3. I am running a business online. Do I have to obtain a business registration certificate?

3. I am running a business online. Do I have to obtain a business registration certificate?

If a person engages in trade or provides services via the internet, and the relevant business operations or services are carried out in Hong Kong, the person in question must submit an application for business registration. People who conduct business must adhere to the same regulations under the Business Registration Ordinance (Cap. 310) , whether they do so online or through a retail location. Failure to comply with the business registration requirement may result in prosecution being brought against the person concerned.

Business Registration Requirements

i) Types of goods traded

Regardless of whether the traded goods are new or used, business registration is required.

ii) Age

The age of applicants for business registration is not restricted. According to the Business Registration Ordinance (Cap. 310), if a minor operates a business (other than an exempted business), both the juvenile and their trustee, who may include a guardian, must submit an application for business registration.

iii) Business Name

The business name used by a business through an online trading platform or an online store must match the name that is listed on the business registration certificate. For the same business, you are permitted to register multiple business names, but each additional business name will be regarded as a separate branch. If you operate multiple businesses, each one should be registered separately, and each one may have its own unique business name.

iv) Business Address

A physical address should be used as the business address for business registration purposes. You cannot register the website link or the email address of your online shop as the business address.

Whether your activities constitute the “carrying on of a business in Hong Kong”

The Inland Revenue Department will collect information about the relevant activities, including procurement and promotion of goods, solicitation of customers, delivery of goods, settlement of sales proceeds, etc., scale of operation, and location at which the activities are carried out, in order to determine whether the activities conducted through the internet constitute the carrying on of a business in Hong Kong.

Exemptions from paying registration fee and levy

Despite the fact that small business owners must still register their business, they may seek for an exemption from paying the levy and business registration cost, provided the average monthly sales or receipts of your business do not exceed $10,000 for businesses mainly deriving profits from the sale of services, or $30,000 from other businesses.

Is an individual who derived profits from online transactions required to pay Profits Tax?

Every person who engages in a trade, profession, or business in Hong Kong and derives profits from such activities that which arise in or are derived from Hong Kong is required to pay Profits Tax. The Inland Revenue Department will decide whether a person is liable for Profits Tax in relation to profits from transactions conducted through the internet based on the totality of the case's facts.

You should be mindful that there may be other legal and tax considerations apart from the above considerations relating to business registration in Hong Kong.  Depending on your business set-up (e.g. operation flow, location of the customers, location of the server hosting your business etc.), legal and tax considerations in other jurisdictions may arise.  You are strongly recommended to review your business set-up and seek legal and/or tax advice as needed.