Hong Kong Branch Office

It is relatively easy to set up a branch office in Hong Kong, but the branch is at risk of greater liabilities than a limited company as it is not treated as a separate legal entity. Branches in some countries have tax advantages but this is not the case in Hong Kong. Branches will be taxed as a limited company on all income sourced in Hong Kong.

Opening a Hong Kong Branch of a Foreign Company

The disadvantages of a branch office are:

• The parent company is fully liable for the liabilities of the branch
• The branches representatives may be held jointly and severally liable for tax debts
• The financial statements of the parent must be lodged at the Companies Registry
• The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
• Banks and clients may prefer dealing with a Hong Kong company rather than a foreign branch
• A branch is rarely ideal for substantial projects because the parent company runs the entire risk
• Upon registration of a branch, evidence has to be provided of the legal existence of the parent
• Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease

The advantages of a branch office are:

• Less obligations to present accounts than with corporations

Features of a branch office in Hong Kong

A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated, the parent company is fully liable for the branches liabilities.

The branch must have the same name as the parent company.

A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.

Documents required to register a branch

To register a branch, evidence has to be provided of the existence of the parent, certified copies are needed of Articles or Statues and you will also need to provide:

• The names of the directors
• The share capital
• The registered office address
• Names of resident representatives who will act for the company

Various documents will need to be translated, the documents include:

• your parent's registration certificate
• your company's articles of association
• the names of the company's directors and secretary

After your branch is registered

All stationery, order forms and similar documents used by your branch are required to show:

• The place of registration of the parent
• The number with which it is registered
• The legal classification of the company
• The address of its registered office
• The place of registration of the branch, and its registration number

Also the following particulars must be shown at the branch office:

• The company name
• The name of the country in which the company is incorporated
• The parent of the branch has limited liability