As from 23 May 2025, Hong Kong's new inward company re-domiciliation regime allows foreign companies that meet certain criteria to seamlessly transfer their domicile to Hong Kong while preserving their legal identity and business continuity through registration under the Companies Ordinance (CO). Following the re-domiciliation process, companies will be treated as Hong Kong-incorporated companies under the CO and having the same rights, obligations and reporting requirements as companies initially incorporated in Hong Kong.
The Companies (Amendment) (No. 2) Ordinance 2025, gazetted on 23 May 2025, amends the CO to enable non-Hong Kong companies meeting certain criteria related to corporate background, financial solvency, integrity, and protections for members and creditors to relocate their legal domicile to Hong Kong, while retaining their corporate identity and operational continuity, allowing them to preserve their contractual and legal obligations incurred before re-domiciliation. The Inland Revenue Ordinance (IRO) was also amended to address the tax residency of re-domiciled companies, transitional tax arrangements and to allow unilateral tax credits in specified situations. The new regime is expected to enhance Hong Kong’s position as a global business and financial hub.
According to information on the Companies Registry website, the major features of the company re-domiciliation regime include the following:
Under most of Hong Kong’s comprehensive double taxation agreements or arrangements (CDTAs), a resident of Hong Kong is defined to mean a company incorporated in Hong Kong or if the company is incorporated outside Hong Kong, is normally managed or controlled in Hong Kong. To provide clarity, the general interpretation provisions under section 2 of the IRO are amended such that references to a “company incorporated in Hong Kong” include a re-domiciled company and references to a “company incorporated outside Hong Kong” exclude a re-domiciled company. Accordingly, re-domiciled companies are now explicitly treated as Hong Kong-incorporated for tax residency purposes under Hong Kong’s CDTAs.
Transitional Tax Arrangements
Hong Kong does not impose tax on the basis of residency or domicile. A company carrying on a trade, profession or business in Hong Kong is chargeable to tax on its profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. Re-domiciliation by itself should not affect a company’s Hong Kong profits tax position. Clarity on certain key tax aspects are nevertheless provided for as follows:
To mitigate double taxation, if a re-domiciled company has paid tax in its place of incorporation of substantially the same nature as profits tax in respect of its unrealised income or profit because of company re-domiciliation, and after re-domiciliation, Hong Kong profits tax is also payable on the actual income or profit derived by the re-domiciled company, unilateral tax credits are available to the company subject to certain limitations.
Insurance Business
Specific rules apply to insurance businesses, addressing how deficits or surpluses arising from pre-re-domiciliation activities are managed for Hong Kong tax purposes.
Stamp Duty
Since the re-domiciliation process will not entail any transfer of a company’s assets or changes in the beneficial ownership of a company’s assets, no Hong Kong stamp duty liabilities will arise because of re-domiciliation as regards any Hong Kong stock or immovable property held by the company being re-domiciled. The transfer of shares in a re-domiciled company must be registered in Hong Kong post-re-domiciliation. The shares will fall within the definition of Hong Kong stock and, hence, the transfer of such shares will be liable to Hong Kong stamp duty.
There are broadly three key incentives for a company to request re-domiciliation to Hong Kong:
Carol Lam
BDO in Hong Kong
The Companies (Amendment) (No. 2) Ordinance 2025, gazetted on 23 May 2025, amends the CO to enable non-Hong Kong companies meeting certain criteria related to corporate background, financial solvency, integrity, and protections for members and creditors to relocate their legal domicile to Hong Kong, while retaining their corporate identity and operational continuity, allowing them to preserve their contractual and legal obligations incurred before re-domiciliation. The Inland Revenue Ordinance (IRO) was also amended to address the tax residency of re-domiciled companies, transitional tax arrangements and to allow unilateral tax credits in specified situations. The new regime is expected to enhance Hong Kong’s position as a global business and financial hub.
Overview of the Company Re-Domiciliation Regime
According to information on the Companies Registry website, the major features of the company re-domiciliation regime include the following:
- This is an inward regime, meaning that non-Hong Kong corporations can re-domicile to Hong Kong but not vice versa.
- The regime is applicable to non-Hong Kong corporations comparable to four types of companies that could be formed in Hong Kong, i.e., (i) private companies limited by shares; (ii) public companies limited by shares; (iii) public unlimited companies with a share capital; and (iv) private unlimited companies with share capital.
- To participate in the re-domiciliation regime, a company must submit an application and supporting documentation to the Companies Registry, meet specific requirements and pay a fee. Regulated entities such as insurers and banks must obtain prior approval from the Insurance Authority or Hong Kong Monetary Authority. Some of the requirements that must be met include the laws of the company’s original domicile allowing and not prohibiting outward re-domiciliation, the company’s members must approve the decision to move forward with re-domiciliation, the company should be able to pay its debts that fall due within 12 months from the application date, the company must have been incorporated for at least one fiscal year before the application for re-domiciliation, etc.
- Re-domiciliation does not have the effect of creating a new legal entity and will not affect the business continuity of the company, or any property, rights, obligations, liabilities, or contractual and legal processes of the company.
- There is no economic substance test applicable to non-Hong Kong corporations intending to re-domicile to Hong Kong.
- Once re-domiciled, companies will be regarded as companies incorporated in Hong Kong with effect from the date of re-domiciliation and will be required to comply with all relevant requirements under the CO.
- The re-domiciled company must be deregistered in its place of incorporation within 120 after the re-domiciliation date.
Under most of Hong Kong’s comprehensive double taxation agreements or arrangements (CDTAs), a resident of Hong Kong is defined to mean a company incorporated in Hong Kong or if the company is incorporated outside Hong Kong, is normally managed or controlled in Hong Kong. To provide clarity, the general interpretation provisions under section 2 of the IRO are amended such that references to a “company incorporated in Hong Kong” include a re-domiciled company and references to a “company incorporated outside Hong Kong” exclude a re-domiciled company. Accordingly, re-domiciled companies are now explicitly treated as Hong Kong-incorporated for tax residency purposes under Hong Kong’s CDTAs.
Transitional Tax Arrangements
Hong Kong does not impose tax on the basis of residency or domicile. A company carrying on a trade, profession or business in Hong Kong is chargeable to tax on its profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. Re-domiciliation by itself should not affect a company’s Hong Kong profits tax position. Clarity on certain key tax aspects are nevertheless provided for as follows:
- Expenses incurred pre-re-domiciliation: Eligible for deduction if they are incurred in the production of assessable profits post-re-domiciliation and not previously claimed overseas provided the deduction criteria under the IRO are met.
- Trading stock acquired pre-re-domiciliation: Deductible at the lower of cost or net realisable value at the date of re-domiciliation.
- Intellectual property (IP) rights registration, R&D or building refurbishment expenditure: Expenditures incurred pre-re-domiciliation are deductible based on use post-re-domiciliation as if they are incurred in the year of first use post-re-domiciliation.
- Purchase cost for certain IP rights, prescribed fixed assets and environmental protection facilities: Expenditure incurred pre-re-domiciliation is deductible based on use post-re-domiciliation at the lower of net book value or market value at the re-domiciliation date.
- Capital expenditure incurred on machinery or plant pre-re-domiciliation: Eligible for depreciation allowances if used for Hong Kong business post-re-domiciliation based on the lower of net tax written down value (cost minus the notional allowances before re-domiciliation) or market value at the re-domiciliation date.
To mitigate double taxation, if a re-domiciled company has paid tax in its place of incorporation of substantially the same nature as profits tax in respect of its unrealised income or profit because of company re-domiciliation, and after re-domiciliation, Hong Kong profits tax is also payable on the actual income or profit derived by the re-domiciled company, unilateral tax credits are available to the company subject to certain limitations.
Insurance Business
Specific rules apply to insurance businesses, addressing how deficits or surpluses arising from pre-re-domiciliation activities are managed for Hong Kong tax purposes.
Stamp Duty
Since the re-domiciliation process will not entail any transfer of a company’s assets or changes in the beneficial ownership of a company’s assets, no Hong Kong stamp duty liabilities will arise because of re-domiciliation as regards any Hong Kong stock or immovable property held by the company being re-domiciled. The transfer of shares in a re-domiciled company must be registered in Hong Kong post-re-domiciliation. The shares will fall within the definition of Hong Kong stock and, hence, the transfer of such shares will be liable to Hong Kong stamp duty.
BDO Insights
There are broadly three key incentives for a company to request re-domiciliation to Hong Kong:
- Certainty of tax residency: Tax residency is a key determinant which decides where tax reporting and tax payments are to be made for global tax compliance purposes, including common reporting standards, country-by-country reporting and the GloBE rules. Companies already managed and controlled in Hong Kong but incorporated overseas may benefit significantly by gaining formal residency, providing clearer tax treaty benefits. This could also eliminate compliance risk from delayed or missed updates on regulatory changes in other jurisdictions.
- Cost efficiency: Compliance burdens and regulatory and administrative costs can be reduced by centralising jurisdictional obligations in Hong Kong. Overseas incorporated companies already with operations in Hong Kong would be able to eliminate dual processes in ongoing corporate maintenance post-re-domiciliation.
- Strategic positioning: Redomiciled companies can leverage Hong Kong’s extensive CDTA network and be able to engage the Hong Kong Inland Revenue Department as its competent authority in the event of a dispute with tax authorities in a CDTA jurisdiction, such as transfer pricing adjustments. Hong Kong business groups may explore the potential benefits of re-domiciling their non-Hong Kong-incorporated companies (such as intermediary holding companies incorporated in the British Virgin Islands and the Cayman Islands) to Hong Kong. Before proceeding, the legal, corporate and tax implications in all relevant jurisdictions should be considered. Potential tax issues to be reviewed in evaluating company re-domiciliation could include:
- Indirect transfer if the company holds investments in jurisdictions that regard re-domiciliation as a change in beneficial owner;
- Exit taxes levied by the jurisdiction of incorporation; and
- Pillar Two issues such as the jurisdictional effective tax rate, safe harbours and substance measurement.
Carol Lam
BDO in Hong Kong