A foreign company which wants to do business in Hong Kong has various options. One of the simplest of these is to set up a branch office. Setting up a branch office in Hong Kong is an easy way to enter the market. Compared to forming a subsidiary, registering a Hong Kong branch office is quite straightforward. The following information offers a guide as to how and why to do this.
What is a branch office?
A Hong Kong branch office operates as a satellite of its parent company set up outside the jurisdiction in which the parent company is incorporated. It undertakes identical business operations in a different physical location. So, unlike a subsidiary company, a branch does not have a separate legal identity. Branch business registration in Hong Kong permits a foreign company to enter the Hong Kong market through a representative office.
Why choose a branch office?
Setting up a branch office is the logical choice if a foreign company does not want to execute any contracts in Hong Kong, but simply wants to connect with new customers in a new location. It is a great way to try out a new market without making a big initial commitment. The parent company retains control over the business as a branch is not a separate legal entity. Providing the registration documents of the parent company is sufficient for establishing a branch in Hong Kong. Branches of foreign companies benefit from certain tax advantages and no stamp duty is payable when transferring a Hong Kong business operated by a foreign company through its branch.
How to set up a branch office in Hong Kong?
The foreign company must first register as a non-Hong Kong company with the Companies Registry. The name of the branch office must be the same as that which appears on the incorporation certificate of its parent company. A Hong Kong resident or registered company should act as the official representative of the foreign company and receive legal notices and deal with compliance requirements. A branch office must have a physical address in Hong Kong. Various documents pertaining to the incorporation and registration of the foreign parent company are required to be submitted.
What are the benefits of setting up a Hong Kong branch office?
The registration process is relatively straightforward and there is no minimum capital investment requirement. The parent company retains direct control over the management of the branch office. The Inland Revenue Department offers several tax benefits. A branch office can be closed easily if the parent company is not satisfied with how the branch performs. Overall, Hong Kong compares favourably with other destinations if you want your business to establish a foothold in an attractive foreign market.
Should you set up a branch office in Hong Kong?
Hong Kong offers an attractive location for a business entity which would like to establish a presence in the Asia Pacific region. Setting up a branch office in Hong Kong is an easy way to start things off if you are not sure about making the commitment to starting a subsidiary company right away. Of course, you should always carefully consider the needs and aims of your company before expanding into any new market, but setting up a branch office in Hong Kong is a relatively low-risk development.
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