# The Real Cost of a Hong Kong Company: Formation, Banking, Audit and Tax

> Complete year-one and year-two cost breakdown for Hong Kong company incorporation. Formation fees, secretary, audit, and the hidden costs most founders miss.
- **Author**: Deepak Jangir
- **Published**: 2026-09-23
- **Category**: Compliance, SaaS, Global Payments
- **URL**: https://dodopayments.com/blogs/en/hong-kong-company-cost

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The advertised cost of a Hong Kong company is HK$3,895 (roughly USD 500).

That's the government fee. It's also a lie by omission.

The real cost is 4-6 times higher, and most founders don't discover this until they've already incorporated. This guide walks through every cost involved in setting up and maintaining a Hong Kong company, year one and year two.

## The Government Fees (The Visible Part)

When you incorporate a Hong Kong company, you pay two government fees:

**Companies Registry incorporation fee (electronic filing): HK$1,545**

This is the fee to file Form NNC1 (the incorporation form) with the Companies Registry. Electronic filing is cheaper and faster than paper (HK$1,720). The application is typically approved within one working day.

**Business Registration Certificate (1-year): HK$2,350**

This is the fee to register your business with the Inland Revenue Department. The fee includes a HK$2,200 base fee plus a HK$150 Protection of Wages on Insolvency Fund (PWIF) levy. The certificate is valid for one year (1 April 2026 to 31 March 2027) and must be renewed annually.

**Total government fees: HK$3,895 (approximately USD 500)**

This is what most guides advertise. It's also where most founders stop reading and assume that's the total cost.

## The Mandatory Services (The Hidden Part)

Hong Kong law requires every company to have two things that cost money:

**Company Secretary: HK$2,800-5,000 per year**

Every Hong Kong company must appoint a company secretary from the day of incorporation. The secretary must be either a Hong Kong resident individual or a licensed corporate service provider (TCSP).

Most foreign founders hire a licensed TCSP to handle this role. The TCSP's responsibilities include:

- Maintaining statutory records (board minutes, shareholder records, etc.)
- Filing the Annual Return (Form NAR1) with the Companies Registry
- Handling Companies Registry correspondence
- Maintaining the Significant Controllers Register
- Preparing board resolutions and corporate documents

The cost varies by provider and complexity. Simple packages start at HK$2,800 per year. Full-service packages with additional support reach HK$5,000+ per year.

**Registered Office Address: Included in secretary package**

Every company must maintain a physical Hong Kong address for official correspondence. This address appears on the public register and is where the Companies Registry sends official notices.

Most TCSP providers bundle the registered office address into the company secretary package. If you hire a secretary separately, you may need to pay for the address separately (typically HK$1,000-2,000 per year).

**Total mandatory services: HK$2,800-5,000 per year**

## The Mandatory Audit (The Biggest Surprise)

Here's the cost that catches most founders off guard.

Hong Kong requires every limited company to produce audited financial statements every year, signed by a Hong Kong-licensed CPA. There is no exemption for small companies or for companies with no revenue. Small companies qualify for simplified reporting, which reduces what the statements have to contain, but it does not remove the audit itself. The one genuine exemption is for companies formally declared dormant, which is a narrow status covered below.

This is a legal requirement under the Companies Ordinance. Failure to file audited accounts results in penalties and potential director liability.

**Audit cost: HK$8,000-12,000 per year for a simple company**

For a company with minimal transactions (just receiving payouts from a [Merchant of Record](https://dodopayments.com/blogs/what-is-a-merchant-of-record)), the audit is straightforward. A Hong Kong CPA will:

- Review your bank statements
- Verify the payout from your MoR
- Prepare financial statements
- Sign off on the audit

Cost: HK$8,000-12,000 per year. See our guide on [merchant of record for SaaS](https://dodopayments.com/blogs/merchant-of-record-for-saas) to understand how this simplifies your audit.

For a company with more complex operations (multiple revenue streams, employees, significant expenses), the audit cost is higher: HK$15,000-30,000+ per year.

**Total audit cost: HK$8,000-12,000 per year (minimum)**

## The Annual Return Filing (Minor Cost)

Every company must file an Annual Return (Form NAR1) with the Companies Registry within 42 days of the incorporation anniversary.

**On-time filing fee: HK$105**

**Late filing penalty: Up to HK$3,480**

This is a small fee if you file on time, but a massive penalty if you miss the deadline. Many founders miss this deadline because they don't know it exists.

Most TCSP providers include NAR1 filing in their company secretary package, so you don't pay this separately. But if you miss the deadline, the penalty is steep.

**Total NAR1 cost: HK$105 (if on time) or HK$3,480 (if late)**

## The Profits Tax Return (Variable Cost)

Your Hong Kong company must file a Profits Tax Return with the Inland Revenue Department. The first return typically arrives 18 months after incorporation.

The return shows your company's profits and calculates the tax owed. Hong Kong has a two-tier profits tax system:

- 8.25% on the first HK$2 million of profits
- 16.5% on profits above HK$2 million

If your company has no Hong Kong-sourced income (because your SaaS is hosted globally and your customers are outside Hong Kong), you may qualify for an offshore exemption. But you still need to file the return and claim the exemption.

**Profits tax filing cost: HK$3,000-8,000 per year**

This is the cost to prepare and file the return with an accountant. If you use a Merchant of Record, the filing is simple: you just show the net payout from the MoR. If you self-manage tax compliance, the filing is more complex.

**Total profits tax cost: HK$3,000-8,000 per year**

## The Business Registration Certificate Renewal (Annual)

Every year, you must renew your Business Registration Certificate. The renewal fee is:

**1-year certificate: HK$2,200 (plus HK$150 PWIF levy = HK$2,350)**

**3-year certificate: HK$5,720 (plus HK$450 PWIF levy = HK$6,170)**

Most founders renew annually (HK$2,350 per year) rather than paying for three years upfront.

**Total BRC renewal cost: HK$2,350 per year**

## Year One: The Complete Cost Breakdown

| Cost Item | Amount (HKD) | Amount (USD) |
|---|---|---|
| Companies Registry incorporation fee | 1,545 | 200 |
| Business Registration Certificate (1-year) | 2,350 | 305 |
| Company secretary (Year 1) | 2,800-5,000 | 365-650 |
| Registered office (included in secretary) | 0 | 0 |
| Statutory audit | 8,000-12,000 | 1,040-1,560 |
| NAR1 filing (on time) | 105 | 15 |
| Profits tax filing | 3,000-8,000 | 390-1,040 |
| **Year 1 Total** | **17,800-29,000** | **2,315-3,765** |

**Realistic Year 1 cost: HK$20,000-25,000 (USD 2,600-3,250)**

This assumes:
- Electronic incorporation (not paper)
- Standard TCSP company secretary package (not premium)
- Simple audit (minimal transactions)
- On-time NAR1 filing (no penalties)
- Offshore tax exemption claimed (no Hong Kong tax owed)

If you use a full-service TCSP package that includes incorporation, secretary, audit, and tax filing, the bundled cost is typically HK$12,000-18,000 for Year 1. But this still doesn't include the mandatory audit, which is separate.

## Year Two and Beyond: The Recurring Cost

| Cost Item | Amount (HKD) | Amount (USD) |
|---|---|---|
| Business Registration Certificate renewal | 2,350 | 305 |
| Company secretary | 2,800-5,000 | 365-650 |
| Statutory audit | 8,000-12,000 | 1,040-1,560 |
| NAR1 filing | 105 | 15 |
| Profits tax filing | 3,000-8,000 | 390-1,040 |
| **Year 2+ Total** | **16,255-27,455** | **2,115-3,565** |

**Realistic Year 2+ cost: HK$18,000-22,000 (USD 2,340-2,860) per year**

The Year 2+ cost is slightly lower than Year 1 because you don't pay the incorporation fee again. But the recurring costs (secretary, audit, tax filing) are the same every year.

## The Audit Requirement: Why It's Mandatory

Hong Kong's audit requirement is unusual. Most countries exempt small companies from audit requirements. Hong Kong does not.

Every limited company must file audited financial statements every year, regardless of:

- Revenue (even if zero)
- Complexity (even if the business is tiny)
- Profitability (even if loss-making)

Small companies are not exempt either. They qualify for simplified reporting, which reduces what the financial statements must contain, but the audit itself still has to happen.

The one real exemption is dormancy. Under section 447 of the Companies Ordinance, a company formally declared dormant is exempt from preparing audited financial statements and from appointing auditors. Note what that actually requires: the company passes a special resolution and delivers it to the Registrar of Companies, not to the Inland Revenue Department, and it must not enter into any accounting transaction. A single accounting transaction ends the exemption from the date it occurs. A dormant company still has to keep a director, a company secretary and a registered office, renew its business registration certificate, and file a profits tax return if the IRD issues one.

In practice this is useless to a trading SaaS business. If you are receiving payouts, you are transacting, and you are not dormant.

This is why the audit cost is non-negotiable. You cannot skip it.

## The Cost Comparison: Hong Kong Company vs. Merchant of Record

If you're trying to decide between incorporating in Hong Kong and using a [Merchant of Record](https://dodopayments.com/blogs/merchant-of-record-vs-psp), here's the cost comparison:

| Scenario | Year 1 Cost | Year 2+ Cost | Complexity |
|---|---|---|---|
| Hong Kong company only | HK$20K-25K | HK$18K-22K | High |
| Merchant of Record only | 4% + 40c per transaction | 4% + 40c per transaction | Low |
| Hong Kong company + MoR | HK$20K-25K + 4% + 40c | HK$18K-22K + 4% + 40c | Medium |

**For a SaaS business with USD 100K annual revenue:**
- Hong Kong company: HK$20K-25K (USD 2,600-3,250)
- Merchant of Record: ~USD 4,000-4,400
- Hong Kong company + MoR: HK$20K-25K + USD 4,000-4,400 (USD 6,600-7,650)

**For a SaaS business with USD 500K annual revenue:**
- Hong Kong company: HK$20K-25K (USD 2,600-3,250)
- Merchant of Record: ~USD 20,000-20,200
- Hong Kong company + MoR: HK$20K-25K + USD 20,000-20,200 (USD 22,600-23,450)

At low revenue, a Merchant of Record is cheaper. At high revenue, a Hong Kong company is cheaper. The breakeven is around USD 300K-400K in annual revenue.

## The Hidden Costs: What Most Guides Miss

Beyond the direct costs above, there are indirect costs:

**Time and attention.** You need to track incorporation deadlines, audit deadlines, NAR1 filing deadlines, and BRC renewal deadlines. Missing any of these results in penalties. Most founders hire a TCSP to manage this, but you still need to coordinate with them.

**Accounting infrastructure.** You need to maintain proper books and records for the audit. If you're using a Merchant of Record, this is simple (just record the payout), because the MoR is the seller of record on each transaction rather than your company. The [MoR versus payment gateway comparison](https://docs.dodopayments.com/features/mor-vs-pg) sets out which party carries which obligation. If you're self-managing tax compliance, this is complex. See our guide on [how to sell software online](https://dodopayments.com/blogs/how-to-sell-software-online) for a simpler approach.

**Tax complexity.** If you're claiming an offshore exemption for Hong Kong tax, you need to document that your income is foreign-sourced. This requires coordination with your accountant and the Inland Revenue Department. For global tax compliance, see our guide on [global VAT and GST for SaaS](https://dodopayments.com/blogs/global-vat-gst-ai-saas).

**Banking fees.** Your Hong Kong bank account may charge monthly fees (typically HK$100-500 per month) or require a minimum balance. This is separate from the company costs.

**Currency conversion.** If you receive payments in USD or EUR and need to convert to HKD, your bank charges conversion fees (typically 1-2% of the amount).

## The Takeaway

The real cost of a Hong Kong company is HK$18,000-22,000 per year (USD 2,340-2,860), not the advertised HK$3,895.

This cost is fixed regardless of your revenue. If you're making USD 10K per year, the company costs are the same as if you're making USD 1M per year.

For most SaaS founders, this cost is not worth it. A [Merchant of Record](https://dodopayments.com/blogs/saas-payments-merchant-of-record) handles global tax compliance and payments for 4% + 40 cents per transaction, with no fixed costs and no audit requirement. See our guide on [accepting payments without a company](https://dodopayments.com/blogs/accept-payments-without-company) for an alternative approach.

The optimal path for most founders is: operate as a sole proprietor in your home country and use a Merchant of Record for global tax compliance and payments. No Hong Kong company, no audit, no company secretary. This is covered in detail in our guide on [whether you need a Hong Kong company for SaaS](https://dodopayments.com/blogs/hong-kong-company-for-saas).

If you do need a Hong Kong company for entity structure, banking, or hiring, budget HK$18,000-22,000 per year for ongoing costs. Don't be surprised by the audit requirement. For integration with a Merchant of Record, see the [Dodo Payments integration guide](https://docs.dodopayments.com/developer-resources/integration-guide).

For more on whether you need a Hong Kong company, see our guide to [do you need a Hong Kong company for SaaS](https://dodopayments.com/blogs/hong-kong-company-for-saas). For more on how a Merchant of Record works, see our guide to [merchant of record for SaaS](https://dodopayments.com/blogs/merchant-of-record-for-saas), [what is a merchant of record](https://dodopayments.com/blogs/what-is-a-merchant-of-record), and [how to sell software online](https://dodopayments.com/blogs/how-to-sell-software-online).

Dodo Payments is a Merchant of Record covering 220+ countries and regions with transparent pricing at 4% + 40 cents per transaction. See the [pricing page](https://dodopayments.com/pricing) and [MoR documentation](https://docs.dodopayments.com/features/mor-introduction) for details.

## FAQ

### What is the cheapest way to incorporate a Hong Kong company?

The cheapest way is to file electronically yourself through the Companies Registry e-Services Portal. You pay HK$1,545 for incorporation plus HK$2,350 for the Business Registration Certificate, so HK$3,895 in government fees. However, you still need to hire a company secretary (HK$2,800-5,000 per year) and pay for an audit (HK$8,000-12,000 per year). Stripped back to those items alone, Year 1 lands at roughly HK$15,000-21,000. That figure excludes the HK$105 NAR1 filing and the HK$3,000-8,000 profits tax filing, which is why the realistic Year 1 total above is HK$20,000-25,000. Using a TCSP to handle incorporation and secretary services typically costs HK$8,000-12,000 for Year 1, but you still pay for the audit separately.

### Do I have to pay for an audit every year?

Yes, in practice. Hong Kong requires every limited company to file audited financial statements every year, regardless of revenue or complexity, and small companies are not exempt: they get simplified reporting, not an audit exemption. The only genuine exemption is for a company formally declared dormant under section 447 of the Companies Ordinance, which means passing a special resolution, delivering it to the Registrar of Companies, and entering into no accounting transactions at all. A business receiving payouts is transacting and cannot be dormant. If you have a trading Hong Kong company, budget for an annual audit.

### Can I reduce the audit cost?

The audit cost depends on the complexity of your business. For a simple company with minimal transactions (just receiving payouts from a Merchant of Record), the audit is straightforward and costs HK$8,000-12,000 per year. For a company with employees, multiple revenue streams, or significant expenses, the audit cost is higher. Using a Merchant of Record simplifies your audit because you just record the net payout, rather than managing complex tax compliance across multiple jurisdictions.

### What happens if I miss the NAR1 filing deadline?

The penalty is steep. On-time filing costs HK$105. Late filing penalties scale up to HK$3,480 if you file more than 9 months late. This is a common mistake because many founders don't know the deadline exists. Most TCSP providers include NAR1 filing in their company secretary package, so they handle it automatically. But if you miss the deadline, the penalty is significant.

### Is the audit cost the same every year?

The audit cost is typically the same every year for a simple company. However, if your business becomes more complex (more transactions, employees, multiple revenue streams), the audit cost increases. For a company that just receives payouts from a Merchant of Record, the audit cost is stable at HK$8,000-12,000 per year.

### Should I incorporate in Hong Kong or use a Merchant of Record?

For most SaaS founders, a Merchant of Record is the better choice. A Merchant of Record costs 4% + 40 cents per transaction with no fixed costs and no audit requirement. A Hong Kong company costs HK$18,000-22,000 per year (USD 2,340-2,860) regardless of revenue. At low revenue, the Merchant of Record is cheaper. At high revenue (above USD 300K-400K annually), the Hong Kong company becomes cheaper. If you don't need a Hong Kong company for other reasons (entity structure, banking, hiring), skip it and use a Merchant of Record.

### Can I use a Hong Kong company without a Merchant of Record?

Yes, but it's not recommended for global SaaS. If you incorporate in Hong Kong, you still need to handle global tax compliance (VAT in the EU, sales tax in the US, GST in Australia, etc.). You can do this yourself (expensive and error-prone) or use a Merchant of Record (simpler and cheaper). Most founders who incorporate in Hong Kong also use a Merchant of Record for tax compliance and payments.

### What if I'm already in Hong Kong?

If you're a Hong Kong resident, the costs are similar, but you may be able to reduce some expenses. For example, you can serve as your own company secretary if you're a Hong Kong resident (though most people hire a TCSP anyway). The audit requirement is still mandatory. The annual cost is still HK$18,000-22,000 per year.
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