Key Entity Types in Each Jurisdiction
| Jurisdiction | Common Entities | Minimum Requirements |
|---|---|---|
| Hong Kong | Private limited company, branches, representative office | Just one director (individual), one shareholder, no minimum capital, company secretary, local registered address. |
| Taiwan | Company limited by shares (股份有限公司), branch, subsidiary | Minimum capital (commonly NT$500,000+), board members, local agent or representative, adherence to local company laws. |
Corporate Tax Rates & Incentives
- Hong Kong: Two-tier profits tax: first HK$2 million of profits taxed at 8.25%; profits above at 16.5%. Also strong incentives under Foreign-sourced Income Exemption (FSIE) and upcoming enhancements in the corporate treasury centre regime. (ird.gov.hk)
- Taiwan: Profit-seeking enterprise income tax generally at 20%. Some incentives for certain industries. Also, deductions and exemptions for capital investments.
Entity Setup Costs & Compliance
- Incorporation: HK is simpler, fewer minimum share capital, lower ongoing costs. Taiwan has more requirements, bureaucracy, minimum capital and local presence.
- Accounting & Reporting: Taiwan requires audited financial statements, annual meetings. Hong Kong also requires audits, but FSIE-eligible entities must keep records evidencing substance, transactions.
- Transfer Pricing & Substance: In both jurisdictions, to benefit from special regimes (FSIE in HK; incentives in Taiwan), you must show actual business activities: employees, premises, board meetings.
Corporate Treasury Centres (CTCs) in Hong Kong: Coming Changes
Hong Kong has launched a consultation (as of July 27, 2026) on enhancing the tax concession regime for corporate treasury centres. Key proposals:
- A tiered regime:
- Tier 1 refinements: broader scope of deduction of interest to non-Hong Kong associated corporations; legal clarifications around substantial activity and intra-group financing.
- Tier 2 pre-approval for extra benefits: exemption from certain rules, 50% tax exemptions for interest income, relief from “anti-tax arbitrage” rule. (ird.gov.hk)
Entrepreneurs considering setting up CTCs should note these changes are proposals; if enacted, they may change structuring options.
Practical Examples
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Example A: Setting up a Taiwan branch of a HK company focused on regional sales and R&D — HK entity retains profits via FSIE-exempt streams; Taiwan branch handles local sales and is taxed at 20%; cross-charge of royalties or services needs TP documentation.
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Example B: HK holding company owning several subsidiaries—profits from offshore dividends may be exempt under FSIE; but interest paid to non-HK associated corporations must meet “subject to tax” and “substance” tests. Proposed CTC reforms may relax some rules.
Action Items
- Decide location of headquarters management control, ideally where decisions are made.
- Build active local substance: staff, premises, operations in chosen jurisdiction.
- Consult a local advisor when applying for incentives or concessions—HK’s FSIE regime, Taiwan’s deduction scheme.
- Stay alert to policy changes—especially HK’s consultation on CTCs, Taiwan’s annual adjustments in progressive tax rates.
This entity setup guide should help you make informed decisions among HK & Taiwan, balancing tax, compliance, and strategic positioning.