Unlocking new paths: Hong Kong's company re-domiciliation regime

Background

Hong Kong has consistently been a top choice for businesses due to its strategic location, robust legal framework, and business-friendly environment. Recognising the evolving needs of the global business community, the Hong Kong government introduced the company re-domiciliation regime through the Companies (Amendment) (No. 2) Bill 2024. This legislative move is part of a broader strategy to enhance Hong Kong's attractiveness as a global business hub.

The regime was developed in response to increasing demand from companies seeking a straightforward and cost-effective way to relocate their domicile to Hong Kong. Traditional methods of re-domiciliation often involve complex and expensive judicial procedures, which can be a significant barrier for businesses. By simplifying this process, Hong Kong aims to attract more international companies, thereby boosting its economy and creating new opportunities for local professionals and service providers.

Key benefits 

• Legal continuity – Your company retains its legal identity without the need for winding up
• Business stability – All property, rights, obligations, and liabilities remain unaffected during the transition
• Tax advantages – Hong Kong offers unilateral tax credits to eliminate double taxation for eligible.  As there will not be any transfer of assets or change in the beneficial ownership of assets throughout the re-domiciliation process, no stamp duty implication will arise from a re-domiciliation.
• Strategic positioning – Relocating to Hong Kong allows companies to leverage the city's strategic location, robust legal system, and access to international markets

Tax considerations 

Non-Hong Kong-incorporated companies that fulfil the requirements on company background, integrity, member and creditor protection, solvency and so on may apply to re-domicile to Hong Kong while maintaining their legal identity as a body corporate and ensuring business continuity.

Hong Kong does not impose tax based on residence or domicile.  Under section 14 of the Inland Revenue Ordinance, any persons, including corporations, partnerships, trustees, and bodies of persons, carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession, or business.

However , the Originating Jurisdiction may impose some form of exit tax, capital gains tax or stamp duty. Companies that re-domicile to Hong Kong will be subject to the international tax compliance agreements that Hong Kong has entered into (such as Common Reporting Standard and Country by Country Reporting). These agreements are being imposed globally and an impetus to move from the Originating Jurisdiction to Hong Kong.

Eligibility Criteria 

Companies seeking re-domiciliation must meet requirements related to company background, integrity, member and creditor protection, and solvency. To qualify for re-domiciliation, a company must:  

• Ensure that the law of its original jurisdiction permits re-domiciliation.  
• Maintain the same or substantially similar company type upon registration in Hong Kong, i.e.:
• a public company limited by shares
• a private company limited by shares
• a public unlimited company with a share capital
• a private unlimited company with a share capital   
• Pass the first financial year and demonstrate solvency that ensuring it can meet its financial obligations for at least 12 months post-application
• Obtain member and creditor consent, where applicable, to apply in good faith
• Comply with Hong Kong’s corporate governance and regulatory framework, including financial reporting and tax

The application process

• Via a “one-stop approach”, the Companies Registry will be responsible for administering and approving applications for re-domiciling to Hong Kong. The business registrations will also be applied with such company re-domiciliation applications.
• Submit application form and key supporting documents and the fees either in electronic form or paper form.
• After receiving requisite and sufficient information and documents, the application will be approved around 2 weeks.
• Upon successful application, the applicant will be registered in the Companies Registry and available for public inspection and a certificate of re-domiciliation will be issued. The re-domiciliation will take effect on the date on which the certificate of re-domiciliation is issued.
• The applicant will be required to be de-registered in its original place of incorporation/jurisdiction and provide such evidence to the Companies Registry within 120 days to complete the re-domiciliation process.  Otherwise, the registration in Hong Kong will be revoked.

Conclusion

Hong Kong's new re-domiciliation regime represents a significant step in strengthening its position as a global business and financial hub. By offering a streamlined process for foreign companies to relocate their domicile, Hong Kong continues to attract international businesses seeking a stable, efficient, and strategically advantageous environment for their operations.

This regime not only underscores Hong Kong's commitment to maintaining a competitive business landscape but also provides companies with the flexibility and continuity needed to thrive in a dynamic global market.

Contact us today to learn more about the re-domiciliation regime in Hong Kong and discover how Vistra can support your business in expanding and operating anywhere in the world.