Many people register companies in Hong Kong to take advantage of Hong Kong’s low tax rates or offshore tax exemptions.

However, starting in 2019, Hong Kong introduced the Economic Substance (Sectors) Ordinance. Certain types of companies that do not have “genuine business substance” in Hong Kong may face fines and may also be required to report to the tax authorities in their home countries.

💡 If you're not sure whether your Hong Kong company is subject to the Economic Substance Regulations, feel free to add me on WeChat qcygscszk or call 18676749275

What types of companies must meet the economic substance requirements?

Not all Hong Kong companies are subject to these requirements; only those engaged in the following specific industries are required to meet the economic substance requirements:

General trading companies and companies that provide general consulting services are currently not subject to the economic substance regulations.

Three Compliance Requirements That Must Be Met

If your company falls into one of the above categories, it must meet the following three requirements in Hong Kong:

Three Consequences of Noncompliance

Consequence 1: Fine

Consequence 2: Exchange of Tax Information

Information regarding companies that do not comply with the substance-over-form principle will be mandatorily reported to the tax authorities of the shareholders’ home countries (such as the Mainland tax authorities).

This is tantamount to directly telling the mainland tax authorities: “This Hong Kong company has no genuine business operations in Hong Kong; please investigate.”

Consequence 3: Revocation of the Business License (Serious Case)

In cases where a company has repeatedly violated regulations over many years and refuses to rectify the violations, the Hong Kong Inland Revenue Department has the authority to apply for the revocation of the company’s business license.

📌 If you find that your company falls under the applicable category but does not yet meet the requirements, we recommend taking corrective action as soon as possible.
Cell phone: 18676749275 ｜ WeChat: qcygscszk

How to Comply

The compliance requirements for holding companies (the most common type) are relatively low:

• Has a compliant registered address in Hong Kong
• Submit an Economic Substance Return annually

The requirements for intellectual property firms and financial institutions are quite high:

• We need real employees and an office
• Substantive management decisions must be made in Hong Kong

Hands-on advice:
If your company’s primary function is shareholding or fund management, you should consider the following: Are annual meetings held in Hong Kong? Are core decisions made in Hong Kong? If all of these activities take place in mainland China, you will need to restructure your operations or increase the number of activities recorded in Hong Kong.

📞 If you would like a professional team to assist you with economic substance compliance filings or structural adjustments, please feel free to contact Qicaiying.
WeChat: qcygscszk Just send [Assistance].

The Four Core Advantages of Qicaiying’s Hong Kong Company Services

🔹 1. A team of experts to guide you throughout the process

Our team of nearly 400 professionals, comprising senior Hong Kong licensed secretaries, certified public accountants, tax accountants and cross-border business consultants, handles tens of thousands of Hong Kong company registration and maintenance cases annually. We provide ”one-to-one” customized solutions from company structure design (e.g. Mainland-Hong Kong dual entity, VIE structure), name search, document preparation to government filing. We have 3 TCSP licensed secretaries and 1 self-owned Hong Kong CPA firm to ensure that every step of the process is legally compliant and to avoid risks from the source.

🔹 2. digitally empowered, smart and efficient

We have invested tens of millions of dollars to develop our own digital system ”E-Tron”, which realizes the standardization of the whole process and visualization of the progress of Hong Kong company registration, bank account opening, annual review, audit and tax filing, and so on. Customers can track the key nodes such as certificate issuance, bank interview, tax return submission, etc. in real time. The integration of AI intelligent analysis can quickly assess whether your business is suitable for applying for offshore exemption, whether you need to do transfer pricing, and assist in generating the optimal compliance program, so that complex matters are clear and transparent.

🔹 3. Eco-links, extra value

We connect over 500,000+ entrepreneurs with domestic and international associations (e.g. Shenzhen Cross-border E-commerce Association, Hong Kong Chinese General Chamber of Commerce), and regularly organize cross-border salons and seminars on finance and tax law. Registering a Hong Kong company through us is not just about getting a certificate - it is also about linking ecological resources such as green channel for bank account opening, cross-border payment, overseas warehouses, auditing and taxation, etc., which solves the problem of ”not knowing who to look for next after registering”, and creates secondary business opportunities.

🔹 4. Full-cycle accompaniment for worry-free sailing

Our services go beyond ”successful registration” to provide full life-cycle support for Hong Kong companies:

Previously: Free assessment of whether you need a Hong Kong company, recommending the optimal type of entity (Mainland company/Hong Kong company/Offshore company);

Midterm: Assist in completing Hong Kong company registration, bank account opening (HSBC / Overseas Chinese / Dah Sing / CBI and many other green channels), VAT / EIN application;

Late: Annual audits, audit tax returns, offshore exemption applications, CRS compliance, account freezes in case of emergencies, to become a long-term and robust partner for your overseas business. We automatically remind and handle all annual compliance matters on behalf of you on a nodal basis, and you just focus on your business.