Briefly
On 20 December 2024, the Hong Kong authorities gazetted the Corporations (Modification) (No.2) Invoice 2024 (“Invoice“) which introduces Hong Kong’s lengthy awaited inward re-domiciliation regime. The Invoice was launched to the Legislative Council on 8 January 2025 and as soon as enacted, will allow non-Hong Kong integrated corporations to relocate their domicile to Hong Kong, whereas sustaining their authorized identification and enterprise continuity.
The proposed re-domiciliation regime, which permits for inward re-domiciliation solely, gives a mechanism for non-Hong Kong integrated corporations to re-domicile to Hong Kong. It applies to the next varieties of corporations at present specified within the Corporations Ordinance (CO) (or their comparable varieties within the unique domicile):
- Personal corporations restricted by shares
- Public corporations restricted by shares
- Personal limitless corporations with a share capital
- Public limitless corporations with a share capital
Corporations restricted by assure with out a share capital and different varieties of corporations not specified within the CO are excluded.
The proposed re-domiciliation regime in Hong Kong is extra versatile than comparative jurisdictions akin to Singapore because it: (1) doesn’t impose an financial substance check for international corporations to be eligible for the proposed regime (e.g., by way of the full worth of belongings, quantity of income or variety of staff); and (2) is just not restricted to corporations restricted by shares.
An applicant should adjust to the next necessities to re-domicile to Hong Kong:
| Key necessities | Key supporting paperwork / info | |
| 1. | Compliance with legal guidelines of its jurisdiction of incorporationThe legislation of the applicant’s unique place of incorporation should permit for outward re-domiciliation to different jurisdictions and the applicant should adjust to the relevant authorized necessities.The corporate kind below the legislation of the unique domicile have to be the identical or considerably the identical as that of the meant firm kind below the CO. | Authorized opinion of a authorized practitioner who practises the legislation of the place of incorporation of the applicant (“Authorized Opinion“) on (i) and (ii)Affirmation within the re-domiciliation kind on (i) and (ii)Director’s certificates |
| 2. | Minimal interval of incorporationThe applicant should have been integrated for not less than one monetary yr as on the date of utility. | Licensed copy of the certificates of incorporationLegal OpinionDirector’s certificates |
| 3. | IntegrityThere have to be no intention to make use of the re-domiciled firm for illegal functions, or for participating in actions which are towards the general public curiosity or would endanger nationwide safety in Hong Kong. | Affirmation within the re-domiciliation kind |
| 4. | SolvencyThe applicant will probably be solvent (i.e., in a position to pay its money owed throughout the interval of 12 months starting on the applying date).The applicant is just not in liquidation or being wound up and no such continuing is ongoing or pending. | Audited / non-audited monetary statements as at a date no sooner than 12 months previous to the applying dateLegal Opinion on (ii)Director’s certificates on (i) and (ii) |
| 5. | Safety of collectors and shareholders’ consentThe re-domiciliation utility have to be made in good religion and never be meant to defraud the corporate’s present creditor(s).The shareholders should consent to the re-domiciliation both (a) as required below the legislation of the unique domicile or the applicant’s constitutional doc(s); or (b) by a decision duly handed by not less than 75% of the eligible shareholders. | Licensed copies of the constitutional paperwork and the decision duly handed (the place relevant).Affirmation within the re-domiciliation kind on (i) and (ii)Authorized Opinion on (ii)Director’s certificates on (i) and (ii) |
The Registrar of Corporations (“Registrar“) will probably be chargeable for administering and approving functions for re-domiciling to Hong Kong. The federal government has indicated that approvals will usually be granted inside two weeks of receiving all required info and paperwork.
Upon profitable utility, the applicant will probably be registered within the Corporations Register and obtainable for public inspection. The Registrar will subject a certificates of re-domiciliation to the applicant, from which date the re-domiciliation will take impact.
The re-domiciled firm will probably be required to offer proof of deregistration of their unique place of domicile to the Registrar inside 120 days from the date of re-domiciliation. Failure to take action throughout the specified time might end result within the registration in Hong Kong being revoked.
Authorized impact
For the needs of the legal guidelines of Hong Kong, a re-domiciled firm will probably be thought to be an organization integrated in Hong Kong with impact from its re-domiciliation date. A re-domiciled firm would have the identical rights and obligations as every other Hong Kong integrated firm of its sort and be required to adjust to the related necessities below the CO.
No new authorized entity is created by the re-domiciliation (i.e., the re-domiciled firm will retain its unique authorized identification as a physique company and thereby its continuity as a authorized entity). It won’t have an effect on the property, rights, obligations and liabilities nor contractual or authorized processes (together with any authorized proceedings by or towards the international firm) of the re-domiciled firm.
Tax implications
The proposed re-domiciliation regime won’t change the overall tax precept that Hong Kong earnings tax is usually solely chargeable on Hong Kong sourced earnings arising in or derived from a enterprise carried on in Hong Kong.
Though the Inland Income Ordinance will probably be amended to deem a re-domiciled firm to be a Hong Kong integrated firm for tax functions, the re-domiciled firm will solely assume Hong Kong associated tax obligations if it additionally carries on a enterprise in Hong Kong.
To offer better certainty over the anticipated Hong Kong tax implications as soon as a re-domiciled firm begins to hold on a enterprise in Hong Kong after the re-domiciliation, new guidelines may also be launched to codify the willpower of allowable deductions for buying and selling inventory, specified varieties of expenditures, and depreciation allowances the place the acquisition befell earlier than the re-domiciliation. To the extent that the re-domiciled corporations are liable to pay international revenue or earnings tax on any deemed achieve or revenue in its unique house jurisdiction because of the re-domiciliation, tax credit may also be permitted (topic to particular situations) to stop double taxation when the achieve or revenue is topic to Hong Kong earnings tax at a future disposal or switch after the re-domiciliation.
In regard to stamp responsibility, because the re-domiciliation course of won’t contain any switch of belongings or change within the helpful possession of belongings, it mustn’t give rise to a cost to Hong Kong stamp responsibility.
Insurance coverage corporations and licensed establishments
The proposed re-domiciliation regime could also be notably enticing to licensed insurers within the insurance coverage sector and licensed establishments (AIs) within the banking sector which had been initially integrated exterior of Hong Kong for regulatory causes.
Below the proposed regime, the Insurance coverage Ordinance and the Banking Ordinance will probably be amended to the impact {that a} re-domiciled licensed insurer or an AI which has fulfilled its obligations of deregistration from its unique domicile will probably be handled as if it had been integrated in Hong Kong and controlled as such.
Insurers and AIs (in addition to AI holding corporations and authorized cash brokers) planning to re-domicile to Hong Kong are required to strategy their respective regulators (i.e., the Insurance coverage Authority and the Hong Kong Financial Authority (HKMA) respectively) in Hong Kong to acquire their non-objection (within the case of insurers) and their approval (within the case of HKMA-regulated entities) earlier than making a re-domiciliation utility.
Along with the Insurance coverage Ordinance and the Banking Ordinance, the Invoice additionally gives for consequential amendments to numerous different monetary services-related laws akin to, for instance, the Securities and Futures Ordinance, the Fee Techniques and Saved Worth Services Ordinance, the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance, and the Monetary Establishments (Decision) Ordinance.
Enterprise teams seeking to re-domicile to Hong Kong ought to plan forward and search skilled assist to totally perceive the authorized and tax implications to the corporate, the enterprise and its administrators and staff, and for a seamless transition with minimal disruption to the enterprise operations.
We now have workplaces globally that can assist you benefit from Hong Kong’s strong regulatory framework, sturdy monetary infrastructure, easy tax regime and nexus to Higher China.
- Company: Reorganization and workplace relocation together with compliance on switch of belongings and liabilities
- Regulatory: Compliance with necessities of (amongst others) the Insurance coverage Authority, the HKMA, Securities and Futures Fee or the Hong Kong Itemizing Guidelines
- Tax: Tax planning to mitigate and keep away from tax leakages arising from exiting the originating jurisdiction and coming into Hong Kong upon re-domiciliation.
- Employment: Relocation of staff and any employment and immigration points
- Mental Property: Registration and upkeep of IP rights; deal with information privateness and cross-border information switch considerations
