establish a branch vs. a subsidiary in hong kong
TRANSCRIPT
Establish a Branch vs. a Subsidiary in Hong KongA presentation brought to you by ourLawFirmHongKong.com
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Foreign Companies in Hong Kong
• Foreign companies that want to enter the Hong Kong market have three business options:
branch; subsidiary; representative office.
• Each of these legal structures is different and the choice between them depends on the foreign company’s future plans.
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The Difference Between Branches and Subsidiaries in Hong Kong
• The most important difference between a branch and a subsidiary is the parent company’s liability.
• The branch in Hong Kong will be completely dependent on the foreign legal entity while the subsidiary will be an independent Hong Kong company.
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The Advantages of the Hong Kong Branch
• The branch must be based in Hong Kong and have at least one resident individual who will act as its representative. Foreign investors choose to open a branch because:
it is easier to incorporate compared to the subsidiary;
it has lower incorporation costs; it doesn’t require a share capital;
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The Characteristics of the Hong Kong Branch
• The main characteristic of the branch in Hong Kong is its dependence on the foreign company:
it must have the same name; must perform the same business activities; the foreign company provides the branch’s
capital; the foreign company is liable for the
branch’s debts.
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The Advantages of the Subsidiary in Hong Kong
• The subsidiary is a separate legal entity from the parent company. Its advantages include:
it can conduct all business activities; it can have a different business name; the shareholders have limited liability; the foreign company is in no way liable for the
subsidiary’s debts.
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The Characteristics of the Subsidiary in Hong Kong• While foreign companies might prefer to open a
subsidiary, this type of company has the following particularities compared to the branch:
higher incorporation costs; mandatory share capital; more complex
audit and reporting requirements.
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Company Incorporation in Hong Kong
• The branch must make an application for the approval of the company name and submit an application for Branch Office Registration with the Companies Registry.
• Subsidiaries can be incorporated in the form of a private or public limited liability company and must also be registered with the Companies Registry and also with the Inland Revenue Department.
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Branch and Subsidiary Taxation in Hong Kong
• Branches are taxed as non-resident entities, only on their Hong Kong income while subsidiaries are taxed as resident companies on their worldwide income.
• The experts at our Hong Kong law firm can give you further details about the taxation system in the city.
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Assistance for Company Formation in Hong Kong
• Foreign companies that want to establish their presence on the Hong Kong market can request the services provided by our lawyers in Hong Kong.
• Our specialists can help you choose the most suitable corporate form based on your business goals and future plans for expansion in the Asia-Pacific area.
Thank You for Your Attention!
For more information please contact us at:
+ 852 8191 3385 (for international clients)
http://www.lawfirmhongkong.com/ 11