
    Profit Tax
    Other Business Relief Measures
    business-relief-hong-kong-budget-2022
    Stamp Duty Wavier
    stamp-duty-hong-kong-budget-2022
    Double Tax Treaty
    tax-treaty-hong-kong-budget-2022
    DOWNLOAD THE FULL HONG KONG 2022-23 BUDGET REPORT

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    Cloud Accounting with Xero and BoardRoom – Make it work for you

    Cloud accounting with Xero and BoardRoom

    Cloud Accounting with Xero and BoardRoom – Make it work for you

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    Cloud Accounting with Xero and BoardRoom – Make it work for you

    Cloud accounting platforms like Xero are well recognised for their benefits such as saving time, money and effort for companies in Hong Kong – big and small. It can improve your finance team’s productivity and speed up processing of payments and invoices, which means your company is getting paid faster.

    Even so, there are still companies hesitant to make the switch from traditional accounting to a cloud accounting system.

    A common concern is the set up and migration of existing financial data into Xero which can be difficult, particularly so for companies with complex structures. This can make implementation time-consuming and hinder your company from realising the full benefits of Xero.

    The solution? By working with the right Xero partner like BoardRoom, your switch to Xero cloud accounting solution can be a seamless and rewarding experience. Our Xero accounting experts will advise and guide you through the process on how you can best optimise Xero to your benefits.

    Leave traditional accounting behind today

    Cloud accounting uses online software and stores the data from your accounts in the cloud. ‘The Cloud’ is a network of remote servers storing vast amounts of data. In contrast, traditional software is installed locally on your computer with data stored on a hard drive or a server on-site.

    While traditional accounting has its benefits such as not requiring an internet connection and having full control over your security levels and access, it is heavily dependent on ensuring that updates and data backup are done continually. When in comparison, the benefits of cloud accounting far outweigh those of traditional accounting.

    Cloud accounting makes it easier for your team to access and collaborate, all without the need for additional hardware costs and software expenses. It also offers your company a real-time snapshot of business performance while providing data security and protection. But, maybe most importantly, cloud accounting helps you save time and improve accuracy, which assists your company run more efficiently. This is why many companies use cloud accounting, like Xero.

    Xero implementation made easy with the right partner

    The complexities of Hong Kong’s regulation make changing to a new accounting system challenging. However, with a team that’s experienced in implementing a new accounting system such as Xero for companies in Hong Kong, organisations can avoid potential pitfalls such as misplaced data or accidentally limiting essential user access.

    Finding the right affiliate can be as simple as looking at the partners that are certified as a Xero consultant. BoardRoom for one is a XeroTM Gold Champion Partner that has consistently showcase our expertise in implementing Xero for a wide range of company profiles.

    We’re experienced in transferring your company’s data from your existing accounting system to Xero. Once you have provided us with the necessary data, we will work in the background to set up your Xero file setup according to your needs. This means minimal downtime for your team while they continue working as per normal.

    Our support does not just end at set-up – we also ensure that your team is confident in fully optimizing the Xero platform. This includes training and support services to facilitate the change management process for your team. We’re also just an email, phone or video conference call away to support your team with any Xero enquiries.

    Challenges of Xero set-up and migration for complex company structures

    Data migration and change in accounting platforms are especially tricky for companies with a complex structure. Strategic planning is often needed to ensure your company structure is reflected correctly in Xero and that it meets any regulatory reporting requirements in Hong Kong.

    Companies may risk errors, issues and potentially expensive faults when switching accounting platforms. Improper set-up and migration of data may lead to long-term problems such as not being able to meet regulatory reporting requirements. Having a partner with the right qualifications like BoardRoom can help avoid these pitfalls and save you time further down the road.

    Our Xero data migration services ensure a complete data migration, comparative balances migration and porting over of last closing balances. Additionally, our online training modules will guide your team through purchase, sales, bank and reconciliation, inventory, reports and other advanced features.

    accounting software

    Making Xero right for you

    How do you get the most out of Xero, especially with limited resources? With thousands of apps and integration available on Xero, BoardRoom helps to cut out the guesswork by recommending the right ones that best suits your company needs.

    We also customise your chart of accounts or report templates, incorporate your logo into financial documents, or set-up tracking categories and contacts – plus more. Most importantly, we’ll provide the necessary training to ensure that your team is set towards success.

    Grow your business with BoardRoom’s regional expertise

    When you partner with BoardRoom, you’re not working with a regular accountancy firm. As professional services experts, we operate across multiple jurisdictions and offer a wealth of knowledge on all aspects of company administration. This means that no matter where your offices are located, whether Hong Kong, Singapore, Malaysia, China or Australia, we can assist you to seamlessly integrate all of your accounts functions through your Xero accounting system.

    In addition to Xero set-up and migration, we also provide incorporation, share registry, company secretarial, payroll, plus many other administrative services. Therefore, by partnering with BoardRoom, your company gains access to our wide range of skills and expertise to assist your administration and accounts teams operate more efficiently.

    xero implementation partners

    Xero consultations are available for full scale migration, set-up or integration of systems – such as payroll or point of sale. No matter the complexity of your company structure or which accounting system you’ve been using, our team of experts are always ready to provide support through every step of the way.

    Find out more today on how partnering with BoardRoom can save you time and money for your Xero implementation needs.

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    Hong Kong Corporate Tax Guide: Improve Your Tax Planning

    corporate tax planning

    Hong Kong Corporate Tax Guide: Improve Your Tax Planning

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    Improve Your Tax Planning with our Hong Kong Corporate Tax Guide

    Hong Kong is world-renowned for its business-friendly taxation and regulatory environment, with corporate tax rates that are considered some of the lowest in Asia.

    However, some companies still pay more tax than they need to. Effective corporate tax planning maximises tax benefits while maintaining compliance. To help your company improve its tax planning, we have created a guide to corporate tax in Hong Kong.

    How to pay corporate tax in Hong Kong

    Corporate tax is known locally as ‘profits tax’ in Hong Kong. It applies to all profits (excluding capital asset sales) that are:

    • sourced in Hong Kong; and
    • generated by corporations, sole proprietors, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong.

    For corporate tax purposes, no distinction is made between resident and non-resident companies. This means no tax is levied on profits arising abroad, even if they are remitted to Hong Kong.

    The standard profits tax rate is capped at 16.5% for corporations or 15% for unincorporated businesses. However, a two-tiered profits tax rates regime applies, which lowers the rate on the first HKD 2 million of assessable profits to:

    • 8.25% for corporations; or
    • 7.5% for unincorporated businesses.

    Assessable profits above HKD 2 million are subject to the standard profits tax rate.

    Typically, the Inland Revenue Department (IRD) issues profits tax returns annually on the first business day of April. After calculating how much tax your company owes, file your profits tax return within one month of the issue date (subject to any extension applications).

    When your company receives the IRD’s notice of assessment, you must pay a provisional tax. If your company ends up under- or overpaying your provisional profits tax, you can subtract or add the amount to your payable tax for the following year.

    business tax advisory

    Why business tax planning is important

    Effective corporate tax planning is all about analysing your company’s finances to ensure that you pay the lowest tax possible while staying compliant. Prioritising tax planning is vital to your business success because implementing the right strategies could ultimately save your company thousands of dollars.

    How your company could benefit from expert business tax advisory services

    Navigating Hong Kong’s complex tax regulations can be challenging. Without expert tax accounting support, it can be easy to miss out on tax breaks and exemptions that your business is entitled to. The best way to maximise your company’s savings and deductions is to work with professional accountants who understand Hong Kong’s regulations.

    Our tax experts at BoardRoom are not only well versed in local tax regulations but also have in-depth knowledge of international tax treaties. With their advice, your organisation can avoid any double tax issues. Moreover, our team will help you to apply for any extra tax incentives that could benefit your business.

    Additionally, as your company grows, so too does the complexity of your tax reporting obligations. If you fail to meet your tax filing obligations, you may experience costly penalties. Our corporate tax accountants help countless businesses in all industries and sizes across Hong Kong and the APAC region to stay tax compliant each financial year.

    Looking for trusted tax advisory services in Hong Kong?

    Contact our taxation specialists today to discover how they could help your company stay compliant and maximise tax benefits.
    We also offer a range of other corporate services all under one roof, including:

    These make it easier for you to get on with business while we take care of the time-consuming, operational tasks.

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    Setting up a company in Hong Kong: what you need to know

    Setting up a company in Hong Kong: what you need to know

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    HOW TO: Setting up a company in Hong Kong

    Thinking of establishing a company in Hong Kong? Expanding into a new international market is exciting for any business, but it also presents its own set of significant challenges. For many executives, the first hurdle is understanding how the company formation regulations and processes work in the new jurisdiction.

    Our guide below makes it easier to take the leap with an overview of everything you need to know about setting up a company in Hong Kong.

    Hong Kong Market Profile

    Hong Kong is an important financial hub within the Asia Pacific (APAC) region that is renowned for its business-friendly taxation and regulatory environment. Some of the key characteristics of the Hong Kong market include:

    • Office rental pricing: Average monthly rent for grade A office space in Hong Kong’s central district was $HK 1,807 per square metre for the first quarter of 2021.
    • Average office space density: 1sq m per person
    • Fixed internet download speed: 59 megabits per second in July 2021
    • Mobile internet download speed: 06 megabits per second in July 2021
    • Gross Domestic Product US$ bn: 344.7
    • Population: 7.5 million
    • Official languages: Chinese, English
    setting up a company in hong kong

    Benefits of setting up a company in Hong Kong

    As one of the largest financial centres in Asia, Hong Kong offers many benefits to companies looking to establish a presence in the region, including:

    • Strategic locational advantages: Hong Kong’s central location is beneficial for companies that want to enter the mainland Chinese market or expand their business within the APAC region.

    The Hong Kong market also has many cultural similarities to mainland China, making it ideal for foreign investors to develop a footprint in the Chinese market.

    • Attractive tax structure: Hong Kong’s corporate tax rates between 8.25% and 16.5% (subject to the amount of profit earned) are considered some of the lowest in Asia.

    In addition, Hong Kong has no capital gains tax, sales tax, consumption tax, value-added tax, estate duty or withholding tax on dividends and interests.

    Further, the ‘territorial source’ concept applies, meaning that residents pay no tax on incomes earned beyond Hong Kong’s borders. Income earners within Hong Kong are taxed at between 2% and 17%, depending on salary. This is considered significantly lower than other jurisdictions in the West.

    • No foreign ownership restrictions: 100% of the shares of incorporated companies in Hong Kong can be owned by foreigners or foreign companies. The market also operates on free trade principles, with no onshore or offshore investment restrictions, import or export tariffs and foreign exchange controls.
    • Bilingual business communication: in Hong Kong, English is widely used in a business context, making it easier for foreign investors to establish companies within the region.

    How to establish a company in Hong Kong

    To help you start enjoying all of the above business benefits, we have compiled a step-by-step process for how to create a company in Hong Kong:

    Step 1 - Choose a company type

    The two most common company types for businesses operating in Hong Kong are:

    1. Limited Liability Company: This entity type means that a business is set up as its own legal entity. Foreign investors often prefer this type because it offers limited liability for business owners. Companies can be limited by shares or by guarantee.
    2. Foreign Company Office: Foreign companies can register in Hong Kong as either a representative office or a branch office. Neither option creates a separate legal entity, however, so all liability extends to the parent company.
    Step 2 - Give your company a name

    Your company name must not:

    • be the same as a name already approved on the Companies Register; or
    • infringe upon any third party’s intellectual property rights.

    You can search the register for free using the Companies Registry search sites: Cyber Search Centre or Company Search Mobile Service.

    The name you choose must comply with the Guideline on Registration of Company Names for Hong Kong Companies, which states that:

    • Company names can be registered as either an English name, a Chinese name or both. However, combining English words/letters and Chinese characters is prohibited.
    • An English company name must end with the word “Limited”, and a Chinese company name must end with the characters “有限公司”.
    • A Chinese company name should contain traditional Chinese characters (繁體字) that can be found in the Kang Xi Dictionary (康熙字典) or Ci Hai Dictionary (辭海) AND also in the ISO 10646 international coding standard. Simplified Chinese characters are not acceptable.
    Step 3 - Set up your company structure

    An essential part of Hong Kong company formation is determining the structure of your company per the following requirements:

    • Directors: a minimum of at least one person. One director needs to be a natural person (ie. an individual). Directors do not need to be residents of Hong Kong, but they must be aged 18 or older.
    • Shareholders: a minimum of at least one shareholder. They can be either an individual aged 18 or older, or a corporate. 100% of shares can be foreign-owned. Sole directors can also act as shareholders.
    • Company secretary: a sole director must not act as the company secretary. To register a company in Hong Kong, you must appoint a company secretary who is either:
      • a person who lives in Hong Kong; or
      • a body corporate with a registered office or place of business in Hong Kong. We provide expert company secretarial services so that your company can meet all of its statutory obligations in Hong Kong.
    • Share capital: no minimum share capital is required. However, most companies choose to issue at least one ordinary share to one shareholder. Bearer shares are not permitted.
    • Registered address: must be a physical address in Hong Kong, not a P.O. Box. If your business does not yet have local office space, professional service firms like BoardRoom can provide your company with a registered office location.
    hong kong company formation
    Step 4 - Submit company registration documents

    You must submit the following registration documents to the Companies Registry:

    • the Incorporation Form;
    • a copy of the company’s articles of association; and
    • a copy of the Notice to Business Registration Office.
    Step 5 - Make other permit and business licence applications (if applicable)

    You may need to apply for other permits and business licences, depending on the type of business you operate. Find more information about permits and licences here.

    how to register a company in hong kong

    How to successfully open a business in Hong Kong

    While it can be complex, the process of opening a business in Hong Kong as a foreigner doesn’t have to be difficult. Our team of company incorporation experts at BoardRoom can guide you through every step of the incorporation journey to make it as smooth and seamless as possible.

    Not only can our team help you incorporate with ease, but we can also take care of your company secretarial needs. Our comprehensive range of company secretarial services helps you to ensure that your company remains compliant with all legal and regulatory requirements in Hong Kong. As a result, you have more time to focus on what really matters: growth and profitability.

    Speak to one of our specialists today to get started in setting up your business in Hong Kong.

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    5 Ways accounting outsourcing services add business value

    5 Ways accounting outsourcing services add business value

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    5 ways that accounting outsourcing services can help your business to grow

    Many companies outsource their tax and bookkeeping responsibilities, but still use in-house teams for all other accounting functions. If your company is among them, it may be worth reconsidering. What if you could outsource all of your accounting functions in a way that not only reduces costs and minimises risk, but also increases revenue growth potential?

    An expert accounting services provider can help you do just that by offering strategic accounting services.

    Specifically, here are five ways that outsourcing accounting services can help your business to flourish.

    01 Facilitate business growth and expansion

    Outsourcing accounting services can help to clarify your company’s financial health status. A complete picture of your company’s finances enables you to make more informed decisions. This becomes critical when you are planning for business growth and expansion.

    Our team of professional chartered accountants at BoardRoom can help by painting a clearer picture of your company’s current cash flow and seasonality. They have the expertise to critically analyse your receivables and collections, so you can more effectively assess organisational performance. With this information, you can then make the best strategic decisions to achieve greater success for your business.

    02 Identify all the tax breaks your company may be entitled to

    Navigating Hong Kong’s complex regulations can be challenging. Without expert accounting support, it can be easy to miss out on the tax breaks and exemptions your business is entitled to. The best way to maximise your company’s savings and deductions is to work with professional accountants who understand Hong Kong’s regulations. 

    Our team of tax experts at BoardRoom are not only well versed in local tax regulations, but they also have in-depth knowledge of international tax treaties. With their advice, your organisation can avoid any double tax issues. What’s more, our team will go the extra mile to apply for any tax incentives that could benefit your business.

    outsourcing accounting

    03 Flag potential risk oversights

    As your company grows, the compliance regulations only become more complex. A single oversight in payroll, tax statements or your company’s profit and loss statements could result in hefty financial penalties.

    Mitigate these risks and reduce your team’s administrative burden by working with a professional accounting firm that has extensive experience in Hong Kong’s tax laws and procedures. Your company will gain access to a team of experts who will flag any irregularities to ensure compliance.

    In short, your business will avoid any costly compliance pitfalls, and you will get to enjoy greater peace of mind.

    04 Store and organise your data

    Accounting generates a lot of paperwork. When records are still analogue (paper-based), they can quickly overrun your office storage space. This can also make efficiently finding and retrieving data difficult.

    The good news is that you can take advantage of outsourcing accounting services to guide your company’s digitisation efforts. As well as storing your accounting records electronically, many full suite firms offer complementary services that can assist you in digitising your company’s payroll and claims submission functions.

    As a result, staff will be able to easily find records, submit expenses and locate the reports they need in real-time from anywhere across the globe.

    05 Free up resources by reducing salary overheads

    Having one or two experienced full-time accountants in-house can cost many thousands of dollars a month. Then add to that the costs involved in hiring, inducting and training these employees.

    By contrast, outsourcing accounting functions to a professional services provider like BoardRoom means you might not need an in-house accounting team at all. Reducing salary overheads frees up company resources that could be better spent elsewhere in the business.

    Not only that, but your company will also gain access to an entire team of accounting experts. Our team can do it all for you, from providing strategic advice on sustainable cost-cutting strategies to managing bookkeeping and tax.

    Are you looking for a trusted accounting firm in Hong Kong?

    BoardRoom is a regional accounting firm in Hong Kong that caters to large corporations and fast-growing SMEs. Our expertise extends from strategically outsourcing accounting services to managing statutory compliance reporting for companies across the Asia-Pacific Region.

    Speak to one of our accounting experts today about how your company can regain precious resources and refocus them on what matters – growing your business.

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    5 advantages of outsourcing payroll services in Hong Kong

    advantages of outsourcing payroll services

    5 advantages of outsourcing payroll services in Hong Kong

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    5 advantages of outsourcing payroll services in Hong Kong

    Delivering a critical business function like payroll in-house can be challenging. There’s no room for error. Employees must be paid accurately and on-time. The company must remain compliant. All in all, it can be a very time-consuming process to manage payroll in-house.

    As companies grow, managing payroll can become even more of a challenge. In-house HR teams may be stretched and not have enough capacity to stay up-to-date with compliance.  This is especially relevant in Hong Kong and the APAC region, where payroll regulations are complex and ever-changing.

    The benefits of outsourcing payroll services add up significantly when you consider the costs involved in managing it in-house. After all, time is money. Increased efficiency makes a substantial difference to the bottom line.

    While time and cost savings are key advantages of outsourcing payroll services, your company also stands to gain five other considerable benefits from outsourcing payroll.

    Here are those advantages:

    01 Continuity in payroll expertise

    Professional payroll outsourcing vendors have extensive experience in processing payroll across a wide range of industries, and for companies of all sizes. This means that even if your company is growing rapidly or expanding into new countries, the accuracy of your pay runs will never be in jeopardy, and they will always be fully compliant with local labour regulations.

    An expert payroll services provider will remove the need to waste time hiring and training a new payroll administrator every time your company experiences growth, or if one of your team members resigns. Instead, you can gain peace of mind from knowing that your employees will be paid on time, every time, by a consistent and dedicated team.

    02 Access to unparalleled reporting capabilities

    Comprehensive payroll reporting can make a real difference to an organisation. Having greater visibility into resource planning information, such as annual leave trends and overtime reporting, can be a game-changer for business planning.

    In addition to having a platform capable of producing comprehensive reporting, a good payroll outsourcing vendor will provide regular reports and valuable insights for your business.

    how to outsource payroll

    03 Enhanced data security and protection

    The personal data stored in payroll systems is highly sensitive. Keeping this data secure and compliant with local personal data protection laws requires a significant investment, not only in infrastructure, but also in cybersecurity and personal data protection training for staff. Reliable payroll outsourcing service providers store their data on highly secure cloud-based servers to deliver maximum data security and protection. At BoardRoom, we look to operationalise, not just tick boxes when it comes to securing and protecting your data. It’s why:

    • our team members participate in regular cybersecurity training sessions, as well as data protection training sessions every year;
    • our data centres have achieved ISO27001; and
    • our cloud hosting was awarded SOC 2 certification.

    04 Minimised compliance and regulatory risks

    In Hong Kong and throughout the APAC Region, HR teams need to factor in a multitude of compliance and regulatory risks when processing payroll. This complexity goes beyond calculating gross net salary correctly, extending to whether or not your company meets specific statutory deductions.

    Complexity, coupled with intricate reporting standards, makes it challenging for even the most experienced in-house team to stay compliant. Payroll needs to be done on time and error-free every time to avoid time-consuming audits and costly penalties. A professional payroll outsourcing provider minimises your exposure to these compliance and regulatory risks.

    05 Expert advice at your fingertips

    One of the key advantages of outsourcing payroll services is gaining access to a team of highly trained payroll professionals. They can answer any questions you have and provide proactive solutions to any potential issues – all without the price tag of maintaining this level of service in-house.

    Your company can also benefit from working with a payroll outsourcing vendor that offers a variety of integrated, value-add corporate services, including:

    outsource your payroll

    Gain the advantage: partner with an established payroll provider

    At BoardRoom, we are experts at helping companies to gain an advantage through efficient, accurate and compliant outsourced payroll services. Letting us manage these services enables you to focus on what matters most in your company: growth and profitability.

    Whether you are a large multinational corporation or a fast-growing SME, our team makes processing your payroll in Hong Kong easy. From local payroll services handling to managing substantial payroll obligations across the Asia-Pacific Region, we ensure your company remains compliant and that employees are paid on time, every time.

    Speak to our payroll experts today about how to outsource payroll services for your company.

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    5 ways outsourcing accounting can boost financial health

    Outsourcing your accounting can save your business time and money

    5 ways outsourcing accounting can boost financial health

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    5 ways that outsourcing your accounting function can boost your company’s financial health

    “Essential but not efficient”…

    If that sounds like an accurate description of your company’s accounting function, it might be time to consider outsourcing to a specialist accounting services provider.

    Not only will you gain more time to focus on business growth, but it can also be a more efficient use of your company’s resources. Perhaps the idea of outsourcing your accounting, tax and bookkeeping responsibilities sounds appealing, but you wonder how to make it work for your company’s unique needs.

    If so, this article will take you through the top five ways that outsourcing your accounting function can boost your company’s financial health.

    01 Get access to expert accountants without increasing salary expenses

    Instead of accumulating overheads with an in-house accounting team, you will create cost savings by outsourcing to an expert services provider.

    This gives you access to a team of accounting professionals without needing to spend on recruitment, training, wages or employee benefits.

    Our team of professional chartered accountants at BoardRoom can streamline your accounting function while ensuring you meet all of your compliance obligations.

    02 Gain clearer insights to support your business growth

    Outsourcing to a credible accounting firm can help you better understand your company’s receivables, credits and collections. This, in turn, can generate a clear picture of your cash flow and revenue seasonality.

    Understanding this information can then create clarity around your company’s overall financial health, providing greater insights into specific areas of growth potential. As an end result, you can make smarter, more informed decisions about your company’s future direction.

    For example, those newfound insights might suggest that the time is right to open another local or overseas branch or hire some new employees. In either case, as the leading corporate and advisory services provider in the Asia-Pacific Region, the BoardRoom team can help:

    • Our setup and incorporation experts can help you to establish a new branch, either locally or across the region, including in Singapore, Malaysia or Australia.
    • Our payroll experts can assist you in automating your company’s payroll management to more effectively manage your human capital.
    Gain clearer insights when outsourcing accounting

    03 Avoid costly penalties by staying compliant

    Running a large, multi-national company can be time-consuming and expensive. As your company grows, so too does the complexity of your tax reporting obligations. The last thing you want is to be in breach of the Hong Kong Inland Revenue Department’s (IRD’s) compliance requirements. At best, that may result in an audit. At worst, you could incur significant financial penalties.

    For example, failing to meet your tax filing obligations can result in costly penalties. If you mistakenly leave some tax unpaid in Hong Kong, the IRD considers the outstanding amount to be a tax default. As such, it will take recovery actions and add a 5% surcharge onto the unpaid tax balance. The second instalment will then be due immediately if the first instalment is late. After six months, the IRD will impose an additional 10% surcharge on any outstanding balance.

    However, a professional firm like BoardRoom is well-versed in tax law compliance. Outsourcing your accounting function to our team of taxation specialists can help your company to avoid any costly pitfalls.

    04 Maximise savings with the tax breaks your company is entitled to

    Your company is probably entitled to several tax breaks, but you may not be aware of all of them, they are also ever-changing so it can be hard to stay up-to-date. For example, businesses in Hong Kong with an annual profit of less than HK$ 2,000,000 need only pay a tax of 8.25%. That is half the regular corporate tax rate.

    The IRD also released several business tax measures in its 2021-22 budget, including profit tax reductions and registration fee waivers. Hong Kong has signed a number of double tax treaties, the benefits to Hong Kong companies are numerous.

    Read more about the Hong Kong Budget 2021-22 Report

    Tax experts at a specialist accounting services provider like BoardRoom can help you to take advantage of all of these tax breaks – and more – while staying compliant. Our team will also go the extra mile and apply for any tax incentives that could benefit your company.

    Efficiency of accounting

    05 Increase efficiency with an organised, automated accounting flow

    To increase efficiency, your company must have digital accounting records. This makes your data easier to analyse, which can help you to identify more insights into the most profitable areas of your business to drive growth.

    Our team of professional accountants at BoardRoom can set up a secure, cloud-based financial management system for your company. We can also integrate payroll and claims submissions into the platform to further streamline your accounting flow and improve efficiency.

    How our expert accounting services can boost your company’s financial health

    Accurate, reliable accounting is at the core of every successful company. However, outsourcing your accounting function to expert service providers like BoardRoom removes the need for an in-house team. This helps you to save on employee overheads while still maintaining access to a professional team of chartered accountants.

    To maximise your company’s financial health, our accounting experts will help you to:

    • stay compliant;
    • maximise your tax benefits;
    • keep you organised; and
    • offer you clearer insights into your company’s growth potential.

    Get in touch with our professional chartered accountant team today to learn more about how they can help to boost your company’s financial health.

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    What to look for in company secretarial services in Hong Kong

    Company secretarial services in Hong Kong

    What to look for in company secretarial services in Hong Kong

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    5 qualities to look for when choosing a company secretarial service provider in Hong Kong

    The pressure of complying with the ever-evolving schedule of corporate legislative requirements in Hong Kong can be overwhelming. The pace of change is relentless, and corporate compliance obligations are only becoming more complex.

    This evolution is necessary in ensuring companies operate safely and fairly. Yes, it’s a short-term inconvenience – but there are multiple benefits for your company in the long run.

    Outsourcing your company secretarial functions to an expert provider can relieve your team of the time-consuming administrative burden of corporate compliance in the here and now. It can also reduce overheads by freeing up key staff to focus on the core functions of your business.

    However, there is a caveat. Failing to meet statutory obligations can have severe legal, reputational and financial ramifications for your company. That is why partnering with an experienced, qualified and knowledgeable corporate secretarial service provider is so essential.

    To help you find the right solution for your company, here are the top five qualities to look for when selecting a company secretarial services provider in Hong Kong.

    01 Corporate governance qualifications and experience

    In Hong Kong, every company must appoint a company secretary. This secretary must be either a resident of Hong Kong or a company whose registered office or principal place of business is in Hong Kong.

    In private companies, a director may take on the role of company secretary, unless they are the sole director. Putting a director to work as your company secretary can initially be an attractive option from a cost perspective. However, as your company grows, so too do the corporate governance requirements.

    This is why so many private companies choose to outsource their company secretarial duties, the role requires the specialist knowledge of a professional, but often doesn’t justify creating another role within the company. Although not a necessity, outsourcing is often the most efficient and cost effective option here.

    For publicly listed companies, requirements regarding who can perform the company secretary role are stricter. The chosen person or company must either have suitable professional or academic qualifications or relevant experience to be acceptable under the Hong Kong Stock Exchange Listing Rules (“Listing Rules”).

    corporate governance in corporate secretarial

    The professional or academic qualifications considered ‘suitable’ under the Listing Rules include being:

    • a member of The Institute of Chartered Secretaries;
    • a solicitor or barrister under the Legal Practitioners Ordinance; or
    • a certified public accountant under the Professional Accountants Ordinance.

    Experience that is considered ‘relevant’ under the Listing Rules includes the proposed company secretary’s:

    • length of employment in the company;
    • previous company secretary roles;
    • familiarity with the Listing Rules and other relevant laws;
    • planned or completed relevant training (the minimum training required is 15 hours per financial year); and
    • professional qualifications in other jurisdictions.

    Clearly, experience and qualifications matter when choosing a corporate secretarial services provider. Our expert BoardRoom team has solid experience and members are all suitably qualified to proactively manage even the most complex corporate governance challenges.

    02 In-depth local knowledge and global expertise

    A company secretary with detailed knowledge of the local regulatory landscape is an invaluable asset to your company. Equally important is an understanding of the subtle nuances of local cultures, traditions and customs.

    At the same time, if your company is international – or even global – you need a company secretary that is familiar with your international legal obligations who can work alongside your legal or compliance agent.  The subtle changes in both law and best-practice throughout different regions can be too easily overlooked without the correct resources on your side. Engaging the right people could help you avoid financial implications, large or small.

    The Corporate Secretarial team at BoardRoom brings together both in-depth local knowledge and international expertise. We can seamlessly guide your company across multiple markets while managing all of the cross-border complexities of tax, trade, currency conversion and contractual rules.

    03 A wide service offering that meets all of your corporate needs

    As your business grows, outsourcing non-core functions to a single corporate expert provider can save key staff members time and allow them to focus on business strategy and performance.

    At BoardRoom, we offer a full range of corporate services all under one roof. We make it easier for you to get on with business while we take care of the time-consuming, operational tasks.

    We can help you by accurately and efficiently:

    04 Dedicated, personalised customer care

    An excellent company secretarial services provider will assign a dedicated company secretary for your organisation. This is essential to give you a single point of contact who understands the exact needs of your business.

    Having a dedicated company secretary also reduces your risk of non-compliance. It is all too easy for an inexperienced company secretary to miss important corporate governance milestones. Non-compliance means costly penalties for your company.

    You can feel confident working with the team at BoardRoom, knowing that we are dedicated to ensuring you meet all your compliance obligations in relation to corporate secretarial matters.

    05 Ability to evolve with you as your company changes

    What is your vision for the future of your company? If going public is on your agenda, your corporate secretarial services provider will need the expertise to guide you through Hong Kong’s Initial Public Offering (IPO) process.

    Alternatively, suppose you are thinking of evolving your corporate structure. In that case, you need to be aware of the many specific compliance requirements involved. You also need to prepare for the significant administrative work needed to make the change happen.

    Whichever direction you choose to take your company, look for a corporate secretarial services provider that offers an extensive range of corporate services. Only with this offering breadth can the provider adapt to your company’s changing needs and evolve with you.

    Looking for quality company secretarial services in Hong Kong?

    Save yourself from the worry and time-consuming nature of corporate compliance by outsourcing your company secretarial functions to our expert BoardRoom team.

    We have a proven track record of helping companies, from large multinational corporations to fast-growing SMEs, to stay compliant. Ultimately, we will save you time and money by letting you get on with growing your business.

    Get in touch with one of our specialists today to learn more about how they can help you with your company’s corporate secretarial and compliance needs.

     

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