Employing in
Hong Kong

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Expanding into
Hong Kong

Expanding to countries such as Hong Kong – which is characterized by a highly-skilled and productive workforce, multifaceted employment and tax laws, a world-renowned infrastructure network and leading sectors in financial services, tourism, trading and logistics, and professional and producer services – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

The legwork and potential red tape can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework.

It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

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Country EOR Guide - Bradford Jacobs

Download our Guide to Hong Kong

Learn all about expanding into Hong Kong and see what we can do to make your expansion easier.

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Download our Guide to Hong Kong

Learn all about expanding into Hong Kong and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
DOWNLOAD GUIDE

Hiring Staff
in Hong Kong

The economy of Hong Kong is a highly developed free-market economy. It is characterized by low taxation, almost free port trade and a well-established international financial market.

Its currency, called the Hong Kong dollar, is legally issued by three major international commercial banks, and is pegged to the US dollar. Interest rates are determined by the individual banks in Hong Kong to ensure that they are market driven. There is no officially recognized central banking system, although the Hong Kong Monetary Authority functions as a financial regulatory authority.

Its economy is governed under positive non-interventionism and is highly dependent on international trade and finance. For this reason, it is regarded as among the most favorable places to start a company.

Hong Kong’s economic strengths include a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves at around US $408 billion as of mid-2017, rigorous anti-corruption measures and close ties with mainland China.

The Hong Kong Stock Exchange is a favorable destination for international firms and firms from mainland China to be listed, due to Hong Kong’s highly internationalized and modernized financial industry. Additional advantages include the city’s capital market in Asia, its size, regulations, and available financial tools, which are comparable to London and New York City.

Hong Kong has also had an abundant supply of labor from the regions nearby. A skilled labor force coupled with the adoption of modern British/Western business methods and technology ensured that opportunities for external trade, investment, and recruitment were maximized. Prices and wages in Hong Kong are relatively flexible, depending on the performance and stability of the economy of Hong Kong. Hong Kong raises revenues from the sale and taxation of land and through attracting international businesses to provide capital for its public finance, due to its low tax policy. According to Healy Consultants, Hong Kong has the most attractive business environment within East Asia, in terms of attracting foreign direct investment (FDI). In 2013, Hong Kong was the third largest recipient of FDI in the world.

As of March 2021, there were over 340 000 SMEs in Hong Kong. They accounted for more than 98% of the total number of enterprises and provided job opportunities to more than 1.2 million persons, about 45% of total employment (excluding civil services).

Most of the SMEs were in the import/export trade and wholesale industries, followed by the professional and business services industry. They accounted for about 46% of the SMEs in Hong Kong and represented about 44% of the SME employment.

In Hong Kong, SMEs are defined as manufacturing enterprises which employ fewer than 100 persons and non-manufacturing enterprises which employ fewer than 50 persons are regarded as SMEs in Hong Kong.

Country:
Hong Kong
Local Currency:
Hong Kong Dollar (HK$)
Time Zone:
Hong Kong Standard Time (GMT+8)
Country Dial Code:
+852
Tax Year:
1 April – 31 March
VAT:
N/A
National Minimum Wage:
HK$37.5 per hour
Taxpayer Identification Number (TIN):
Hong Kong Identity Card (HKID) number
Business Registration (BR) number
eTAX Account
Main trading partners (2021):
China, United Kingdom, India, Switzerland, Netherlands, Chinese Taipei, Singapore, South Korea, and Japan

Hiring Staff
in Hong Kong

The economy of Hong Kong is a highly developed free-market economy. It is characterized by low taxation, almost free port trade and a well-established international financial market.

Its currency, called the Hong Kong dollar, is legally issued by three major international commercial banks, and is pegged to the US dollar. Interest rates are determined by the individual banks in Hong Kong to ensure that they are market driven. There is no officially recognized central banking system, although the Hong Kong Monetary Authority functions as a financial regulatory authority.

Its economy is governed under positive non-interventionism and is highly dependent on international trade and finance. For this reason, it is regarded as among the most favorable places to start a company.

Hong Kong’s economic strengths include a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves at around US $408 billion as of mid-2017, rigorous anti-corruption measures and close ties with mainland China.

The Hong Kong Stock Exchange is a favorable destination for international firms and firms from mainland China to be listed, due to Hong Kong’s highly internationalized and modernized financial industry. Additional advantages include the city’s capital market in Asia, its size, regulations, and available financial tools, which are comparable to London and New York City.

Hong Kong has also had an abundant supply of labor from the regions nearby. A skilled labor force coupled with the adoption of modern British/Western business methods and technology ensured that opportunities for external trade, investment, and recruitment were maximized. Prices and wages in Hong Kong are relatively flexible, depending on the performance and stability of the economy of Hong Kong. Hong Kong raises revenues from the sale and taxation of land and through attracting international businesses to provide capital for its public finance, due to its low tax policy. According to Healy Consultants, Hong Kong has the most attractive business environment within East Asia, in terms of attracting foreign direct investment (FDI). In 2013, Hong Kong was the third largest recipient of FDI in the world.

As of March 2021, there were over 340 000 SMEs in Hong Kong. They accounted for more than 98% of the total number of enterprises and provided job opportunities to more than 1.2 million persons, about 45% of total employment (excluding civil services).

Most of the SMEs were in the import/export trade and wholesale industries, followed by the professional and business services industry. They accounted for about 46% of the SMEs in Hong Kong and represented about 44% of the SME employment.

In Hong Kong, SMEs are defined as manufacturing enterprises which employ fewer than 100 persons and non-manufacturing enterprises which employ fewer than 50 persons are regarded as SMEs in Hong Kong.

Country:
Hong Kong
Local Currency:
Hong Kong Dollar (HK$)
Time Zone:
Hong Kong Standard Time (GMT+8)
Country Dial Code:
+852
Tax Year:
1 April – 31 March
VAT:
N/A
National Minimum Wage:
HK$37.5 per hour
Taxpayer Identification Number (TIN):
Hong Kong Identity Card (HKID) number
Business Registration (BR) number
eTAX Account
Main trading partners (2021):
China, United Kingdom, India, Switzerland, Netherlands, Chinese Taipei, Singapore, South Korea, and Japan
Taxpayer Identification Number (TIN):
The TIN is called BSN and is formed of a 9-digit code (Burgerservicenummer).

The Main Sectors of the Hong Kong Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Financial Services

Hong Kong’s financial services cover a wide range of services, such as asset management, banking, stock brokerage, insurance, and other financial services. The financial services industry in Hong Kong enjoys a “first-mover” advantage in offshore business. Hong Kong has been nominated as the business and international financial hub in the world. The industry also employs around 8% of the territory’s total workforce.

In 2018, Hong Kong was ranked third in Asia, and fifth worldwide as per market capitalization of Hong Kong’s stock market. Moreover, Hong Kong was also ranked as the world’s most active market for initial public offerings (IPOs) in IPOs funds raised in 2018. The stock trading activities and banking facilities render the support to the continued growth of net output in the financial services industry.

This industry contributes around 4% of the territory’s GDP and employs around 6% of the territory’s workforce. This industry can be divided into two categories: inbound tourism and outbound tourism. Inbound tourism includes all the accommodating services, food and beverage services, retail trade, transport, and personal services, pertaining only to the part provided to visitors.

However, outbound tourism covers reservation services and its related activities, cross-boundary passenger transport services, and travel agency, pertaining only to the part provided to Hong Kong residents traveling abroad. According to reports in 2020, the tourism industry has contributed to 0.4% of GDP and 5.9% of total employment.

The trading and logistics industry is the largest among the four pillar industries in Hong Kong. The logistics industry includes planning, executing, and regulating the movement and storage of goods and services from the origins to final consumption. The goods can be raw materials, goods in progress, and finished commodities.

Storage, freight transport, postal, freight forwarding, and courier services are all activities that fall under this type of industry. As a matter of fact, trading firms are closely associated with logistics activities. Therefore, the statistics on the employment situation and economic contribution of trading services are presented together with logistics services.

Concerning the trading and logistics fields, Hong Kong secured the position as the seventh largest trader position worldwide in 2018.

Professional and Producer Services

Another critical pillar in Hong Kong’s economy. The professional services of Hong Kong comprise of technical testing and analysis, legal, accounting, architecture and engineering activities, scientific research and development, auditing, management, and management consultancy activities, information technology-related services, advertising, specialized design, and related services.

Similarly, the producer services include the services for use by other business entities in the local economy, as well as exports of services to companies and individuals. These two industries have also done excellent work in generating value-added of 11.6% of GDP and 15.4% of total employment.

Creative industries are important economic drivers for Hong Kong. They help to increase the innovation capacity of the economy and can be a powerhouse for future economic growth. Hong Kong has developed a leading edge in key areas of creative industries like film, television, music, design, architecture, advertising, digital entertainment, and printing and publishing, etc.

According to the latest statistics, Hong Kong has around 28 780 creative industry-related establishments, with about 136 880 practitioners engaged. In 2020, the value added of creative industries stood at around 4.5% of the Hong Kong’s Gross Domestic Product, and 6.2% of the total employment.

The Main Sectors of the Hong Kong Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Financial Services

Hong Kong’s financial services cover a wide range of services, such as asset management, banking, stock brokerage, insurance, and other financial services. The financial services industry in Hong Kong enjoys a “first-mover” advantage in offshore business. Hong Kong has been nominated as the business and international financial hub in the world. The industry also employs around 8% of the territory’s total workforce.

In 2018, Hong Kong was ranked third in Asia, and fifth worldwide as per market capitalization of Hong Kong’s stock market. Moreover, Hong Kong was also ranked as the world’s most active market for initial public offerings (IPOs) in IPOs funds raised in 2018. The stock trading activities and banking facilities render the support to the continued growth of net output in the financial services industry.

This industry contributes around 4% of the territory’s GDP and employs around 6% of the territory’s workforce. This industry can be divided into two categories: inbound tourism and outbound tourism. Inbound tourism includes all the accommodating services, food and beverage services, retail trade, transport, and personal services, pertaining only to the part provided to visitors.

However, outbound tourism covers reservation services and its related activities, cross-boundary passenger transport services, and travel agency, pertaining only to the part provided to Hong Kong residents traveling abroad. According to reports in 2020, the tourism industry has contributed to 0.4% of GDP and 5.9% of total employment.

The trading and logistics industry is the largest among the four pillar industries in Hong Kong. The logistics industry includes planning, executing, and regulating the movement and storage of goods and services from the origins to final consumption. The goods can be raw materials, goods in progress, and finished commodities.

Storage, freight transport, postal, freight forwarding, and courier services are all activities that fall under this type of industry. As a matter of fact, trading firms are closely associated with logistics activities. Therefore, the statistics on the employment situation and economic contribution of trading services are presented together with logistics services.

Concerning the trading and logistics fields, Hong Kong secured the position as the seventh largest trader position worldwide in 2018.

Professional and Producer Services

Another critical pillar in Hong Kong’s economy. The professional services of Hong Kong comprise of technical testing and analysis, legal, accounting, architecture and engineering activities, scientific research and development, auditing, management, and management consultancy activities, information technology-related services, advertising, specialized design, and related services.

Similarly, the producer services include the services for use by other business entities in the local economy, as well as exports of services to companies and individuals. These two industries have also done excellent work in generating value-added of 11.6% of GDP and 15.4% of total employment.

Creative industries are important economic drivers for Hong Kong. They help to increase the innovation capacity of the economy and can be a powerhouse for future economic growth. Hong Kong has developed a leading edge in key areas of creative industries like film, television, music, design, architecture, advertising, digital entertainment, and printing and publishing, etc.

According to the latest statistics, Hong Kong has around 28 780 creative industry-related establishments, with about 136 880 practitioners engaged. In 2020, the value added of creative industries stood at around 4.5% of the Hong Kong’s Gross Domestic Product, and 6.2% of the total employment.

Commercial Laws in
Hong Kong

Labour Law in Hong Kong

Labor law in Hong Kong is based on both employer and employee protection. The Employment Ordinance is the governing law of employment, and also includes the influence of trade unions and work councils. However, this may vary according to the industry and sector, and it is best to confirm with the Labor Department on what regulation applies.

In Hong Kong, it is common practice for employment contracts to be presented to employees in writing. There are two contract types to choose from – with the main differences between them being the contract length and benefits entitlement.

There is no requirement for an employment contract to be in writing, but it is strongly encouraged by the Labor Department and is common practice. Upon the employee’s request, however, the employer must provide a written document with the terms and conditions of the employment in writing.

If an employment contract is to be in writing, the employee is to be provided with a copy of the signed employment contract, with the following information to be included – wages, the wage period, the length of notice for termination of the employment contract, and any end-of-year payments.

  • Inland Revenue Department (IRD) – the Hong Kong government department responsible for collecting taxes and duties. The IRD is responsible for the administration of Hong Kong ordinances on taxes and duties and the related rules and regulations. They also carry out the following duties:
    • collecting revenue efficiently and cost-effectively
    • providing courteous and effective service to the taxpaying public
    • promoting compliance through rigorous enforcement of law, education, and publicity programs
    • enabling staff to acquire the necessary knowledge, skills, and attitude so that they can contribute their best to the achievement of our vision
  • The Labor Department – The Labor Department is the principal government agency responsible for the execution and coordination of labor administration functions in Hong Kong SAR. Since 2003, the Department has also had a strengthened role in labor policy formulation. In addition to providing comprehensive employment services, the Department enforces labor laws, improves employees’ rights and benefits, fosters harmonious labor relations, and promotes safety and health at the workplace. It also provides services and information to both workers and employers and educates them on labor laws.

Income Tax: Any individual earning an income from Hong Kong must pay local taxes, regardless of their residential status. Income tax is not imposed on an individual’s total income. Instead, there are 3 types of income tax an individual can contribute to:

  • Salaries Tax – income from employment, office, or pensions
  • Profits Tax – income from business or trading profits
  • Property Tax – rental income from immovable property

All individuals are subject to pay Income Tax, the most common being salaries tax. Income tax is to be paid by the individual in an annual tax return.

Income Tax is worked out progressively, according to the employee’s income. Employees are responsible for making their own payments to the tax authorities. Individuals must file an annual tax return, which is issued on the first working day of May and must be submitted within a month from the date of issue.

For more information, download our guide to Hong Kong

Commercial Laws in
Hong Kong

Labour Law in Hong Kong

Labor law in Hong Kong is based on both employer and employee protection. The Employment Ordinance is the governing law of employment, and also includes the influence of trade unions and work councils. However, this may vary according to the industry and sector, and it is best to confirm with the Labor Department on what regulation applies.

In Hong Kong, it is common practice for employment contracts to be presented to employees in writing. There are two contract types to choose from – with the main differences between them being the contract length and benefits entitlement.

There is no requirement for an employment contract to be in writing, but it is strongly encouraged by the Labor Department and is common practice. Upon the employee’s request, however, the employer must provide a written document with the terms and conditions of the employment in writing.

If an employment contract is to be in writing, the employee is to be provided with a copy of the signed employment contract, with the following information to be included – wages, the wage period, the length of notice for termination of the employment contract, and any end-of-year payments.

  • Inland Revenue Department (IRD) – the Hong Kong government department responsible for collecting taxes and duties. The IRD is responsible for the administration of Hong Kong ordinances on taxes and duties and the related rules and regulations. They also carry out the following duties:
    • collecting revenue efficiently and cost-effectively
    • providing courteous and effective service to the taxpaying public
    • promoting compliance through rigorous enforcement of law, education, and publicity programs
    • enabling staff to acquire the necessary knowledge, skills, and attitude so that they can contribute their best to the achievement of our vision
  • The Labor Department – The Labor Department is the principal government agency responsible for the execution and coordination of labor administration functions in Hong Kong SAR. Since 2003, the Department has also had a strengthened role in labor policy formulation. In addition to providing comprehensive employment services, the Department enforces labor laws, improves employees’ rights and benefits, fosters harmonious labor relations, and promotes safety and health at the workplace. It also provides services and information to both workers and employers and educates them on labor laws.

Income Tax: Any individual earning an income from Hong Kong must pay local taxes, regardless of their residential status. Income tax is not imposed on an individual’s total income. Instead, there are 3 types of income tax an individual can contribute to:

  • Salaries Tax – income from employment, office, or pensions
  • Profits Tax – income from business or trading profits
  • Property Tax – rental income from immovable property

All individuals are subject to pay Income Tax, the most common being salaries tax. Income tax is to be paid by the individual in an annual tax return.

Income Tax is worked out progressively, according to the employee’s income. Employees are responsible for making their own payments to the tax authorities. Individuals must file an annual tax return, which is issued on the first working day of May and must be submitted within a month from the date of issue.

For more information, download our guide to Hong Kong

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