Selling Food Online? Business Registration Requirements in Hong Kong

Business Registration Requirements to Open an Online Food Shop in Hong Kong

1. Definition and Legal Basis of Business Registration

According to the Business Registration Ordinance, any person carrying on business in Hong Kong, regardless of whether it is in the form of a sole proprietorship, partnership, or limited company, must apply for business registration within one month after the commencement of business. The definition of "carrying on business" is broad and covers engaging in any form of commercial, business, craft, or professional activity. Operating an online food shop involves the sale of goods, which clearly falls within the scope of this ordinance. Therefore, business registration is mandatory.

Further Reading: Summary of the Business Registration Ordinance

2. Potential Risks of Not Registering

Failure to apply for business registration within the specified time limit (within one month after the commencement of business) in accordance with the Business Registration Ordinance constitutes a legal offense. Offenders are liable to a maximum fine of HKD 5,000 and imprisonment for up to six months.

Failure to obtain a valid business registration certificate will seriously affect the daily operation of the business, for example:

• Inability to smoothly open a commercial bank account.
• Failure to qualify for various licenses or permits required for operation.
• Potential exposure to other legal and operational obstacles.

Further Reading: Inland Revenue Department – Consequences of Non-compliance with Business Registration and Section 18 of the Business Registration Ordinance.

Hong Kong Online Shop Business Registration Application Process

Application for business registration can be done online, by mail, or in person. The process is relatively simple. Here are the steps and required documents:

1. Choose Your Business Structure

• Sole Proprietorship: Owned and operated by an individual who is solely liable for all business debts.
• Partnership: Owned and operated by two or more individuals who are jointly and severally liable for all business debts (except for limited partnerships).
• Limited Company: A separate legal entity where shareholders have limited liability, requiring prior registration with the Companies Registry.

2. Complete the Application Form

• Sole Proprietorship: Complete Form 1(a). Sample Application Form: Form 1(a), Form 1a
• Partnership: Complete Form 1(c). Sample Application Form: Form 1(c), Form 1c
• Limited Company or Other Corporate Bodies: Complete Form 1(c). If applying for company registration simultaneously, the relevant forms are usually processed together.

Please Note: Unless the applicant submits the application online, if submitting via paper form, the above forms can be obtained in person at the Business Registration Office or by completing Form IRBR194 for collection. The Inland Revenue Department website only provides sample forms for reference and does not offer blank forms for online download.

Further Reading: Download Business Registration Forms

3. Prepare Required Documents

• Completed application form

• Copy of the applicant's Hong Kong Identity Card or passport

• If it is a limited company, a copy of the Certificate of Incorporation issued by the Companies Registry is required

• Proof of business address (if applicable, e.g., lease agreement or utility bill)

4. Submit Application and Pay Fees

• Online Application: Submit the application using the Inland Revenue Department's eTAX platform, applicable to sole proprietorships, partnerships, and branch registrations. [Learn More]

1. Under "Business Matters," select "Application for Business or Branch Registration."
2. Choose the application type (Sole Proprietorship Business, Partnership Business, Branch Operated by a Registered Sole Proprietorship or Partnership Business).
3. Enter the application details (Details of Business, Details of Partners, Select Validity Period of Business Registration Certificate).
4. After submitting the application, the certificate can be downloaded through GovHK within two working days.

• Mail Application: Mail the form to GPO Box 29015, Concorde Road Post Office, Kowloon, Hong Kong.

1. Time to collect the Business Registration Certificate: Within 2 working days after receiving the completed application form.

• In-Person Submission: Go to the Business Registration Office at Revenue Tower, 5 Gloucester Road, Wan Chai, Hong Kong. [Check Address and Office Hours]

1. Time to collect the Business Registration Certificate: If the information is complete, it can usually be collected within half an hour after submitting the application form.

Costs for Business Registration for an Online Shop in Hong Kong

Business registration involves a business registration fee and a levy, with the rates depending on the business structure. When applying for a business registration certificate, you can choose to apply for a one-year or three-year certificate. The fees payable are divided into the business registration fee and the Protection of Wages on Insolvency Fund levy, which must be paid when a company is first established or when renewing the BR. In the past, the government may have waived the business registration certificate fee in certain years. If you apply for a three-year business registration certificate at once, the paid business registration certificate fee can also be refunded if the government waives the relevant fees in the future.

• Business Registration Fee (payable annually): One year, fee amount HK$ 2,200; Three years, fee amount HK$ 6,020. Inland Revenue Department Announcement

• Levy: Payable under the Protection of Wages on Insolvency Fund Ordinance, the amount is fixed. The fund aims to protect employees' wages and entitlements when their employers face financial difficulties or bankruptcy.

Can Business Registration Certificate Fees be Waived?

1. Business Turnover Requirement

If your business mainly earns profits by providing services and the average monthly turnover does not exceed HK$10,000.00, or for other businesses, it does not exceed HK$30,000.00. For operating businesses, applicants need to provide the average monthly turnover for the past six months. However, for new businesses, they need to provide the estimated average monthly turnover for the first six months after the business commences as a reference.

2. Number of Businesses Requirement

If a sole proprietor or the same partners operate two or more businesses simultaneously, none of these businesses will be eligible for a waiver.

Comparison of Business Tax Rates for Online Shops in Hong Kong

Hong Kong calculates profits tax based on a two-tiered tax rate system, which is divided into two types: limited companies and unlimited companies. In addition, if a group has multiple subsidiaries, a maximum of only one subsidiary in the group can declare the two-tiered tax rate; the remaining subsidiaries must be taxed at a rate of 15% or 16.5%.

• Sole Proprietorships and Partnerships: Profits are included in personal income and are calculated based on the standard tax rate or personal income tax. The profits tax rate for the first HKD 2 million in profits is 7.5%; the profits tax rate for profits exceeding HKD 2 million is 15%. Reference: Profits Tax—Business

• Limited Companies: Profits are subject to a tiered tax rate. The profits tax rate for the first HKD 2 million in profits is 8.25%; the profits tax rate for profits exceeding HKD 2 million is 16.5%. Reference: Profits Tax—Company
  
  Please Note: If a corporation is an associated entity of another corporation that has already benefited from the two-tiered profits tax rates, the corporation (associated entity) will not be eligible for the two-tiered rates, and all of its assessable profits will be taxed at the standard rate of 16.5%. In other words, within a group, only one corporation can enjoy the concessionary tax rate of 8.25% on the first HKD 2 million of profits.

Tax Planning Tips

• Choose the Appropriate Business Registration Type: Whether your business is registered as a sole proprietorship, partnership, or limited company will directly affect the applicable profits tax rate. Hong Kong currently implements a two-tiered profits tax rate system, with different tax rate brackets for unlimited companies (sole proprietorships and partnerships) and limited companies (unlimited companies: 7.5% on the first HKD 2 million profit, 15% thereafter; limited companies: 8.25% on the first HKD 2 million profit, 16.5% thereafter). The choice of which structure to adopt should comprehensively consider the expected profit level, business risk tolerance (limited companies enjoy limited liability protection), and long-term development plans to find the best balance between tax efficiency and operational considerations.

• Apply for Tax Relief Policies: The Hong Kong tax regulations allow businesses to deduct all expenses and outlays incurred in generating assessable profits. This is a crucial legal way to reduce the tax burden. From daily operating expenses (such as rent, salaries, advertising costs) to business-related professional service fees, many expenses may meet the deductible expenses criteria. Therefore, businesses must properly keep all receipts and records to accurately declare them when filing tax returns. At the same time, the government will periodically introduce tax concessions or other tax relief policies. Operators should closely monitor the latest announcements from the Inland Revenue Department to ensure they do not miss any legally entitled tax benefits.

By understanding and applying the above two basic principles, small business operators can manage their taxes more effectively while remaining compliant. It is recommended to consult a professional accountant for more specific tax planning advice tailored to your business situation.

Business Registration Requirements for Opening an Online Shop in Hong Kong

In addition to basic business registration, online food shops need to meet food safety and licensing requirements.

1. Business Registration Address: A valid Hong Kong address must be provided as the business registration address. This can be the actual business premises or a residential address (if it meets the relevant regulations).

2. Food Business Licence: This is a core requirement for operating an online food shop. Depending on the types of food you handle and sell, you may need to apply for different licences or permits from the Food and Environmental Hygiene Department (FEHD). If your online shop involves food manufacturing, processing, or packaging (even if done at home), you usually need to obtain a Food Factory Licence. The application requires compliance with fire safety, hygiene, and building structure requirements. If your online shop sells specific categories of restricted foods, such as cut fruits, sushi, sashimi, raw oysters, frozen confections, etc., you need to apply for the corresponding permits. Each type of restricted food requires a separate application for a Restricted Food Permit. Please check the conditions attached to your Food Factory Licence or Restricted Food Permit to ensure that the online sales model is covered. If in doubt, you can inquire with the FEHD to see if special approval or updates to the licence terms are needed.

3. Food Source and Labelling: You must ensure that the food sold comes from legitimate sources and complies with the requirements of the Hong Kong Food and Drugs (Composition and Labelling) Regulations, correctly labelling the food name, ingredients, expiry date, manufacturer information, etc.

4. Import and Export Permits (if applicable): If your food is imported from overseas, or if you will export food to other regions, you may need to apply for relevant import and export permits.