All you need to know about Hong Kong payroll Agenda: 1. General - - PowerPoint PPT Presentation

All you need to know about Hong Kong payroll

Agenda:

• 1. General knowledge
• 2. Setting up a company and types of structures

General Knowledge

Facts about Hong Kong

• Hong Kong’s literal translation is “Fragrant Harbour” which it gained from the

historical incense traders.

• It has 2 official languages. English and Chinese (Cantonese dialect).
• Located at the southern coast of China at the Pearl River Estuary and the edge of

the South China Sea.

• Population of 7.18 million, of which over 300,000 are expats.
• Hong Kong is a highly autonomous territory and one of two Special Administrative

Region’s of the People's Republic of China (SAR).

• Its currency is the Hong Kong dollar.

• Under transfer of sovereignty the region agreed to retain its currency (Hong Kong

dollar), legal system, and parliamentary system for a period of fifty years.

• The economy is export oriented and in spite of small size is the 9th largest trading

entity in the world. (Source, Trading Economics)

• Independent member of APEC, IMF

, WTO, FIFA and International Olympic Committee.

Business Culture

Business Culture – Fun Fact

§ In business when dealing with Westerners, the Chinese often chose a nickname. Don’t be surprise if during your business dealing with the Chinese they ask to consult with a fengshui man (a geomacer). § A fengshui man may be brought in determine good luck dates or the proper special arrangement for a building or office. This individual's opinion should be observed.

Business Culture – Appearance & Behaviour

• The color red is considered a lucky color in Hong Kong. When

dressing for a business meeting select a red tie to impress your

• host. The color white is synonymous with death.
• It is common in China to show one's surprise or dismay by sucking

air in quickly and loudly through the lips and teeth. If you have been shown this gesture, it would be advisable to modify your

• request. Your host is obviously displeased.

Business Culture - Behaviour

• Drinking helps to relax the host and is an important part of the relationship

building phase in Chinese business culture.

• Gift giving is a very important part of Chinese culture.
• Bar hopping and karoke are standard means of entertainment. Be prepared

to be taken out on the town almost every night during your stay in Hong Kong.

• At close of trip, have a dinner for your host as show of respect.

Business Culture - Communications

• The handshake is fairly common in Hong Kong, however a slight bow will

show a sign of respect.

• Because Hong Kong is so densely populated the Chinese tend to converse

very closely together.

• Silence is held in high regard in Hong Kong. Allow your host to contemplate

without interruption.

• Names are usually written in the following order the last name first, middle

name second and the first name last.

Business Culture - Communications

• Use titles with names whenever possible.
• Appointments are recommended.
• Punctuality is expected.
• Use only black and white materials for presentations, as colors are very

significant.

• Patience is important. The Chinese do not make business decisions quickly.

Business Culture – The Concept of Face

• Face is an intangible quality that reflects a person's reputation, dignity,

and prestige.

• You may lose face, save face, or give face to another person.
• Companies as well as individuals have face and this is often the rationale

behind business transactions.

Business Culture – Confucianism/Hierarchy/Family Values

• The teachings of Confucius describe the position of the individual in Hong

Kong Chinese society.

• Confucianism is a system of behaviours and ethics that stress the
• bligations of people towards one another based upon their relationship.

Confucianism stresses duty, loyalty, honour, filial piety, respect for age and seniority, and sincerity.

• These traits are demonstrated by the Hong Kong Chinese in their respect

for hierarchical relationships.

Business Culture – Meeting and Greeting

• The handshake is commonly used when greeting westerners.
• The Hong Kong Chinese handshake is rather light.
• During the greeting, many Hong Kong Chinese lower their eyes as a sign of

respect.

• There is no need for you to emulate this gesture, although prolonged eye

contact should be avoided during the greeting.

• If you are at a large function, you may introduce yourself to other guests.

Business Culture – Meeting and Greeting

• At smaller functions, it is polite to wait for your host or hostess to

introduce you.

• The Chinese traditionally have 3 names: The surname, or family name is

first and is followed by two personal names. The first personal name is their father's name and the second personal name is their own name.

• Address the person by an honorific title and their surname.
• If they want to move to a first name basis, they will advise you which

name to use.

• Some Chinese adopt more western names and may ask you to call them by

that name.

Business Culture – Dining Etiquette

• Table manners are rather relaxed in Hong Kong, although there are

certain rules of etiquette. When in doubt, watch what others do and emulate their behavior.

• Wait to be told where to sit. There is often a seating plan.
• Wait for the host to tell you to start eating or for him to begin eating.
• Food is served on a revolving tray.
• You should try everything.
• Never eat the last piece from the serving tray.
• Burping is considered a compliment.

Business Culture – Building Relationships

Although businesspeople in Hong Kong do not require long-standing personal relationships to do business, many businesses are family- owned, so personal relationships are an integral part of the enterprise.

• Once you have begun to work with a Hong Kong businessperson, it is

important to maintain the relationship.

• When you first meet, expect a fair amount of small talk. Your Hong Kong

colleagues will want to get to know you well enough that they are comfortable working with you.

• Do not be surprised if you are asked questions that might be considered

extremely personal in your home country.

Business Culture – Building Relationships

• The Hong Kong Chinese take a long-term view of business relationships.
• Hong Kong Chinese are direct communicators, although they also make use
• f non-verbal communication.
• In general, businesspeople are non- confrontational and will never overtly

say no, so that they do not embarrass the other person.

Business Culture – Meetings and Negotiations

• Appointments are necessary and should be made between 1 and 2 months

in advance if you are travelling to Hong Kong.

• Avoid trying to schedule meetings during Chinese New Year (late January
• r early February) as many businesses close for a week during that time.
• You should arrive at meetings on time.
• There will be a period of small talk before getting down to business

discussions.

• When meeting your Hong Kong business associates, allow the most senior

person in your delegation to lead the group and be introduced first.

Business Culture – Business Card Etiquette

§ Business cards are exchanged after the initial introductions. § Have one side of your business card translated into Chinese, with the Chinese characters printed in gold, since it is an auspicious colour. § Business cards are exchanged using both hands. § Hand your card so the typeface faces the recipient. § Examine business cards carefully before putting them in a business card case.

Setting up an Entity in Hong Kong

Hong Kong Companies

• All companies must be incorporated through the Companies Registry by

lodging online. https://www.eregistry.gov.hk/icris- ext/apps/por01a/index?locale=en_US This process will also provide the business with a Business Registration through Inland Revenue for tax purposes.

Hong Kong Companies

• The Companies Registry (“the Registry”) administers and enforces most

parts of the Companies Ordinance.

• The Registry registers local and non-Hong Kong companies and statutory

returns, de-registers defunct solvent companies and provides the public with services and facilities for inspecting and obtaining company information kept by the Registry.

• They administer and enforce several other ordinances, including the

Trustee Ordinance (insofar as it relates to trust companies), the Registered Trustees Incorporation Ordinance and the Limited Partnerships Ordinance

Hong Kong Companies

• The Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and its

subsidiary legislation came into effect on 3 March 2014.

• The new Companies Ordinance provides a modernised legal framework for

the incorporation and operation of companies in Hong Kong and reinforces Hong Kong’s position as an international financial and commercial centre.

• The website below contains useful reference materials on the Companies

Ordinance and other relevant Ordinances to facilitate compliance. http://www.cr.gov.hk/en/home/

Setting up a New Company Hong Kong

Hong Kong – Company Type

You can choose from a range of company types to suit your business requirements. § A Limited Company is the most commonly-used company type. This is a company which is incorporated in Hong Kong, which means that the owner can take advantage of all the tax benefits and concessions available to any fully incorporated business, including the Closer Economic Partnership Arrangement (CEPA), a free trade agreement with Mainland China.

Hong Kong – Company Type

• Branch Office of Parent Company. If a company incorporated outside Hong Kong

establishes a place of business in Hong Kong, it must register with the Companies Registry as a ‘Registered Non-Hong Kong Company’ within one month of

• establishment. Unlike a subsidiary limited company, a branch office is not a

separate legal entity from the parent and can leverage funds off the credit rating

• f its owner.
• Representative Offices cannot engage in profit-making activities and can only

fulfill limited functions. They are useful if a company wishes to explore the Hong Kong market before making a larger investment. If the company decides to enter into a transaction which creates a legal obligation, it must change the business to a limited company or branch office.

Hong Kong – Company Name

For limited companies incorporated in Hong Kong, the company name must not be the same as a name appearing in the index of company names kept by the Registrar

• f Companies. You may conduct a company name search free of charge through the

Companies Registry’s Cyber Search Centre or the Company Search Mobile Service.

Hong Kong – Company Structure

• Most of the limited companies incorporated in Hong Kong are private companies

limited by shares.

• A private limited company in Hong Kong requires at least one director who is a

natural person and one company secretary. If the company has one director only, the sole director cannot be the company secretary of the company at the same

• time. If the company secretary is a natural person, he/she should ordinarily

reside in Hong Kong. If the company secretary is a body corporate, its registered

• ffice or place of business should be in Hong Kong. A non-Hong Kong resident can

be appointed as a director.

• The registered office of the company must be situated in Hong Kong.
• There is no requirement for shareholders to be Hong Kong residents. The sole

shareholder can be a director of the company.

Hong Kong Company Incorporation

• Once you have decided to incorporate a limited company and chosen a

company name, you can apply for incorporation with the Hong Kong Companies Registry.

• To simplify the process of setting up a limited company, any application for

company incorporation includes a simultaneous application for business registration.

Hong Kong Company Incorporation

• You may submit applications for incorporation of local companies online at the

24-hour portal e-Registry or deliver the documents in hard copy form to the CR with the correct fees:

• Documents:
• Incorporation Form (Form NNC1 for company limited by shares)
• A copy of the company’s Articles of Association
• A Notice to Business Registration Office (IRBR1)

Hong Kong Company Incorporation

• Fees, the fees for incorporating a company limited by shares are:
• Company Registration fee – HK$1,720 (If unsuccessful, an application for a

refund of HK$1,425 may be made)

• Business registration fee – HK$2,000 for a one-year certificate; HK$5,200

for a three-year certificate

• Levy to the Protection of Wages on Insolvency Fund – HK$250 for a one-

year certificate; HK$750 for a three-year certificate

• Online applications for company incorporation and business registration can

normally be processed within one hour. If you deliver your application in hard copy form, the Certificate of Incorporation and Business Registration Certificate will normally be issued within four working days.

Hong Kong Register a Business

• You need to register your business with the Business Registration Office of the

Inland Revenue Department. You must register within one month of starting business.

• Once you have registered your business, you must display your Business

Registration Certificate at your place of business.

Hong Kong Register a Business

• To simplify the process of setting up a limited company in Hong Kong, your

application for company incorporation includes a simultaneous application for business registration. Apart from the incorporation documents, you must also deliver the following to the Companies Registry when you make your application for company incorporation:

• A Notice to Business Registration Office (IRBR1)
• Business registration fee: HK$2,000 for a one-year certificate; HK$5,200

for a three-year certificate

• Levy to the Protection of Wages on Insolvency Fund: HK$250 for a one-

year certificate; HK$750 for a three-year certificate

• *There might be some concessions from time to time, please refer to the

business registration fee and levy table for the current charge.

Hong Kong Register a Business

• If you submit your application for business registration in paper form, your

business registration certificate will be issued in 30 minutes over the counter,

• r in two working days by post.
• Business registration certificate applied under the one-stop company

incorporation and business registration service will be issued together with the Certificate of Incorporation by the Companies Registry, normally within one hour for online applications or four working days for applications delivered in hard copy form.

Hong Kong Company Bank Accounts

• First you need to register and incorporate your business as you will need these

documents for your bank account application. Your chosen bank will advise you on what other documents you need to provide.

• Banks in Hong Kong normally require a minimum deposit the amount of which

varies between different banks.

• Hong Kong’s anti-money laundering guidelines, Know Your Customer, mean

that banks may request identity and residence information for all beneficial

• wners of the company before they will open an account.

Hong Kong Finding an Office

• Hong Kong offers a wide variety of premises to suit any business. InvestHK can

help you find the space that is right for you.

• Central is considered Hong Kong’s main business district. Leading names in the

banking, accounting, legal and corporate worlds can all be found here. Of course, office space in such a sought-after location comes at a price, so many companies choose to locate in other popular areas, including Admiralty, Wanchai, Causeway Bay, Sheung Wan and Quarry Bay on Hong Kong Island and Tsim Sha Tsui (TST) and Kowloon East on the Kowloon peninsula.

Hong Kong Finding an Office

• Hong Kong offers a wide variety of premises to suit any business. InvestHK can

help you find the space that is right for you.

• Central is considered Hong Kong’s main business district. Leading names in the

banking, accounting, legal and corporate worlds can all be found here. Of course, office space in such a sought-after location comes at a price, so many companies choose to locate in other popular areas, including Admiralty, Wanchai, Causeway Bay, Sheung Wan and Quarry Bay on Hong Kong Island and Tsim Sha Tsui (TST) and Kowloon East on the Kowloon peninsula.

• Hong Kong’s excellent public transport system means that companies can

choose to locate in more affordable locations and remain easily accessible for clients and staff.

Hong Kong Finding an Office

• Leases are typically for two to three years with an option to renew. They

should always come with a full tenancy agreement. Outgoings will include:

• Cash security deposit (up to three months’ rent, including service charge and

government rates)

• One-off fee to the property agent (normally one month’s rent)
• Management service charges - typically covering air conditioning, security,

common areas, cleaning and other building services

• Government rates at five percent of annual rateable value, payable quarterly

in advance

• Government rent is calculated at three percent of the rateable value of the

property and is adjusted in step with any subsequent changes in the rateable value

• Legal fees (if you employ a lawyer to process the tenancy agreement)

Hong Kong Finding an Office

• Serviced or virtual offices are a popular choice for newly arrived companies.
• Serviced offices are available across the city, allow for short-term leases and
• ften provide tenants with a range of secretarial services.
• Virtual offices provide a mailing address and a receptionist, who will answer

the phone on behalf of your company.

Hong Kong Finding an Office

• Hong Kong offers three main types of industrial buildings for office set-up:
• Flatted factories - for general manufacturing, normally intended for sale or

lease

• Industrial/office premises - floor space in developments with planning

permission and lease modification for industrial/office use, certified for

• ccupation
• Specialised factories - primarily purpose-built for specialised manufacturing

process, usually for occupation by a single operator

• Most of the flatted factories and industrial/office buildings are found in Kwun

Tong and Tsuen Wan. Around 80 percent of specialised factories are in the New Territories.

Hong Kong Finding an Office

• If your company is involved in science, technology, design or research and

development, and requires specialised facilities, there are a number of excellent options available:

• Hong Kong Science & Technology Parks (HKSTP)
• Cyberport
• Hong Kong Design Centre

Hong Kong Immigration, Visas & Identity Card

• While Mainland China always requires a visa for entry, Hong Kong is a

separate travel area with business-friendly immigration policies.

• Visitors from over 170 countries/territories enjoy visa-free entry into Hong

Kong, with limits ranging between seven and 180 days.

• Foreign nationals normally need a visa before living or working in Hong Kong.

But Hong Kong’s light-touch visa policies mean that short-term visitors are permitted to conduct business negotiations and sign contracts while on a visitor’s visa or entry permit.

Hong Kong Immigration, Visas & Identity Card

• Employment visa - To employ people from overseas, you need to demonstrate

that a prospective employee has special skills, knowledge or experience not readily available in Hong Kong. The proposed employee must be sponsored by an employer in Hong Kong.

• Investment visa - This requires you to be a shareholder of a Hong Kong registered
• company. You can do this by:
• Registering and setting up a company in which you are the major investor, or
• Investing in a Hong Kong-based company
• You will also need to produce details of the viability of your proposed business – or

your financial position if you are investing in an existing company.

Hong Kong Immigration, Visas & Identity Card

• Entrepreneur visa - The applicant should be the proprietor or partner of the

start-up company or a key researcher of the relevant project. The start-up business concerned should be supported by a government-backed programme with a rigorous vetting and selection process. For example:

• StartmeupHK Venture Programme administered by InvestHK;
• Incu-App, Incu-Bio and Incu-Tech programmes administered by the Hong

Kong Science and Technology Parks Corporation;

• Cyberport Incubation Programme;
• Enterprise Support Scheme administered by the Innovation and Technology

Commission; and

• Design Incubation Programme administered by the Hong Kong Design

Centre.

Hong Kong Immigration, Visas & Identity Card

• Capital Investment Entrant Scheme (CIES) - The Government has announced

that the Capital Investment Entrant Scheme would be suspended with effect from 15 January 2015 until further notice.

• The Immigration Department will continue to process applications received on or

before 14 January 2015, whether already approved (including approval-in- principle and formal approval) or still being processed. For details and FAQs, please refer to Immigration Department’s website www.immd.gov.hk.

Hong Kong Immigration, Visas & Identity Card

• Dependant visa - People who successfully apply for a visa can bring their

spouse and dependent children under the age of 18, provided they have sufficient funds and suitable accommodation. The limit on their stay is the same as the visa holder – who is officially the ‘sponsor’. A spouse holding a dependant visa can undertake any type of lawful employment in Hong Kong.

• Enhancement measures have been applied to the General Employment Policy

(for both employment and investment), the Admission Scheme for Mainland Talents and Professionals, and the Quality Migrant Admission Scheme.

• The Immigration Department has also introduced a pilot scheme for the

admission of the second generation of Chinese Hong Kong permanent residents who have emigrated overseas.

• For more details, please refer to the following link:

http://www.immd.gov.hk/eng/faq/enhancement-measures-on-admission- schemes.html#Admission

Hong Kong Immigration, Visas & Identity Card

• The Hong Kong Identity Card (abbreviation: HKID, ID card) is an official

identity document issued by the Immigration Department of Hong Kong.

• The Hong Kong Permanent Identity Card is a class of HKID issued to Hong

Kong residents who have the right of abode (ROA) in the Hong Kong Special Administrative Region.

• According to the Registration of Persons Ordinance (Cap. 177), all

residents of age 11 or above who are living in Hong Kong for longer than 180 days must, within 30 days of either reaching the age of 11 or arriving in Hong Kong, register for an HKID.

• HKIDs contain amongst others the name of the bearer in English, and if

applicable in Chinese.

• It does not expire for the duration of residency in Hong Kong.

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