Ranked 5th out of 63 by The International Institute for Management Development (IMD) World Competitive Yearbook 2022, Hong Kong stands tall as a global business powerhouse. Due to its advantageous geographic position, robust economic development, and business-friendly policies, it comes as no surprise that many entrepreneurs opt to establish their startup operations in Hong Kong to broaden their global reach into the Asian market. Besides its enduring commercial benefits, Hong Kong’s well-known entrepreneurial spirit and dynamic environment offer an ideal backdrop for initiating a business venture. 

Why is Hong Kong an exceptional destination for expanding your startup? Let’s delve into the unique circumstances that make now the perfect time to invest and grow your venture in this dynamic market. 

• A supportive government
• Low, simple, and competitive tax system
• Strong network of incubators and accelerators
• Proximity to mainland China and APAC markets
• Diverse and wide-ranging startup and SME ecosystem
• Language
• Conclusion

A supportive government

Embracing its role as a catalyst for progress, the Hong Kong government is committed to fostering growth and innovation across various sectors. Through the initiatives outlined in the Hong Kong Budget 2024, the government aims to drive the city forward to achieve new milestones of success. From strengthening green finance to providing vital support for SMEs and promoting international trade, these initiatives reflect Hong Kong’s commitment to maintaining its position as a leading global hub. 

Innovation and Technology 

• In 2024, the Greater Bay Area International Clinical Trial Institute will be established in the Hetao Shenzhen Hong Kong Science and Technology Innovation Co-operation Zone. 
• The New Industrialization Acceleration Scheme will be launched in 2024, offering enterprises up to HK$200 million in matching funds. 
• HK$200 million is allocated to support incubation and acceleration programs for startups in Hetao engaged in life and health technology. 
• HK$3 billion is set aside to launch the Frontier Technology Research Infrastructure Support Scheme. 

Assisting Small and Medium Enterprises 

• Extending the application period for 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme until the end of March 2026. 
• Injecting HK$500 million into the BUD Fund alongside the launch of “E-commerce Easy,” offering up to HK$1 million per enterprise for the implementation of e-commerce projects in Mainland China. 
• Launching the Digital Transformation Support Pilot Programme, inviting SMEs in the F&B and retail sectors to choose from ready-to-use solutions starting in early 2024. 

Trade 

• Establishing a multinational supply chain management center offering consulting services, trade financing, and corporate training. 
• Investigating the feasibility of creating a trade single window to offer comprehensive services to enterprises. 
• Encouraging Mainland manufacturing enterprises to establish offshore trading management headquarters in Hong Kong. 

Exploring new markets 

• Exploring the possibility of setting up Economic and Trade Offices in Riyadh, Saudi Arabia, and Kuala Lumpur, Malaysia. 
• Planning to host the “Belt and Road Festival” and the “Belt and Road Initiative Tax Administration Cooperation Forum” in 2024. 

Low, simple, and competitive tax system 

In the realm of taxation, Hong Kong stands out as a beacon of simplicity and generosity. With just three direct taxes to contend with, complemented by a wealth of allowances and deductions, navigating the tax landscape becomes a rewarding endeavor.  

The three taxes are: 

• Corporations enjoy a two-tiered profits tax system in Hong Kong, with the first HK$2 million of profits taxed at a rate of 8.25 percent, and profits exceeding that amount taxed at a rate of 16.5 percent. Unincorporated businesses, such as partnerships and sole proprietorships, have corresponding tax rates of 7.5% and 15%. 
• The standard rate for salaries tax stands at 15%. 
• Property tax is set at a flat rate of 15%. 

Here are the taxes that Hong Kong DOES NOT impose: 

• Sales tax or VAT 
• Withholding tax on dividends and interest 
• Capital gains tax 
• Tax on dividends 
• Estate tax 

Strong network of incubators and accelerators 

In the fast-paced environment of entrepreneurship, the early stages often make or break a startup’s success. This is where the support of incubators and accelerators becomes invaluable. For those opting for Hong Kong as the base for their business venture, this is indeed the optimal decision, as the city’s programs stand out not only for their abundance but also for their effectiveness in nurturing innovation and propelling startups toward success. 

How do startups in Hong Kong benefit from Accelerators? 

• Gain mentorship and sponsorship support, receiving valuable guidance, expertise, and knowledge to navigate startup challenges effectively. 
• Connect directly with investors interested in discovering promising startups through accelerator programs, potentially opening doors to funding opportunities. 
• Tap into the wealth of experience and skills accumulated by mentors and accelerator managers, accessing invaluable insights and information to accelerate startup growth. 
• Benefit from the diverse and encouraging environment of Hong Kong’s accelerator programs, which offer flexibility and adaptability, fostering an atmosphere conducive to startup success. 

How do startups in Hong Kong benefit from Incubators?  

• Cultivate relationships and exchange information with professionals and fellow entrepreneurs to foster business growth. A strong network provides valuable connections for both short-term and long-term success. 
• Gain access to essential resources like education, software, and workshops covering various topics such as business fundamentals and funding acquisition. These resources support startup development and growth. 
• Access affordable workspace options, akin to coworking spaces. Ensure they offer essential amenities like centralized printing and conference room access while exploring potential incubators. 

Proximity to mainland China and APAC markets 

Situated strategically in Asia, Hong Kong serves as a gateway for businesses to seize the myriad opportunities available in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and beyond. 

Since the signing of the Mainland and Hong Kong Closer Economic Partnership Agreement (CEPA) in 2003, collaboration between Hong Kong and Mainland China has flourished. This landmark agreement not only simplifies access to the vast mainland market for Hong Kong products and services but also surpasses China’s commitments under the World Trade Organization (WTO). By eliminating tariffs and providing preferential access to certain service sectors, CEPA paves the way for enhanced economic ties between the two regions. 

The unveiling of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) outline in 2019 marks a significant boost to the relationship between Hong Kong and the mainland. With nine bustling cities in Guangdong province alongside Hong Kong and Macao, the GBA emerges as a vibrant economic powerhouse within the Pearl River Delta. Notable cities like Guangzhou and Shenzhen, renowned for their manufacturing and technological prowess, underscore the region’s economic significance. Hong Kong’s seamless integration into the GBA opens doors for both local and international investors to dive into the boundless economic potential of Mainland China. 

Diverse and wide-ranging startup and SME ecosystem 

According to InvestHK’s 2023 Startup Survey, a remarkable surge was witnessed in both the number of startups and employed staff. With 4,257 startups employing 16,453 staff, Hong Kong’s resilience and growth are undeniable. 

Meanwhile, the SME sector continues to play a pivotal role in Hong Kong’s economic rebound, representing 98% of all businesses and employing 44% of the private sector workforce. As the backbone of the economy, SMEs contribute significantly to driving growth and innovation. 

Dive deeper into Hong Kong’s vibrant startup and SME ecosystem with our infographic, offering a comprehensive look at the dynamic landscape and a window of opportunities awaiting entrepreneurs and investors. 

Language  

When contemplating global expansion, language often poses a significant obstacle. It can be challenging to grow your startup in a new country when effective communication with potential investors, partners, or staff is hindered. However, for many foreign startups in Hong Kong, this is not a concern.  

With English, Cantonese, and Mandarin being the three main languages in Hong Kong, entrepreneurs proficient in either English or Cantonese should encounter no hurdles in connecting with potential stakeholders and enhancing their brand presence. 

Conclusion 

As Hong Kong is entering a truly golden age of innovation and technology, the outlook for 2024 is promising. Stepping into this Dragon year, Asia is set to lead the world in GDP, with Hong Kong playing a central role in this development. 

The city offers a supportive environment for ambitious entrepreneurs, with a vibrant ecosystem, clear regulations, and access to a diverse talent pool. As a key player in the global tech scene, Hong Kong presents excellent opportunities for entrepreneurs to turn their ideas into reality and succeed. 

For those with ambitions to grow on a global scale, now is the ideal time to begin this journey with a “Grow Fast Go Beyond” mindset. 

The post Is Now the Perfect Time to Invest and Expand Your Business in Hong Kong? appeared first on MyBusiness in Asia.

In this article, we will provide a simplified summary to help you understand how these measures will impact businesses:

• Introduction
• Bolstering Confidence
  • Strategic Partnerships Enhancing the Small Business Landscape
  • Attracting Global Talent and Business Re-domiciliation
  • Enhancing Liquidity and Financial Assistance for SMEs
  • Accelerating Digital Transformation and Online Expansion
  • Revitalizing Tourism and Sector-Wide Benefits
  • Tax Reductions, Incentives, and Business Support
• Accelerating High-quality Development
  • Investment in Future Growth and Innovation
  • Responding to Changes in Global Trade Dynamics
• Conclusion

Bolstering Confidence

Strategic Partnerships Enhancing the Small Business Landscape

The announcement by the Finance Chief of over ten strategic enterprises partnering with The Office for Attracting Strategic Enterprises (OASES) signifies a major advancement in enriching Hong Kong’s business ecosystem. Anticipated to introduce over $40 billion in investments and generate around 13,000 jobs (including 30 companies from the initial batch), this initiative nurtures a dynamic and supportive environment for businesses. It offers SMEs opportunities for new collaborations, broader network access, and the chance to tap into the innovation and market prospects brought by these strategic enterprises to Hong Kong.

Attracting Global Talent and Business Re-domiciliation

The proactive measures of the government have welcomed over 140,000 applicants through talent admission schemes to Hong Kong, with more than 100,000 already establishing their new residence in the city. This significant influx of skilled professionals is crucial for companies in search of expertise and significantly contributes to the vitality of the local economy.

Enhancing Liquidity and Financial Assistance for SMEs

Recognizing the essential role of SMEs, which account for more than 98% of all local businesses, the Hong Kong budget prolongs the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme by an additional two years until March 2026. This move, coupled with a $10 billion increase to the existing $280 billion fund, is intended to facilitate easier access to government-backed loans at preferential rates.

Accelerating Digital Transformation and Online Expansion

The budget emphasizes the importance of digital transformation for SMEs via the Digital Transformation Support Pilot Programme, specifically designed to help SMEs in the retail and food service sectors to integrate digital technologies, with the expectation of aiding over 8,000 businesses. Moreover, the “E-Commerce Easy” program, part of the BUD Fund, seeks to enable firms to enter the Chinese e-commerce market, offering up to HK$1 million in support for each qualifying company.

Revitalizing Tourism and Sector-Wide Benefits

In an effort to rejuvenate the economy and various sectors, the government plans to organize over 80 major events in the first half of 2024, with a commitment of $100 million for event promotion over the next three years. Alongside the Tourism Board’s introduction of seasonal festivals and thematic tours, these initiatives are aimed at revitalizing tourism and sparking demand in retail, hospitality, catering, and transport sectors.

Tax Reductions, Incentives, and Business Support

The Hong Kong budget introduces several tax reductions, incentives, and support for businesses for the fiscal years 2023/24 and 2024/25.

For the fiscal year 2023/24, it offers a total, 100% exemption on both salaries tax and personal assessment tax, limited to $3,000, which will be reflected in the final tax bill for the 2023/24 assessment year, benefiting approximately 2.06 million taxpayers.

It also proposes a one-time 100% profit tax rebate for 2023-24, capped at $3,000, expected to assist around 160,000 businesses. The budget also allows for tax deductions on expenses incurred to reinstate leased commercial premises and makes allowances for industrial buildings and structures effectively claimable by new owners upon ownership changes.

For the fiscal year 2024/25, it plans a rate concession for non-domestic properties for the first quarter, from April to June 2024, with a cap of $1,000 per rateable property, which is anticipated to assist about 430,000 non-domestic properties.

Accelerating High-quality Development

Investment in Future Growth and Innovation

The Hong Kong government commits HKD 10 billion to the New Industrialisation Acceleration Scheme (NIAS) to attract high-value-added manufacturing in areas such as biotechnology, artificial intelligence, and green technology. This initiative complements previous investments, such as the Hong Kong Growth Portfolio’s backing of tech firms and startups, focusing on the Strategic Tech Fund for local startups.

The government continues to support startups through incubator programs, accelerator schemes, and access to venture capital. The collaborative efforts of the Hong Kong Science Park, Cyberport, and InvestHK to draw international startups demonstrate the government’s dedication to creating a thriving startup ecosystem. Additionally, sectors expected to experience growth, including green finance, the digital economy, and advanced manufacturing, will receive policy enhancements and financial backing, further enriching the business environment.

Responding to Changes in Global Trade Dynamics

Hong Kong is actively refining its trade and economic strategies to better align with the evolving global trade landscape, emphasizing an uptick in exports to burgeoning markets such as ASEAN and the Middle East. With the globalization of Mainland manufacturing enterprises, Hong Kong is positioning itself as a premier hub for multinational supply chain management, offering extensive professional services. This strategic pivot is supported by the expansion of Hong Kong’s economic and trade network overseas, reinforcing its role in the international business arena. Efforts to encourage Mainland manufacturing firms to set up their global or regional headquarters in Hong Kong highlight the city’s ambition to become a central node for global business activities.

In conclusion, the 2024-25 Hong Kong budget establishes a solid groundwork for business resurgence and economic renewal. Concentrating on SME empowerment, digital transformation, tax incentives, and investments in sectors with high growth potential, the government is dedicated to fostering a business-friendly climate that propels companies towards success and cement Hong Kong’s position as a frontrunner in innovation and economic progress. The strategic efforts to attract worldwide talent and simplify business re-domiciliation further bolster Hong Kong’s competitive advantage, rendering it an appealing choice for both businesses and professionals.

The post Hong Kong Budget 2024: Empowering businesses for new opportunities appeared first on MyBusiness in Asia.

About the Singapore Fintech Festival

The Singapore Fintech Festival (SFF) 2023, held from November 15 to 17, stood out as one of the largest fintech festivals globally.

This event attracted over 60,000 attendees, including more than 650 exhibitors, and represented over 100 countries. It served as a convergence point for leaders and experts in finance, technology, and public policy.

Special Highlights of SFF 2023

The 2023 edition was marked by a special focus on the ‘Applications of Artificial Intelligence (AI) in Financial Services‘, discussing topics like driving low-carbon transitions, expanding financial access for underserved populations.

The event also bolstered digital economic resilience, and scaling AI and Web3 solutions both regionally and globally.

The event also featured prominent pre-festival activities like The Capital Meets Policy Dialogue, the annual Innovation Lab Craw and the event on companies’ expansion in APAC by Startups and Angels in partnership with MyBusiness in Asia.

About the HongKong Fintech Festival

Hong Kong Fintech Week, taking place this year from October 30, 2023 to November 05, 2023, is a cross-boundary fintech event held in Hong Kong, one of Asia’s biggest financial hubs, and Shenzhen.

The entire week drew a record high of over 35 000 attendees and over 5.5 million views online from over 100 economies, featured over 800 distinguished speakers and over 700 exhibitors, as well as attracting more than 30 Mainland and international delegations.

Special Highlights of HKFTW 2023

Under the theme “FinTech Redefined“, this year’s main conference explored FinTech development, covering key topics that shape the industry.

The discussions spanned global regulations and trends, the intricacies of funding and venture capital, and the evolving landscape of family office investments.

The exploration also extended to cutting-edge domains such as artificial intelligence (AI), Web3, and emerging frontiers that push the boundaries of financial technology.

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The post MBiA attendance at the Singapore Fintech Festival and Hong Kong Fintech Week 2023 edition appeared first on MyBusiness in Asia.

At RBA, we understand that managing your company’s finances can be a complex and time-consuming task. That is why we offer a range of essential accounting services to ensure that your business operates at its full potential.

Quarterly Bookkeeping

Accurate and up-to-date financial records are the backbone of any successful business.

Regular bookkeeping reduces the risk of financial discrepancies and errors, saving your company time and money. It streamlines your financial processes and allows you to focus on core business activities.

Proper bookkeeping can also help you identify potential tax savings, deductions, and credits, ultimately minimizing your tax liability and freeing up capital for business growth.

This means that all your accounting transactions for the quarter are registered within your company’s accounting books.

Quarterly Management Accounts

Quarterly Management Accounts are the financial reports that provide a snapshot of your company’s financial health at a particular point in time. These reports encompass essential financial statements such as the income statement, balance sheet, and cash flow statement.

The management accounts are critical to monitor a company’s performance and provides additional advantages:

Timely Decision-Making: Waiting until the end of the fiscal year to assess your company’s performance may leave you with limited room for corrective actions. With monthly or quarterly reports, you can spot potential issues early and make informed decisions to drive your business forward.

Financial Planning: These reports help in budgeting and forecasting, giving you the insight needed to plan for future expenses, investments, and revenue targets. This proactive approach can enhance your company’s financial stability.

Investor and Stakeholder Confidence: Monthly or Quarterly reports can be vital for investors and stakeholders who want to gauge the financial health of your company. Transparent and timely reporting can boost their confidence in your business, potentially attracting new investments and partnerships.

Quarterly GST Filing Requirements

In Singapore, GST-registered companies are required to submit quarterly Goods and Services Tax (GST) returns to IRAS. Both GST returns and payment are due one month after the end of the quarterly accounting period. This is a mandatory compliance measure and ensuring timely and accurate GST filing is essential to avoid penalties and fines.

Regular bookkeeping services are indispensable tools for a company in Singapore, providing a means to meet regulatory requirements, manage finances effectively, and monitor performance. By embracing the principles of transparency and accountability, companies can make informed decisions, stay competitive in the bustling Singaporean market, and drive long-term success.

Healthy and growing businesses are highly recommended to have if not monthly financial reporting, quarterly ones that will help with managing the company better.

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• Share Certificates in Singapore: Overview and Legal Considerations 
• Tout comprendre sur fiscalité des entreprises à Singapour en 2024 
• Is Now the Perfect Time to Invest and Expand Your Business in Hong Kong?
• Work Permit Quota System in Singapore: A Concise Guide for Small Business Owners
• Navigating PDPA Compliance: Comprehensive Package by MBiA & ResGuard Solutions Partnership

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About MyBusiness in Asia – MBiA

We are a tech multi-disciplinary advisory firm providing accounting, tax and corporate secretarial solutions to entrepreneurs, startups and SMEs for all their business matters.

Our experts help you to understand all aspects of doing business in Asia. Feel free to reach out to know more.

The post 3 Reasons Why Regular Bookkeeping is Beneficial for your Company appeared first on MyBusiness in Asia.

Networking for Your Entity or Business through Events

When you run a business outside of your own country, you might feel isolated and lack the information to carry on. Therefore, you can join networking events to connect with all kinds of companies and people to find potential business opportunities.

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About MyBusiness in Asia – MBiA

We are a tech multi-disciplinary advisory firm providing accounting, tax and corporate secretarial solutions to entrepreneurs, startups and SMEs for all their business matters.

Our experts help you to understand all aspects of doing business in Asia. Feel free to reach out to know more.

There are different types of events, from small to big and casual to professional. You can always choose one based on its theme and business industry.
There are also many benefits to joining networking events, but the following are some of the most important:

• Increased business opportunities;
• Increased publicity of your company;
• Market insights;
• New connections with people who have different backgrounds, and;
• Connections in person so you can receive quick feedback and a new perspective.

Furthermore, networking can be a source of growth both professionally and personally. As a businessperson, you can brush up on skills when presenting your company/products. Meanwhile, as an individual, you can meet new people and create friendships.

Understand the Chambers of Commerce, their Events, Memberships and Goals

The most effective way to extend your network is to join a Chamber of Commerce. They can be based on your nationality, where your investment capital comes from, or a new market you would like to enter.

A Chamber of Commerce is a group of businesses that work together for their mutual interests. Each Chamber of Commerce will elect its own board of directors or executive council and decide which goals to pursue. It may influence pro-business policies by lobbying legislators.

Chambers also organize regular events and seminars and bring opportunities for their members to connect with others and develop more local knowledge.

As a downside, membership fees can be expensive. In addition, there is a chance that the atmosphere of the chamber will not suit you. Also, some chambers have specific conditions of membership. For example, the Japanese Chamber of Commerce asks all member companies to have capital from Japan. Alternatively, if there is no funding from Japan, the company is asked to present a work permit for a Japanese employee.

Indeed, some Chambers of Commerce require to have a proper link to the country they are representing. Therefore, it is important to do some research before you commit to being a member. You can always check each chamber’s website and LinkedIn page for their activities and updates.

Aim for Events organized by Private Organizations

Alternatively, you can look up events organized by private organizations to grow your business network. They usually do so based on specific topics and bring guest speakers to share deeper knowledge before networking.

Therefore, it would be easy for you to select events based on your interests and business category. However, it is worth remembering that these events might require an entrance fee and your personal information. Moreover, you might need to frequently check the event information from LinkedIn or their own website since these events can be more spontaneous and irregular.

Last Advice before Jumping in your Next Event

To sum up, there are many advantages to attending networking events, such as fostering a sense of community, meeting new people, and finding new perspectives. You can easily find suitable events online which will maximize your business opportunities.

At first, you might feel shy and nervous to speak to strangers. But the more you get out of your comfort zone by doing so, the more you will develop your networking skills. It might help you to keep in mind that everyone at networking events feels the same self-consciousness and has the same motivation, which is to extend their business connections.

If you appreciate our content, you will also appreciate our other articles:

• Trends and View of the Startup Environment in Hong Kong
• Understand how the ONE Pass and how to apply for this special Pass in Singapore.
• Apply for an EP in Singapore and understand the new COMPASS framework.
• Learn everything about the Stamp Duty for shares and calculator in Singapore
• Making Sense of the Dividends Taxation and Regulations in Singapore

The post How to Extend your Business Network with Events appeared first on MyBusiness in Asia.

The role of a company secretary in Hong Kong

A company secretary plays a complex, multi-faceted and very important role within a company or organization.

The company secretary is the company’s named representative on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law. It is also their responsibility to maintain company records, such as lists of directors and shareholders, and annual accounts.

The company secretary is mainly responsible for arranging meetings, preparing minutes of meetings of the company, maintaining statutory books, filing statutory returns with the Companies Registry.

It also has the responsibility of ensuring compliance with the statutory and stock exchange requirements, registering share transfers, monitoring changes in relevant legislation and the regulatory environment, and taking appropriate action. To that end, it will be liaising with lawyers and auditors and government bodies.

Who can be company secretary?

In Hong Kong, according to Section 474 of the Companies Ordinance (Cap.622) provides that every company must have a company secretary. There may, however, be joint secretaries. The sole director of a private company cannot be appointed also as the company secretary of the company.

A private company with only one director cannot appoint as company secretary a body corporate the sole director.

The company secretary must be a Hong Kong resident or a body corporate having its registered office or place of business in Hong Kong.

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About MyBusiness in Asia – MBiA

We are a tech multi-disciplinary advisory firm providing accounting, tax and corporate secretarial solutions to entrepreneurs, startups and SMEs for all their business matters.

Our experts help you to understand all aspects of doing business in Asia. Feel free to reach out to know more.

A company secretary should have well knowledge and experienced to ensure the ability to commit the jobs mentioned above.

The roles and responsibilities of company secretaries in Hong Kong have increased substantially and become more complex as demands for better corporate governance have grown.

If you have a good company secretary, it can help you to cut costs associated with acquiring your own office, register the company faster, and enjoy the services of a professional company secretary, and your company will probably achieve a higher valuation.

MyBusiness in Asia’s responsibilities and offering for corporate secretary services

We have extensive experience helping our clients with all aspects of corporate secretarial services in Hong Kong, from company establishment to annual maintenance filings and other filings and coordination with the Hong Kong Companies Registry and Business Registration Office to the deregistration and winding up process.

Below is a list of general secretarial services we provide:

• Acting as name company secretary of the Hong Kong company with MyBusiness in Asia
• Preparing annual returns and corresponding filings with the Companies Registry
• Preparing documents in relation to the annual general meeting
• Keeping and updating statutory books and records
• Preparing documents in relation to share transfers and filings with the Stamp Office for stamping
• Preparing documents and corresponding filings with the Companies Registry in relation to the following:

1. Change of director and/or company secretary
2. Change of registered office address
3. Change of name
4. Share allotment
5. Consolidation or subdivision of share capital

If you appreciate our content, you will also appreciate our other articles:

• Trends and View of the Startup Environment in Hong Kong
• Understand how the ONE Pass and how to apply for this special Pass in Singapore.
• Apply for an EP in Singapore and understand the new COMPASS framework.
• Learn everything about the Stamp Duty for shares and calculator in Singapore
• Making Sense of the Dividends Taxation and Regulations in Singapore

The post How Important is a Company Secretary in Hong Kong? appeared first on MyBusiness in Asia.

According to the Companies Ordinance (CO), a company incorporated in Hong Kong is required, unless exempted, to hold an annual general meeting (“AGM”) within a prescribed timeframe. Additionally, general meetings other than the AGM may be held as necessary.

Change to the Companies Ordinance

However, on January 27, 2023, the Companies Amendment Ordinance 2023 (“Amendment Ordinance”) was gazetted and became effective on April 28, 2023. This Amendment Ordinance now allows companies incorporated in Hong Kong to conduct fully virtual general meetings or adopt a hybrid format.

The purpose of the Amendment Ordinance is to modernize the CO and the Companies (Model Articles) Notice (Cap. 622H) (“Model Articles”) to explicitly address the scenario of Hong Kong companies holding fully virtual general meetings without the need for physical presence, as well as hybrid general meetings.

The newly introduced section 583A of the CO allows companies to hold general meetings in three ways:

1. At a physical venue (referred to as a physical meeting).
2. Through virtual meeting technology (referred to as a fully virtual meeting).
3. In a combination of a physical venue and virtual meeting technology (referred to as a hybrid meeting).

Under section 584 of the amended CO, companies are permitted to hold general meetings at two or more locations using Virtual Meeting Technology. This technology enables members who are not physically present at the same place to listen, speak, and vote during the meeting.

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About MyBusiness in Asia – MBiA

We are a tech multi-disciplinary advisory firm providing accounting, tax and corporate secretarial solutions to entrepreneurs, startups and SMEs for all their business matters.

Our experts help you to understand all aspects of doing business in Asia. Feel free to reach out to know more.

Virtual Meeting Technology is defined as “a technology that allows a person to listen, speak, and vote at a meeting without being physically present.” Therefore, Hong Kong companies now have the flexibility to hold general meetings using Virtual Meeting Technology only, at a physical venue only, or in a hybrid mode, combining both virtual and physical methods.

The cases in which changing the Articles of Association are necessary

If a Hong Kong company’s Articles of Association merely state a place or places for conducting general meetings or specify the physical venue in the notice of a general meeting, there is no need to amend the Articles to hold Virtual Meetings. However, amendments to the Articles of Association are required if they:

1. Explicitly prohibit the holding of a general meeting via Virtual Meeting Technology.
2. Mandate that general meetings be held exclusively at a physical venue.

When deciding on the most appropriate meeting mode, companies must consider convening a valid meeting in compliance with the law and their articles, as well as whether a physical meeting remains the most suitable option or if a fully virtual or hybrid general meeting can enhance member engagement and maximize participation.

In conclusion, the Amendment Ordinance brings a significant change to the CO, enabling Hong Kong companies to embrace the benefits of virtual and hybrid general meetings. This modernization will provide companies with increased flexibility and the opportunity to adapt to evolving business practices while ensuring compliance with the relevant regulations.

If you appreciate our content, you will also appreciate our other articles:

• Trends and View of the Startup Environment in Hong Kong
• Understand how the ONE Pass and how to apply for this special Pass in Singapore.
• Apply for an EP in Singapore and understand the new COMPASS framework.
• Learn everything about the Stamp Duty for shares and calculator in Singapore
• Making Sense of the Dividends Taxation and Regulations in Singapore

The post The New Rules of General Meetings for Hong Kong Companies appeared first on MyBusiness in Asia.

A Territorial based tax system

Profits made in Hong Kong will be subject to the local corporate income tax of 16,5% (8.25% for the first 2 million Hong Kong dollars of profits), while the foreign derived profits are exempt from tax in Hong Kong.

As a rule of thumbs, if the company has no economic substance in Hong Kong nor any of its investors and directors are based in Hong Kong, the company could see its profits qualified as offshore.

Indeed, unlike Singapore, Hong Kong does have a real offshore status for companies that have no economic substance in Hong Kong. Additionally, if none of the investors and directors are based in Hong Kong, the company could see its profits qualified as offshore.

It is important for businesses and investors to understand the different tax implications and regulatory environment when operating in different sectors. The onshore status offers more stability and transparency but also comes with higher tax liabilities, while the offshore status offers more tax benefits. However, it can be seen as insecure for potential investors or bring attention from tax authorities.

In order to mitigate risks and concerns, the Hong Kong government in response to the European Union, has refined its Foreign Source Income Exemption (FSIE) regime effective from 1st January 2023.

Onshore status of Profits in Hong Kong

As explained, if the incomes of the company are generated in Hong Kong, they must be taxed in Hong Kong.

Moreover, if the company qualifies for the resident status in Hong Kong, the company will have access to the tax benefits of DTAs (Double Taxation Agreements). Please note that to be tax resident of Hong Kong, the business of the company must be controlled and managed from Hong Kong.

As of today, Hong Kong has signed 43 DTAs with different countries. The purpose of a DTA is to define the tax residence and the place of taxation of an income in order to avoid double taxation of individuals and companies who are resident in the jurisdictions of the signatory countries.

The Profits that Qualify as Offshore

According to the existed territorial source principle of taxation, only profit sourced from Hong Kong is subject to profits tax in Hong Kong. Moreover, passive incomes arisen in or derived from outside Hong Kong and received by a Hong Kong registered company are not subject to tax under the FSIE regime.

Under the new FSIE Regime and for income received in Hong Kong, non–intellectual property passive income may be deemed to be sourced from Hong Kong and subject to Hong Kong profits tax if they are received by a multinational enterprise group entity in Hong Kong which fails to meet the economic substance requirements.

For intellectual property income, they will also be subject to Hong Kong profits tax if they are received by a multinational enterprise group entity in Hong Kong which fails to meet the specific approach.

The conditions are tightened but the offshore status remains in Hong Kong. Indeed, the offshore status is more defined but brings more security and could show more credibility to some groups of companies.

However, if companies are looking for tax optimization in Hong Kong, it is critical to understand the differences between the onshore and offshore status. The offshore status offers great tax benefits, but it is important to not forget that the corporate income tax rate in Hong Kong remains one of lowest in Asia.

If you appreciate our content, you will also appreciate our other articles:

• Trends and View of the Startup Environment in Hong Kong
• Understand how the ONE Pass and how to apply for this special Pass in Singapore.
• Apply for an EP in Singapore and understand the new COMPASS framework.
• Learn everything about the Stamp Duty for shares and calculator in Singapore
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The post Explanation of the Onshore and Offshore Profits in Hong Kong appeared first on MyBusiness in Asia.

This issue covers the critical decision factors in selecting where to start your tech startup in Asia. This includes:

• Incorporation and Set Up Requirements
• Tax Rules
• Immigration and Visa
• Costs and Expenses
• Environmental Risk

You can view the document or download it with the links below!

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Starting a business and securing funding from external investors is an exciting but challenging journey for first-time entrepreneurs. To maximize your chances of success, it is crucial to lay a solid foundation before seeking investment.

By adequately preparing your business, you can demonstrate your commitment, competence, and the potential for growth to potential investors.

Define Your Vision and Business Plan and Scalable Business Model

Before approaching investors, it is vital to have a clear vision for your business and a comprehensive business plan.

Define your long-term objectives, identify your target market, and establish a unique value proposition. Demonstrate how your revenue streams, distribution channels, and cost structures can scale as your customer base expands. Outline your marketing strategies, revenue projections, and growth plans.

A well-thought-out business plan will not only give investors confidence in your vision but also serve as a roadmap for your own decision-making and execution.

Validate Your Market and Product

Investors want assurance that your business idea has a market demand and can generate revenue. Conduct thorough market research to identify your target customers, understand their needs, and validate the potential demand for your product or service.

Gather feedback from potential customers, conduct surveys, and analyze competitor offerings.

Additionally, develop a minimum viable product (MVP) or prototype to showcase the feasibility of your solution. Solid market validation will strengthen your credibility and increase investor interest.

Build a Competent Team

Investors look beyond the idea; they assess the capabilities of the team executing the plan.

Assemble a talented and diverse team that complements your skills and brings expertise to key areas such as technology, marketing, finance, and operations. Highlight the qualifications and relevant experience of your team members.

A strong team with a track record of success demonstrates your ability to execute and adapt to challenges, making your business an attractive investment opportunity.

Protect your Intellectual Property (IP)

Safeguarding your intellectual property is crucial for long-term success. Evaluate your business’s intellectual assets, such as patents, trademarks, copyrights, and trade secrets.

Engage a legal expert to help you file necessary applications and protect your IP rights. Investors value businesses with well-protected IP, as it provides a competitive advantage and minimizes the risk of copycat competitors eroding market share.

Establish Key Performance Indicators (KPIs)

Metrics play a vital role in monitoring the health and progress of your business.

Identify Key Performance Indicators (KPIs) relevant to your industry, such as customer acquisition cost, customer lifetime value, churn rate, and revenue growth. Track and measure these KPIs to showcase your business’s financial and operational performance.

Transparent reporting and a focus on data-driven decision-making instill confidence in investors and demonstrate your commitment to achieving milestones.

Preparing for Company Evaluation

Financial Statements and Projections: To evaluate the financial health and growth potential of your business, prepare accurate and up-to-date financial statements. These statements typically include the income statement, balance sheet, and cash flow statement.

Additionally, provide realistic financial projections that outline revenue, expenses, and profitability over a specified period. Investors will scrutinize these figures to assess the viability of your business and its potential for generating returns.

You can receive help from your accounting team while raising funds or from your corporate services provider to guide you too.

Why Raising Funds Matters

Raising funds from external investors is a significant milestone for first-time entrepreneurs. By adequately preparing your business before seeking investment, you can enhance your chances of securing funding and attracting the right investors. Your corporate service provider can also guide you in raising funds

Defining your vision, validating your market, building a competent team, protecting your intellectual property, developing a scalable business model, and establishing key performance indicators are vital steps to position your business for success. Remember, investors are not just investing in your idea; they are investing in your ability to execute and generate returns.

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