Hong Kong is undeniably becoming a top destination for businesses from the Middle East, especially for investors from the UAE and Saudi Arabia. Hong Kong’s primary allure is clear — this dynamic city offers strategic access to Mainland China and its Belt and Road Initiative, showing lucrative expansion opportunities to its 154 member countries. 

The appeal is demonstrated by the fact that in 2023 alone, a total of HK$40.9 billion was raised through initial public offerings on the Hong Kong Stock Exchange, showcasing its robust financial ecosystem​​. Hong Kong’s famously business-friendly policies, low tax regime, and world-class infrastructure further enhance its attractiveness.

For Middle Eastern enterprises seeking global expansion, Hong Kong provides an exceptional platform to secure funding, gain international recognition, and connect with Asia’s growing markets. This article will guide you through the key benefits, legal requirements, and strategic steps involved in setting up a company in Hong Kong from the Middle East, ensuring you can leverage these advantages for your company’s growth and success.

Why Choose Hong Kong?

1. Strategic Location and Market Access

Hong Kong’s prime location in Asia makes it a gateway to the world’s largest consumer market, China, and its Belt and Road Initiative, not to mention the Regional Comprehensive Economic Partnership (RCEP) member countries. 

The city is well-connected with over 220 destinations worldwide through its world-class airport and seaport facilities, ensuring supremely efficient logistics and supply chain management. This strategic positioning allows Middle Eastern businesses seamless access to a larger market, facilitating growth and expansion.

2. Business-Friendly Environment 

Hong Kong boasts a highly business-friendly environment characterised by its simplified business registration process and attractive tax regime. The city allows 100% foreign ownership, making it easy for Middle Eastern investors to set up operations. With a corporate tax rate of just 16.5% and no VAT, dividend, or capital gains taxes, businesses can also retain more profits to reinvest in growth.

3. Economic and Legal Stability

Hong Kong’s robust economic framework and autonomous legal system provide a tremendously stable business environment. The city’s legal system is based on English Common Law, ensuring transparency and fairness. 

Government policies are famously geared towards supporting business growth, offering various incentives and support programmes. All this makes Hong Kong an ever-attractive destination for Middle Eastern businesses seeking a reliable and secure environment for their investments.

Advantages of Setting Up a Company in Hong Kong from the Middle East

1. Bilateral Agreements and Trade Relations

One significant advantage for setting up a company in Hong Kong from the Middle East is the 2010 Hong Kong – UAE Double Tax Agreement, which helps avoid double taxation on income generated from trading between Hong Kong and the UAE. 

Hong Kong has numerous trade agreements with surrounding regions, offering more accessible market access. The city’s role as a central global trading hub is highlighted by its status as the tenth-largest trading centre globally, with China accounting for about 40% of the transhipment traffic​​.

2. Ease of Setup and Operations

Hong Kong offers a traditionally streamlined process for setting up a business, allowing for 100% foreign ownership and a quick registration process that can be completed in as little as 48 hours​​​​. 

The city’s infrastructure is highly developed, with world-class ports and airports ensuring efficient logistics. In 2024, Hong Kong’s GDP will be approximately $407 billion, growing 2.9%, reflecting its strong economic position​​. 

3. Cultural Compatibility

Hong Kong’s multicultural workforce and bilingual environment (English and Cantonese) make it easier for Middle Eastern businesses to operate smoothly. The city is historically known for blending Eastern and Western cultures, facilitating better understanding and cooperation in business dealings. 

Tourism contributes about 5% of Hong Kong’s GDP and highlights the city’s openness and global appeal​​. This cultural compatibility and openness make it an attractive destination for UAE and Saudi Arabia businesses, ensuring smoother integration and operations.

Legal and Financial Requirements for Starting a Business in Hong Kong

1. Business Structures Available 

Hong Kong offers several business structures to suit different needs, including Limited Companies, Sole Proprietorships, Partnerships, and Representative Offices. The most popular choice is the Limited Company, which provides limited liability protection and a separate legal entity, essential for risk management and credibility​​​​.

You can read more in our article The Different Types of Business Entities in Hong Kong.

2. Registration Process 

Registering a business in Hong Kong is straightforward and efficient. The process involves selecting a company name, preparing incorporation documents, and submitting them to the Companies Registry. 

Most businesses can complete the registration within 48 hours. The required documents include the company’s Articles of Association and a completed incorporation form. A local company secretary must be appointed, and a registered office address in Hong Kong is necessary​​​​.

You can read more in our article The Complete Guide to Starting a Business in Hong Kong.

3. Licensing and Permits

Depending on the nature of the business, specific licenses and permits may be required. For instance, businesses in finance, food and beverage, and healthcare sectors may need additional approvals. Generally, Hong Kong has a liberal approach to business licensing, with many businesses requiring no special permits. 

The application process is transparent and well-documented for those who do, ensuring compliance with local regulations. Understanding and obtaining the necessary licenses and permits is crucial to avoiding legal issues and ensuring smooth operations​​​​.

You can read more in our Guide to Business Licensing in Hong Kong.

Financial Considerations for Starting a Business in Hong Kong

Raising Capital in Hong Kong 

Hong Kong has no minimum capital requirement, providing flexibility for new businesses. This means a distinct advantage for well-capitalised Middle Eastern investors from the United Arab Emirates and Saudi Arabia, as they can leverage their financial strength to scale operations quickly, secure premium locations, and attract top talent. 

The city also offers funding options, including loan programs, market funds, and incubator schemes to support startups. For instance, the Innovation and Technology Fund (ITF) has dedicated HKD 18 billion to support technological innovations, which can be a significant advantage for Middle Eastern tech startups looking to expand​​​​.

You can read more in our article on The Hong Kong Startup Funding & Government Scheme Guide.

Taxation in Hong Kong

Hong Kong’s tax system is renowned for its simplicity and low rates. The corporate tax rate is set at 16.5%, but companies earning profits up to HKD 2 million benefit from a reduced rate of 8.25%. Also, Hong Kong does not impose VAT, capital gains tax, or withholding tax on dividends, making it an attractive destination for businesses aiming to maximise profits​​​​.

The salary tax ranges from 2% to 17%, providing a favourable environment for employers and employees. Hong Kong’s property tax is 15% of the property’s assessable value. These tax benefits and the city’s robust financial infrastructure only add to the compelling reasons for Middle Eastern businesses, accustomed to low tax rates, to establish operations in Hong Kong​​​​.

You can read more in our Guide to Tax Compliance and Annual Filing in Hong Kong. 

Operational Setup for Starting a Business in Hong Kong

Opening a Bank Account

Opening a corporate bank account in Hong Kong is a transparent but stringent process for new businesses. Requirements typically include proof of business activities in Asia and compliance with stringent Know Your Customer (KYC) procedures. 

Traditional banks require personal visits for account setup, while fintech companies offer quicker, remote setups with fewer restrictions. This flexibility allows Middle Eastern businesses to choose banking solutions that best fit their needs​​​​.

You can read more in our guide on How to Set up a Hong Kong Corporate Bank Account.

Hiring Employees

Hiring the right talent is vital for your business’s success. Hong Kong offers various visa options for foreign employees, including the General Employment Policy (GEP) for skilled professionals and the Technology Talent Admission Scheme (TechTAS) for tech-specific roles​​​​. Understanding local labour laws and cultural nuances in recruitment is essential to ensure compliance and create a harmonious work environment.

You can read more about it in our article, Types of Work Visas in Hong Kong.

Marketing Your Business

Understanding the Local Market

Hong Kong’s diverse population includes locals, expatriates, and tourists, creating an incredibly unique and varied consumer base. Because of this, segmenting your target audience and understanding their preferences is crucial for effective marketing. For instance, digital marketing might resonate with younger, tech-savvy audiences, while traditional methods like outdoor advertising could be more effective for older demographics and tourists​​​​.

Effective Marketing Strategies

Leveraging Hong Kong’s vibrant and varied media landscape is essential for successful marketing. 90% of Hong Kong’s population is connected to the internet, making digital marketing a powerful tool. Traditional mediums like the South China Morning Post and popular radio stations are also viable options, depending on your audience.

We recommend collaborating with local marketing and advertising experts to help tailor your campaigns to resonate with the local audience. This approach ensures that your marketing strategies are culturally relevant and effective, maximising your reach and impact​​​​. If you need help finding the right experts, we can help facilitate this. 

Intellectual Property Protection

Importance of IP Protection

Hong Kong has rigorous regulations for protecting intellectual property (IP), covering patents, trademarks, and copyrights. The city’s dedicated Intellectual Property Department ensures that all IP rights, whether local or international, are reliably safeguarded. 

This robust IP protection framework is crucial for businesses looking to innovate and protect their assets. Understanding and leveraging these protections for Middle Eastern companies can prevent potential infringements and secure their competitive edge on the broader market​​​​.

You can read more in our Guide to Intellectual Property Protection in Hong Kong.

Expanding Beyond Hong Kong

Regional and International Opportunities

Hong Kong’s strategic location is an ideal regional and international expansion springboard. Its world-class infrastructure directly connects businesses to over 220 global destinations. Additionally, Hong Kong has numerous 

Free Trade Agreements (FTAs) and Double Taxation Agreements (DTAs), providing businesses with preferential access to key markets and reducing trade barriers​​​​. By establishing a presence in Hong Kong, Middle Eastern businesses can leverage these agreements to expand into the Asia-Pacific region and beyond, maximising their growth potential and market reach.

Where to Next With InCorp

Establishing a business in Hong Kong offers numerous advantages for Middle Eastern companies, including strategic market access, a business-friendly environment, and robust legal protections. While Hong Kong is renowned for its business-friendly climate, its stringent processes are designed to maintain its world-class standards. 

Partnering with an experienced firm like InCorp is essential to successfully navigating these complexities. With proven on-the-ground expertise, InCorp can guide you through setting up and growing your business. Contact InCorp today for tailored assistance and expert insights on setting up a company in Hong Kong from the Middle East.