7月1日837号令生效后，跨境卖家三类香港公司风险分层：谁最危险？ -

Since July 1, two perspectives have been particularly prominent in the cross-border industry.

One is anxiety:

“Now that Order No. 837 has taken effect, can individuals still register a Hong Kong company?”

“I used to run an Amazon store through a Hong Kong company. Could this now be considered a violation of foreign investment regulations?”

“Will it become increasingly difficult to file for ODI registration?”

Another is luck:

“I registered my Hong Kong company before July 1—does that mean I’m in on it?”

“The Hong Kong company is just the entity behind the online store; it hasn’t made any actual capital contributions, so I don’t think this counts as an overseas investment, right?”

“The money’s all in overseas payment accounts—no one should be able to touch it, right?”

Both of these mindsets are prone to going off track.

Order No. 837 is not simply a “ban,” nor does it leave a loophole for cross-border sellers to “operate as they please.”

The message it really sends is:

Foreign investments made by domestic enterprises, other organizations, and individual residents will gradually come under a more clearly defined regulatory framework.

According to the “Regulations of the State Council on Foreign Investment” (State Council Decree No. 837), foreign investment refers to activities in which an investor, through the contribution of assets or equity interests, the provision of financing or guarantees, or other means, directly or indirectly acquires ownership, control, operational management rights, or other related interests in enterprises or assets in other countries or regions; The term “investor” explicitly includes enterprises, other organizations, and individual residents within China. These Regulations shall take effect on July 1, 2026.

In response to a reporter’s question, an official from the Ministry of Commerce also explicitly stated that the management of investments made by investors in Hong Kong, Macao, and Taiwan shall be carried out in accordance with these regulations.

This means that setting up a Hong Kong company as an individual, personally controlling a Hong Kong business entity, or having a Hong Kong company receive payments from cross-border e-commerce platforms can no longer be viewed through the lens of the old mindset that “no one is watching, it’s invisible, and it doesn’t count as an investment.”

But it should also be made clear that:

At present, further details are still needed to clarify how individual residents operating overseas entities should register and file reports, as well as how to handle existing Hong Kong companies.

Therefore, the most important thing cross-border sellers should do right now is not to let anxiety get the better of them, nor to continue hoping for the best, but to first determine exactly which category their Hong Kong company falls into.

Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations—all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan).

I. The Most Significant Change in Order No. 837: Individuals Are No Longer a Regulatory Blind Spot

In the past, many cross-border sellers registered Hong Kong companies using their personal identities.

The reason is simple:

Quick registration;

Low cost;

Makes it easy to connect to platforms such as Amazon, TikTok, and independent websites;

Makes it convenient to receive payments from overseas;

You don't need to set up a complex ODI architecture right from the start.

Many business owners assume that:

“I’m an individual registering a Hong Kong company; this isn’t a mainland company making an overseas investment, so it shouldn’t fall under the jurisdiction of the ODI.”

However, following the issuance of Order No. 837, this understanding needs to be revised.

This is because the regulations explicitly include “individual residents” within the scope of investors.

This does not mean that all Hong Kong companies registered by individuals will be penalized immediately, nor does it mean that all cross-border online stores must immediately re-register as corporate ODI entities.

But it at least illustrates one thing:

It is no longer a regulatory gray area for individual residents to hold overseas business entities, control overseas assets, or undertake overseas business through Hong Kong companies.

What will really matter in the future is not whether you used 1 Hong Kong dollar or 1 U.S. dollar to register your company, or whether any funds were actually transferred.

Instead:

Have you acquired control of an overseas company?

Have you conducted business through a Hong Kong company?

Is it possible to receive platform payouts through a Hong Kong company?

Are there any retained earnings through the Hong Kong company?

Have you used a Hong Kong company to circumvent mainland China tax obligations, foreign exchange regulations, or the reporting of tax-related information to online platforms?

This is what regulators are really concerned about.

II. Why Are Hong Kong Companies Owned by Cross-Border Sellers Being Re-Evaluated?

Order No. 837 did not appear in isolation.

This is actually the result of several changes occurring simultaneously.

First, the submission of tax-related information by platforms has become routine.

Decree No. 810 of the State Council, the “Regulations on the Reporting of Tax-Related Information by Internet Platform Enterprises,” requires internet platform enterprises to report tax-related information—such as identity information and income data—regarding business operators and employees on their platforms to the tax authorities.

A supporting announcement from the State Taxation Administration also specifies that platform companies must submit the identity information of business operators and workers on their platforms, as well as revenue data for the previous quarter, within the month following the end of each quarter; the first submission of such identity and revenue information is scheduled for October 1–31, 2025.

Second, tax issues related to individual residents’ overseas income and overseas-controlled enterprises will receive greater attention.

Article 8 of the *Individual Income Tax Law* stipulates that where an enterprise established in a country or region with a significantly lower effective tax rate is controlled by a resident individual, or is jointly controlled by a resident individual and a resident enterprise, and where, in the absence of a reasonable business need, the profits attributable to the resident individual are not distributed or are distributed in reduced amounts, the tax authorities have the right to make tax adjustments using reasonable methods.

Third, the information barriers between overseas accounts, platforms, payment tools, banks, and tax filings are breaking down.

In the past, many sellers used Hong Kong companies as “shells for receiving payments,” based on the core principle of information fragmentation:

Platform data remains on the platform;

Funds in the payment collection tool;

The goods are shipped from within the country;

The company is based in Hong Kong;

The boss is in mainland China;

Tax filing is a whole different story.

But now, this fragmented line of reasoning is becoming increasingly difficult to reconcile.

Therefore, what Order No. 837 truly brings is not that “a certain action can no longer be taken,” but rather that cross-border business is entering a new phase:

The entities, funds, flow of goods, platform data, and tax filings must be mutually consistent.

III. Hong Kong companies owned by cross-border sellers can generally be divided into three categories

Different types of Hong Kong companies carry different risks and require different corrective measures.

Category 1: “Hong Kong buyer companies” exporting under Code 0110 within the mainland”

This is the highest-risk category.

Common structures include:

Domestic factories or trading companies export via general trade under code 0110;

According to the customs declaration documents, the Hong Kong company is the overseas buyer;

After the goods are exported, the platform’s sales profit remains with the Hong Kong company;

Domestic companies export at lower prices, while Hong Kong companies sell at higher prices;

The profit margin is retained in the Hong Kong company or in offshore collection vehicles.

On the surface, this appears to be normal international trade.

However, if, in practice, the Hong Kong company is effectively controlled by a mainland-based owner, the operational team is based on the mainland, and product selection, procurement, pricing, advertising, and customer service are all handled on the mainland—with the Hong Kong company serving solely as the entity for receiving payments and retaining profits—then the risks are very clear.

The regulator will ask a few questions:

Why do most of the profits stay in Hong Kong?

What functions do Hong Kong companies perform?

Do Hong Kong companies have actual staff, office space, and business decision-making processes?

Do low-priced exports by domestic companies comply with the arm’s-length principle?

What is the basis for pricing between Hong Kong companies and mainland companies?

Is there a legitimate business need for retaining profits in Hong Kong?

If these issues are not adequately addressed, they can easily give rise to three types of risks:

First, risks related to related-party transactions and transfer pricing;

Second, the risk of being treated as a CFC due to profits being retained in the Hong Kong company over the long term;

Third, foreign exchange and tax risks associated with capital repatriation, foreign exchange settlements for trade in services, and funds received through personal bank accounts.

It’s not that there’s absolutely no room for improvement at these companies, but we can no longer simply brush the issue aside by using the phrase “Hong Kong buyers.”

What really needs to be addressed is:

Contract Chain;

Price Chain;

Functional Risk Analysis;

Audit Report;

Explanation of Profit Allocation;

Logic Behind Domestic and Overseas Tax Filing.

If a Hong Kong company essentially serves as a profit pool rather than engaging in substantive business operations, its structure should be reassessed as soon as possible.

Category 2: Newly Established Platform Stores Operated by Hong Kong Companies

This is the largest category of cross-border sellers.

Especially in the past year or two, many sellers have been registering Hong Kong companies in bulk in order to receive payments from Amazon, TikTok, SHEIN, TEMU, Meikeduo, or their own independent websites.

These companies share the following characteristics:

Low registration costs;

Short history;

Mainly used to link platform stores;

The company has no office or employees in Hong Kong;

The goods are shipped from China;

The operations team is based in mainland China;

Funds are pooled through a third-party payment collection tool;

Many of the accounting, auditing, and tax filing systems have not yet been established.

The most awkward thing about these kinds of companies is that:

It's not as if it has no business at all.

The seller is indeed selling products, has actual orders from the platform, and is generating real income.

But it doesn't operate like a real Hong Kong company.

Since most of the actual business operations are conducted within the mainland, Hong Kong companies primarily serve as platform entities and payment recipients.

The biggest risk for these companies in the future may not necessarily be “immediate noncompliance,” but rather the growing gap in their data.

For example:

No Hong Kong company accounts;

No audit report;

There is no correspondence between platform revenue and the company's financial records;

There are no supporting documents for procurement, logistics, or advertising expenses;

There is no description of the service relationship between the mainland team and the Hong Kong company;

No justification for the retention of profits;

There is no correspondence between domestic tax returns and foreign entities.

One of the most common mistakes many sellers make is:

“The company was just founded not long ago, so don’t worry about it.”

But the newer the company, the more important it is to get the books in order right from the start.

The biggest advantage of setting up a new company in Hong Kong is that it has little historical baggage.

If you keep accurate records, undergo audits, and file tax returns starting from the very first year—clearly documenting platform payments, procurement costs, logistics and advertising expenses, service fees, and retained profits—you’ll be in a much stronger position in the future, whether it comes to bank due diligence, platform audits, or tax audits.

Conversely, if you file zero returns from the start, fail to keep accounting records, mix business and personal transactions on personal bank cards, and make haphazard transfers using various payment methods—only to try to catch up years later—the costs will multiply.

Category 3: Hong Kong Companies Providing Payment Processing Services for Independent E-commerce Sites

This is the most covert—and also the most likely to spiral out of control—type.

Many independent online sellers use Hong Kong-based companies to sign up for Stripe, PayPal, credit card processing services, or other payment processing tools, and then sell to consumers in the U.S., Europe, or other overseas markets through their own websites.

At first glance, independent websites offer more freedom than marketplaces:

No restrictions in the Amazon Seller Central dashboard;

No platform enforces mandatory settlement;

Domain names, ad accounts, payment accounts, and logistics channels can be decentralized;

Sales data isn't necessarily concentrated on a single platform;

Funds can also be transferred through multiple payment collection tools.

But precisely because of this, the compliance risks associated with independent websites are more complex.

Sellers with independent online stores often face a “mismatch in the four key metrics”:

Unclear cargo flow;

Cash flow is unclear;

The contract workflow is unclear;

The data flow is unclear.

For example:

The shipment was sent via domestic small-package service, but the customs declaration documents were incomplete;

Payments are received by a Hong Kong company, but the operations team is based in mainland China;

The ad account is registered under an individual or another entity;

There are no complete supporting documents for logistics, procurement, returns, or customer service;

Some of the funds were transferred to personal accounts or private accounts overseas;

Issues related to overseas sales tax, value-added tax, economic substance, and permanent establishments have long remained unresolved.

The biggest problem with these types of companies is not the audit of a single Hong Kong company, but rather the lack of verifiability throughout the entire business chain.

If you add to this the receipt of payments in the form of cryptocurrency, funds left in overseas personal accounts, the commingling of business and personal funds, and failure to report overseas income for tax purposes, the risks become even higher.

The OECD also clarifies in its Crypto Asset Reporting Framework (CARF) that CARF is designed to facilitate the automatic exchange of tax-related information on crypto assets and prevent virtual assets from undermining global tax transparency.

Therefore, sellers with independent websites should never mistakenly assume that:

“If it's not a store on a platform, nobody will know about it.”

“As long as your money is in PayPal, Stripe, or USDC, it's safe.”

“Since the website is ours, the data won’t be visible.”

What will really matter in the future isn’t how well you hide, but whether you can explain your business clearly.

IV. How should the three types of Hong Kong companies be handled, respectively?

Category 1: 0110 Counterparty Companies—Priority Should Be Given to Addressing Profit Attribution

If your Hong Kong company is the buyer for a mainland exporter and retains profits over the long term, you should focus on the following three issues:

First, are the export prices of domestic companies reasonable;

Second, does the Hong Kong company actually assume responsibility for functions and risks related to procurement, sales, inventory, marketing, exchange rates, and credit;

Third, is there a reasonable business purpose for retaining profits in Hong Kong?

If a Hong Kong company is merely a nominal buyer and all actual business decisions are made on the mainland, an assessment of related-party transactions and profit attribution should be conducted as soon as possible.

In this situation, it is not enough to simply catch up on the audits for the Hong Kong company.

It is also necessary to review, at the same time, domestic corporate income tax, individual income tax, foreign exchange, customs valuation, and related-party transactions for the same period, among other matters.

In a nutshell:

Companies like these can no longer serve as “profit pools”; they must return to their true functional roles.

Category 2: Hong Kong-based platform stores—you must promptly provide missing financial records and supporting evidence

If your Hong Kong company serves solely as a platform and payment recipient, we recommend that you don’t rush into setting up a complex structure just yet, but instead focus on addressing the basic compliance requirements first.

Key actions include:

Match the platform stores with their corresponding Hong Kong companies;

Organize the transaction history for payment collection tools;

Organize the platform settlement statements;

Organize vouchers for purchasing, logistics, advertising, warehousing, and service fees;

Establish accounting records for a Hong Kong company;

File annual tax returns based on the audit;

Describe the service relationship between the mainland team and the Hong Kong company;

Assess whether the retained earnings are reasonable.

What these companies fear most is not the business itself, but the lack of a chain of evidence.

Selling real products isn't a problem.

The problem is that you claim to be selling goods for real, yet you have no accounting records, no supporting documents, no audits, and no tax filings.

Category 3: Payment processors for independent websites must first implement risk isolation

If an independent e-commerce payment processor has too many historical issues—such as purchasing goods and shipping them under false invoices, procurement without invoices, commingling of business and personal funds, funds left in overseas personal accounts, or long-unresolved overseas sales tax issues—it is not recommended to simply resolve the matter by “submitting an audit report.”

A more realistic approach would be:

First, conduct a historical risk assessment;

Distinguish between existing and new business;

Operate the new business under a clearer organizational structure and set of accounts;

Reorganize the relationships between domain names, payment processing, advertising, logistics, procurement, customer service, and tax filing;

Where necessary, implement a "cut-off" between new and existing assets and isolate risks.

Companies like this cannot rely solely on Chinese regulations; they must also comply with the regulations of the overseas markets where they sell their products.

For example, U.S. sales tax, EU VAT, UK VAT, payment provider KYC requirements, and due diligence on overseas banks can all simultaneously impact a company’s operations.

V. Don’t Let the Anxiety Over “Rushing to Register a Hong Kong Company” Lead You Astray

After Order No. 837 was issued, some sellers began frantically rushing to register Hong Kong companies.

The logic is:

“If you registered before July 1, you should be considered part of the existing base.”

“If you register after July 1, it might be harder.”

“Let's just grab a spot for now.”

This idea is understandable, but it isn't necessarily correct.

This is because what truly determines risk is not the registration date, but how the registration is used afterward.

After you register a Hong Kong company:

No bookkeeping;

Unaudited;

Failure to report payments received from the platform;

Profits are retained long-term—no explanation needed;

Withdraw funds from the payment tool to a personal bank card;

The relationship between the mainland team and the Hong Kong company is unclear;

The Hong Kong company has no substantive functions;

Even if you register before July 1, you won't automatically be safe.

Conversely, if you establish a Hong Kong company after July 1, but your business operations are genuine, your funding is transparent, your accounting records are complete, you are in compliance with tax regulations, and the relationships between your domestic and overseas entities are clear, it may not necessarily be impossible.

Therefore, cross-border sellers shouldn't focus solely on the “registration date.”

Pay even closer attention to:

Why was this company established?

Who's in control?

What kind of business do you run?

Where does the money come from?

Where do the profits go?

How do I file my taxes?

How can you prove that your business is legitimate?

How should we handle multiple due diligence processes from banks, online platforms, tax authorities, foreign exchange regulators, and auditors in the future?

It's not that you can't use a Hong Kong company.

But it can no longer be just a “shell.”

VI. The so-called “simplified channel” cannot be regarded as a definitive policy at this time

The question that concerns many sellers the most is:

Will there be a simplified registration process for individuals operating overseas entities in the future?

Will there be a transition period for cross-border e-commerce sellers?

Will existing Hong Kong companies be allowed to retroactively register?

Is it possible to establish a personal Hong Kong company in compliance with regulations without going through the traditional ODI process for enterprises?

There is a lot of speculation in the market about these issues.

However, as of now, no clear implementation rules have been issued regarding the specific procedures for registration, filing, and handling of existing overseas business entities owned by individual residents.

Therefore, the possibility of “a simplified process” should not be treated as a confirmed policy benefit.

You certainly shouldn’t rush to register a large number of Hong Kong companies just because some intermediaries tell you that “restrictions will be lifted later,” “you should register now,” or “there will be a unified retroactive registration process later.”

For businesses, the safest strategy is not to gamble on policy, but to first do what they can do well:

The subject is authentic;

The business is legitimate;

The accounting records are accurate;

The funds are genuine;

Tax returns are accurate;

The relationship between domestic and international matters is clearly explained.

Even if simplified registration or transitional arrangements are actually introduced in the future, those who can provide complete documentation will still be better positioned to take advantage of the opportunity.

If the books are completely blank, cash flow is chaotic, and the source of profits is unclear, even if there’s an opportunity, you may not necessarily be able to get through the process smoothly.

VII. The 5 Most Important Things Cross-Border Sellers Should Be Doing Right Now

1. First, categorize the Hong Kong companies.

It depends on what kind of Hong Kong company you have:

Buyers of domestic 0110 exports;

Platform store owners;

Payment processor for independent e-commerce sites;

Pure payment collection channel;

Entity retaining profits;

Or has it already become a personal slush fund?

Depending on the category, the corrective measures vary significantly.

2. Clarify the relationships between domestic and foreign entities

Who is in charge of procurement?

Who is in charge of operations?

Who is in charge of advertising?

Who is in charge of customer service?

Who is responsible for warehousing and logistics?

Who bears the inventory risk?

Who reaps the lion's share of the profits?

Who signs the contract with the platform?

Who has a relationship with the client?

The sooner these issues are addressed, the easier it is to identify risks.

3. Complete the accounting and auditing for the Hong Kong company

As long as a Hong Kong company is in operation, it should not file zero-revenue tax returns for extended periods.

Platform transaction volumes, payment tool transaction volumes, procurement, logistics, advertising, and service fees must all be entered into the accounting system.

An audit report is not a mere formality; it is an important document for verifying the accuracy of business transactions in the future.

4. Assess Retained Earnings and CFC Risks

If profits remain with a Hong Kong company for an extended period and the owner is a Chinese tax resident, it is important to determine whether there is a legitimate business need for not distributing those profits.

In particular, the risk increases significantly when a Hong Kong company has no substantive personnel, no reinvestment plans, and no genuine expansion plans, yet retains large amounts of profits over a long period.

5. Stop mixing public and private affairs

Please stop casually withdrawing funds from your Hong Kong company’s account into your personal bank account.

Do not mix company revenue, the owner’s personal income, collections on behalf of others, and payments to suppliers.

The foundation of future compliance is the separation of corporate funds and personal funds.

Conclusion: Order No. 837 is not the end, but rather a new starting point for cross-border compliance

Decree No. 837 does not prohibit cross-border sellers from expanding into overseas markets.

On the contrary, the regulations themselves emphasize that the state supports investors in conducting foreign investment activities in accordance with market principles and the law, making their own decisions, assuming their own risks, and bearing their own profits and losses.

What has truly been curtailed is the gray area that used to involve “using Hong Kong companies as shells, hiding money through payment collection tools, mixing payments through personal bank cards, and diverting profits through low-priced exports.”

In the future, the competition among cross-border sellers won’t be about who registers fastest or who sets up the most convoluted business structure, but rather whose business can stand up to scrutiny.

Can Hong Kong companies still be used?

It works.

But it needs to evolve from a “shell company for receiving payments” into a “genuine business entity.”

Will the ODI be a waste of time?

No.

However, companies need to reassess whether their overseas entities serve as investment structures, trading entities, platform entities, or simply payment collection tools.

Will there be a blanket ban on individuals registering Hong Kong companies?

At this point, that interpretation is not valid.

However, compliance requirements regarding individuals’ control over overseas companies, overseas accounts, and overseas profits will only become increasingly clear.

One sentence summary:

Decree No. 837 does not aim to dismantle all Hong Kong companies, but rather to dismantle those “cross-border illegal structures” whose funding, profits, and actual business operations cannot be accounted for.

For sellers who are still using Hong Kong companies for cross-border e-commerce, the most important thing to do is not to worry or rush to buy a shell company, but to immediately take stock of their situation:

Is your Hong Kong company a business entity or a risk entity?

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