Types

Subsidiary Company

Branch Office

Representative Office

Entity Name

Need not be the same as parent company

Must be the same as the foreign head office

Must be the same as the foreign head office

Allowed Activities

Can conduct all business activities

Must be the same as the foreign head office

Can only conduct market research or coordinating activities

Suitable For

For local or foreign companies that wish to expand their operations in Hong Kong and/or further expansion into the China and other Asian market

For foreign companies that wish to expand their operations in Hong Kong

For foreign companies who wish to set up temporary vehicle in Hong Kong to conduct research and act as liaison office

Disadvantages

Continuing compliance obligations eg Financial Reports, Audit, AGMS, etc

Continuing compliance obligations eg Financial Reports, etc

It is a temporary vehicle and cannot generate revenue

Ownership

Can be 100% foreign or locally owned

Owned 100% by the foreign head office

Just a temporary administrative arrangement

Separate Legal Entity

Yes

No

No

Cap on Number of Members

Yes, max 50

Not Applicable

Not Applicable

Minimum Setting up Requirement

Minimum one shareholder that can be an individual or a corporate entity (100% local or foreign shareholding allowed). Must have at least one individual director

Must have one Hong Kong Resident Agent/Representative

No special requirements

Limited Liability

Liabilities limited to subsidiary

Liabilities extend to the foreign head office

Liabilities extend to the foreign head office

Need for Audited Accounts

Need to arrange to its annual financial statements audited by a Hong Kong licenced accounting firm.

Only need to be audited if the financial statements of the foreign head office is also required to be audited.

No

Filing of Accounts with CR/IRD

No/Yes

No/Yes

No/No

Tax Treatment

May be qualified as Hong Kong resident entity and hence may be able to enjoy local corporate tax benefits

Generally taxed as non-resident entity, local tax benefits not available

Not Applicable

Access to Tax Treaty

Generally, have access to tax treaties

Generally, no access to tax treaties

Not Applicable

Tax Benefits

Eligible to be taxed at the two-tier tax rates

Eligible to be taxed at the two-tier tax rates

Not Applicable

Bank Account

Can open bank account in Hong Kong

Can open bank account in Hong Kong

Can open bank account in Hong Kong in the name of the foreign parent company

Validity Period

Perpetually until deregistered

Perpetually until deregistered

No restrictions on the duration

Staff Hiring

No restrictions on hiring local or foreign staff

No restrictions on hiring local or foreign staff

No restrictions on hiring local or foreign staff

Appointment of Officers

Must appoint at least one individual director and one company secretary

Must appoint at least one local authorized agent.

No special requirements

Appointment of Designated Rep.

Must appoint a local resident to act as the designated representative

No

No

Governing Body

CR

CR

IRD