Hong Kong originally did not have a foreign investment law, but the Hong Kong government announced in its 2023-24 fiscal budget that it would reinforce the Capital Investment Entrepreneur Scheme, which was abolished in 2015.
The "Capital Investment Entrepreneur Scheme" is an investment immigration system that provides the right to live in Hong Kong if you invest a certain amount of money in the city.
It was first introduced in October 2003 (HK$6.5 million, about US$830,000 based on the minimum investment) and was abolished in January 2015 (HK$10 million, about US$1.3 million).
Plans for its re-implementation were announced through this budget.
The detailed implementation plan has yet to be announced, but the minimum investment standard is expected to rise from HK$10 million (about US$1.3 million) as of the standard just before its abolition in 2015.

Tax Incentives

There are no incentives such as tax cuts, subsidies, land provision, and rent reduction provided to foreign companies, and the same standards and laws as Hong Kong companies are applied.

Support for R&D Businesses

Background:

R&D can lead to the development of new products and services, serving as a valuable resource for innovative science and technology.
According to the Hong Kong Statistical Office, as of 2019, R&D projects in Hong Kong amounted to HKD 26.6 billion (about US$3.44 billion), accounting for 0.99% of the total GDP.
To revitalize Hong Kong's R&D sector, the government is actively supporting it by providing subsidies.

Support Policies:

The Hong Kong government established "The Innovation and Technology Venture Fund" (ITVF) to enhance investment capabilities in science and technology innovation, providing matching investments for Hong Kong start-ups, with significant private investment capped at up to HK$50 million (about US$6.48 million). As of 2021, the Innovation and Technology Fund (ITF), which supports college student start-ups, product patent applications, and technology research, provided a total of HK$4 billion (about US$518 million) in funding.
This accounted for the largest portion of R&D activities, amounting to HK$1.3 billion (about US$168.4 million). In the fourth quarter of 2020, two InnoHK innovative R&D platforms were established to advance the global science and technology research center.
Discussions about the third InnoHK platform were focused on promoting innovative science and technology convergence between Hong Kong and the international community. InnoHK Innovation R&D Platform (InnoHK Clubs): This platform supports the establishment of laboratories, research centers, etc., at locations provided by Hong Kong Science & Technology Parks Corporation for universities, research institutes, and IT companies worldwide.
Currently, two platforms have been established under the themes of Health@InnoHK and AI@InnoHK, providing a total of HK$10 billion (about US$1.28 billion) in funding. As of February 28, 2023, various support programs, including the Innovation and Technology Support Program, the Mainland-Hong Kong Joint Funding Scheme, and the University-Industry Collaboration Program, have been operational, with a total disbursement of about $34 billion. The Hong Kong government announced its plan to invest HK$3 billion (US$385 million) in basic research in innovative technologies such as artificial intelligence and quantum technology through the 2023-24 fiscal budget.
Additionally, there is an ongoing discussion about building a second "Innovative Manufacturing Center (AMC)" in the Dafu area.

Definition of R&D

R&D means the definition of R&D in section 16B(4)(a)(b) of the Tax Ordinance.
The definition of 'qualified R&D activities' refers to activities that are carried out in Hong Kong and are newly developed or applied in the field of science and technology.
However, it does not include market, commercial, and industrial affairs, efficiency research, and marketing-related tasks.
The above definition is consistent with international standards.
"Other R&D activities" are R&D activities organized by designated "Hong Kong Research Institute/Hong Kong University/Overseas University" and include activities conducted overseas.

Type A

It offers a 100% tax reduction for the development of industrial facilities and machinery for "qualified R&D activities" and the expenditure of "other R&D activities" with support for existing R&D projects.

Type B

Type B is divided into two categories.
The first provides a "qualified R&D activity" fund to "designated Hong Kong research institutes." The second covers "qualified expenditure" arising from "qualified R&D activities" conducted by companies.
There is a 300% tax reduction up to HK$2 million in the total amount of activities and expenditures.
If it exceeds HK$2 million, the remaining amount will be eligible for a 200% tax reduction.

Restrictions and Prohibitions (Industry)

Public utilities such as mail, railways, water, and telecommunications, risk, pollution, and public health sectors are restricted from domestic/foreign investment, and public health sectors require authorities' permission.

Special Economic Zones and Free Trade Zones

Tai Po, Tseung Kwan O, Yuen Long Industrial Complexes

The basis of Hong Kong's investment attraction policy is "the same treatment for domestic and foreign companies." There are no separate incentives for foreign-only industrial complexes and locations for foreign companies.
There are three industrial complexes built for industrial use, but each of them is about 80 hectares, which is not large.
According to the Hong Kong Institute of Science and Technology (HKSTP), Hong Kong's manufacturing industry accounts for only about 1% of GDP, and most of the Foreign Direct Investment (FDI) flowing into Hong Kong is for purposes other than manufacturing.
Therefore, there is not much demand for industrial sites. To promote Hong Kong's re-industrialization, the Hong Kong Innovation and Technology Fund opened a Data Technology Center (DT Hub) in Tseung Kwan O in 2020.
It is then pushing for the construction of the Innovative Manufacturing Center (AMC) and supporting innovative manufacturing startups through the first AMC center completed in Tseung Kwan O in mid-2022, strengthening the high value-added and advanced Hong Kong manufacturing industry.
The AMC, located in Jeonggwano, has a total of eight floors and covers 33,000 square meters, housing innovative technology manufacturers such as medical facilities, biomedical devices, intelligent electronic devices, and robot technology.
The Data Technology Center (DT Hub) and the Innovative Manufacturing Center (AMC) are expected to create 900 and 2,200 jobs, respectively.
Additionally, the Microelectronic Center (MEC) in Yuen Long, established in 2020 for research and development and production of electronics, communication products, medical devices, and robot technologies, including semiconductors, is scheduled to be completed at the end of 2023 and will be officially operational from 2024.

In the case of establishing a local corporation, the corporation must assume all legal and financial responsibilities.
For all types of corporations, business registration is required within a month of the business's commencement.
In Hong Kong, most documents and contracts, such as phone applications, lease contracts, and opening company bank accounts, cannot be signed without proper business registration.
There are no specific qualifications for establishing a corporation, but it is essential to consider whether the director is disqualified or not.
In other words, a director cannot establish a corporation if he/she has any unresolved matters related to business in Hong Kong.
In some cases, a bank credit guarantee of two to three years may be required or desired.

The establishment of a branch involves setting up a branch of the headquarters in Hong Kong and registering the headquarters' board of directors, articles of incorporation, and corporate registration copy with the Corporate Registry of Foreign Companies in Hong Kong.
This method constitutes a form of investment.
In the event of a legal dispute, the headquarters assumes full legal and financial responsibility for the branch's business activities.
The headquarters is jointly responsible for consumer compensation, return policy, agent employment and management, and labor law issues related to local products carried out by the branch under Hong Kong law.
Additionally, the headquarters shares responsibility for the branch's debts.

The tax base of a local corporation is calculated based on profits generated from operations in Hong Kong.
However, in the case of a branch, the tax calculation can be based on either the profits generated from the branch's business activities or the total profits of the headquarters.
If the Hong Kong branch does not generate income in a given year and seeks exemption from corporate tax, the headquarters' settlement report must be translated into English, notarized, and submitted to the Hong Kong Tax Office.
For income generated by the branch during the accounting period, only the settlement report of the Hong Kong branch needs to be submitted to the Hong Kong Tax Office.
The English name of the headquarters will be used as is, and the directors of the Hong Kong branch will also be registered without changes.
Business activities are conducted similarly to local subsidiaries, and company secretaries must be appointed.
In the event of changes in the executive staff of the headquarters, address changes, or capital adjustments, all changes in the headquarters must be reported to the Hong Kong government.
Branch Registration: Branch registration can be made through the Hong Kong Business Registration Office.

Whether to organize a management organization: The director/auditor/representative of the parent company must be formed and appointed.

A liaison office is a type of company primarily established by a foreign corporation to prepare for a business operation period in Hong Kong and can perform only limited functions.
Activities such as information collection and contact with customers can be conducted, but the office is not authorized to conclude actual business contracts other than office rentals.
When establishing a liaison office, a separate corporate registration procedure is not required, and the business can commence upon user registration.

A corporation is a limited liability company composed of one or more shareholders.
It is a type of business entity that sets a limit on the amount of investment.
Stock companies are further divided into public and private companies and are classified as listed and unlisted companies within the public category.
A company designated as Co., Ltd. is established in a manner similar to a limited liability company.
Directors are not necessarily required to be Hong Kong nationals, but they cannot concurrently serve as executive secretaries.
The executive secretary must be a natural person who is at least 18 years old, and if the executive secretary is a natural person, he/she must be a resident of Hong Kong.
The minimum capital required at the time of the company's establishment is HK$1.

Limited liability companies are the most frequently applied business types in Hong Kong, and managers can benefit from the CEPA agreement between Hong Kong and China.
Most limited liability companies established in Hong Kong are individual limited liability companies, and one natural director and executive secretary must be appointed when the company is established.
Even if you are not a Hong Kong national, you can delegate to the director of the company.
If there is one director, the director shall not concurrently serve as the executive secretary.
The executive secretary is a role in the company that oversees preparing minutes, preparing, and storing legal documents.
If the company secretary is a natural person, he must be a resident of Hong Kong.
The company registration office must be located in Hong Kong.
Since there are no nationality restrictions on shareholders of limited liability companies, it is possible to appoint shareholders who are not Hong Kong people.
If the company has one shareholder, it can serve as a director at the same time.
The capital required at the time of establishment of the company is at least HK$1.

Individual business operators are unlimited liability companies, and individuals are fully responsible for the company's debts.
Small businesses (restaurants, self-employed, etc.) in Hong Kong mainly establish companies in the form of private businesses.
If you obtain a business registration certificate from the Hong Kong Companies Registry, you can operate the company as a private business owner.
There are no obligations for capital or investment conditions, and there are no nationality restrictions when appointing directors or representatives.
It takes at least two to three weeks to establish a private company and varies depending on the document screening.