Introduction
Every Hong Kong company – being foreign-owned or not – needs to have a company director and a stakeholder.
But the rules in Hong Kong for company directors are more relaxed than in other countries.
There are still a few points that you should know as a foreigner before incorporation of a Hong Kong company.
All of the information here is based by the official government rules of Hong Kong.
If there is missing information or you have additional questions, always feel free to ask us directly.
Hong Kong company director – Who can become a Hong Kong company director?
Unlike a Singapore company, a foreigner can be a director of a Hong Kong company.
In Singapore, the company director has to be a local Singaporean.
This makes it a huge advantage because as a foreigner, this means:
- less costs (less outside people)
- more control (the company is completely within your decision)
- you don’t have to live in Hong Kong nor be a resident (less costs)
Hong Kong company director – What are the responsibilities and risks as a HK company director?
Being a HK company director is an advantage, but it comes with its own set of responsibilities, such as
- Decision-making: approve policies, contracts, major transactions.
- Compliance oversight: ensure filings, audits, taxes are handled.
- Delegation: can delegate tasks (e.g., to a company secretary, accountants, managers) but cannot delegate ultimate responsibility.
- Board meetings: should keep minutes and follow formal procedures.
As an example:
You may outsource the accounting tasks to an in-house accountant or an accounting firm, but you as a director are ultimately responsible that everything is correct.
But how can someone like you running a business makes sure that everything is running smoothly?
We hear you.
You cannot start learning the whole HK accounting, laws, and regulations.
We have to set of advice for clients:
- You don’t need deep knowledge, but try to have an overall understanding so you can qualify the right accountants for your business.
- Work with expert accountants who have experience in managing foreign entities
For number 1:
We have created a set of YouTube videos for you to understand the overall tasks of a HK accountant better and what the recurring tasks are.
For number 2:
Read our guide on how to find a good accountant (CPA) in Hong Kong.
And if you hire us as your accounting firm or want to get more information, feel free to book a consultation call.
Some of our clients ask us: “What is the worst that can happen if a mistake is made?”
Citing the HK government page: “Certain offences (false statements, fraud, failing to file documents) may lead to fines or imprisonment.”
In practice this means:
failing to file an annual return can lead to prosecution and daily default fines.
Hong Kong company director – How many directors can we be?
There is no limitation on the number of directors.
The only limitations are:
- It has to be minimum one
- At least one director has to be a person (not a company – also companies can be director. We call this a holding company).
Hong Kong company director – When should I become a HK company director?
Just because you CAN become a director, should you always become a director in HK?
The short answer: It depends.
Some decide to have a nominee director which we also explain in this video.
This is a very tax-related question whether you should or should not and what the consequences are.
Taxes in Hong Kong itself will not make any differences for you as a foreigner not residing here, regardless whether you are a director or not.
You can still benefit from the 0% offshore tax and 0% capital gains and dividend tax as HK director.
Being a director can (but not always) affect the taxes in the country you are residing it.
Let us give you three examples so you can understand it better:
1 – Thailand: HK director living in Thailand
If you live in Thailand as a HK director, this will not have any effects on the taxes you pay in Thailand.
Thailand does not tax foreign-sourced income that is not brought into the country.
A new law even cites that even money that is brought in from previous years will not be taxed.
As we can see, Thailand is fairly relaxed when it comes to taxing its residents.
2- Vietnam: HK director living in Vietnam
Vietnam taxes its residents on worldwide income (very different from Thailand).
But also Vietnam has different rules for managing foreign companies.
Even if the director lives in Vietnam, the foreign company is not taxed under Vietnamese law.
But:
Vietnam taxes a resident on its dividends gained as a stakeholder (you cannot avoid this, whether you are a director or not).
Vietnam applies a
- 0% rule to a single-member company (one stakeholder) and
- 5% to a multiple-member company (multiple stakeholders).
3 – Cyprus: HK director living in Cyprus
Cyprus being part of the EU has stricter rules (but not as strict as the rest of the EU).
Now this case becomes interesting and where details matter.
If you
- are a HK company director
- reside/live in Cpyrus and
- manage the HK company from Cyprus
then the HK company will be taxed under Cyprus law as if it is a Cyprus company.
But here where you can now make it more tax-optimal for you:
You can manage the company whenever you are not in Cyprus.
This means you are still a director, but whenever you make decisions these are made outside of Cyprus.
This needs very detailed meeting minutes and board meetings so that you can prove it to your Cyprus tax office.
Usually, a good accounting firm in HK with a company secretary knows how to handle this.
If you want to know how it can work for you, book a consultation call with us.
The second option and the safer one is:
You are the stakeholder, but not the director of the company.
You can employ another person to become the director (who does not live in Cyprus).
You could also be two stakeholders, where
- you would be passive (not a director)
- and your partner is actively managing the company
Read more:
How you can become more tax-efficient when living in Cyprus through Hong Kong company?
Hong Kong company director – how do I pay myself as a foreign director?
It really depends on what we are trying to achieve.
If you are using your Hong Kong company as a digital nomad or you have your residency at a different location, then there is no need to pay yourself as a director.
It is actually not beneficial tax-wise to pay yourself as a director because that would be considered a salary that then would be taxed accordingly in Hong Kong.
We advise our clients to pay themselves only through dividends as stakeholders (which can be done monthly). This way, they can benefit from the 0% dividend tax law in Hong Kong.
In case you intend to live in Hong Kong, then it makes sense to pay yourself a salary to grant your stay and visa.
In that case, it becomes more complicated – we want to find the salary high enough so the visa is being granted, but low enough to pay out the rest through dividends (which is more tax beneficial for you).
We discuss these details in our first consultation call to see what your goal is and how we can find the right solution for you.
