The first thing you must do before creating your company is to determine which of the three types of businesses fits your needs the most. Once you have created a company, you cannot simply change its business type. Instead, you would have to dissolve that company and start a new one. Because of all the work that would take, you want to be certain that during the incorporation process you are registering as the correct business type.
The most common type of business is the limited company. This company is a full business in Hong Kong. This means you can take advantages of the various tax benefits available to all incorporated firms in Hong Kong. Limited companies do receive tax benefits under the Closer Economic Partnership Arrangement (CEPA), which is a free trade agreement between Hong Kong and Mainland China. A limited company is a good choice for those who want to base their operations in Hong Kong, although it does require more work to set up.
The second option is for companies that have already incorporated in another country but still wish to have an office in Hong Kong. By establishing a branch office of your parent company, you can take advantage of the fact that your corporation already has established credit and cash flow in another country. Once you have established your branch office in Hong Kong, you will have one month to register it with the Companies Registry. You will register as a Registered Non-Hong Kong Company.
Legally, your branch office is not seen as an independent business. This means you may not pay as many taxes as you would as a limited company, but you will also not be able to take advantage of as many tax breaks or concessions, either.
Your third option is to register as a Representative Office. This option does not work for any business that wants to make a profit in Hong Kong. Representative offices are legally limited in what they can do. Many corporations open a representative office in order to examine the Hong Kong economy before they create a branch office or open a limited company. A representative office can be converted into either type of business at a later date.