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Shenzhen company vs Hong Kong company: how to choose, how to run both

If you only do mainland business and need to issue invoices and hire mainland staff, a Shenzhen company is enough; you only need a Hong Kong company to receive foreign currency, settle cross-border, go global, or raise capital and list. Run both and it's a Hong Kong holding company plus Shenzhen operations. Qianhai and Hetao offer the double 15% and the Hong Kong-tax cap, but with hard thresholds — registering in Qianhai ≠ automatically getting them.

This fits you if

You are, or will be, operating across both Shenzhen and Hong Kong, and are unsure where to base your entity and how to move money and goods compliantly.

This is not for you if

You only do mainland business with no cross-border or foreign-currency needs — a Shenzhen company is probably all you need; don't open a Hong Kong company just to 'look impressive'.

Key figures
Qianhai corporate tax break
Corporate income tax 15%

five industry categories, now extended to the whole 120.56 km² Qianhai zone[S45]

Qianhai personal tax break
Hong Kong-tax cap: individual income tax above the Hong Kong tax burden is waived

2023-01-01 to 2027-12-31[S45]

Hetao corporate tax break
15%

(designated enclosed zone, encouraged industry, ≥60% of income from the main business, substantive operations), through 2027-12-31[S46]

Side by side

The two companies side by side, at a glance

Hong Kong tax rates: see S25/S22. The mainland side is general knowledge — check official sources for the exact brackets.

HKSZ
Profits tax / corporate income tax8.25% (first HK$2M) / 16.5%; territorial basis25% (15% for high-tech / encouraged industries in Qianhai and Hetao)
VATNoneYes (13% / 9% / 6%)
Foreign exchangeFree, no capital controlsControlled (FX purchase/payment, ODI/FDI filing)
Issuing mainland invoices (fapiao)NoYes (a must for mainland operations / expense claims)
Employee costsMPFFive insurances and one fund (social security)
Setting upFast and simple (1 director + secretary + registered address)More filings; a corporate bank account required
Best-fit scenariosReceiving foreign currency, cross-border settlement, taking a brand global, fundraising and listing, offshore RMBMainland operations, issuing invoices, hiring mainland staff, tapping the local market and subsidies

When to choose which

Only mainland business, need to issue invoices, hire mainland staff → a Shenzhen company is enough. Need to receive foreign currency / settle cross-border / go global / raise capital and list → a Hong Kong company. Running both (the most common case) → a Hong Kong holding company plus Shenzhen operations (WFOE), or the two in parallel; the key is to work out how funds move compliantly and how ODI/FDI is filed.

Qianhai / Hetao: the low-tax sweet spots where the two sides overlap

Qianhai's twelve measures for Hong Kong: employment subsidy for Hong Kong and Macao youth up to RMB 5,000/month, start-up award up to RMB 1M, education subsidy (bachelor's RMB 72,000/year × 3 years), housing RMB 1,000 + living RMB 2,000/month; a Hong Kong/Macao youth start-up must have a business registration ≤5 years old with Hong Kong/Macao youth holding ≥25% combined. One-or-the-other rule: the Hong Kong-tax cap cannot be stacked with the GBA high-end talent tax subsidy.

How to move money and goods across the border compliantly

Money: ODI/FDI filing, FX purchase/payment, cross-border RMB; don't run company money through a personal account. Goods: ROCARS → Trade Single Window (switchover mid-2026, register early), CEPA zero tariff on Hong Kong-origin goods (certificate of origin).

What the official sites won't tell you

  • Don't open a Hong Kong company just to 'look impressive'· First-hand insight in the works

    With no cross-border or FX needs, a Hong Kong company means annual audit and tax filing plus a hard account-opening — pure added cost

  • The double 15% and the Hong Kong-tax cap have hard thresholds· First-hand insight in the works

    The corporate tax break requires being in a designated zone + on the encouraged list + substantive operations; the personal one requires actually working in the zone. A nominal registered address ≠ getting the break

  • The policies have expiry dates· First-hand insight in the works

    Qianhai's corporate tax break currently runs to 2025-12-31 and the personal one to 2027-12-31 — check whether they've been extended before you act

  • Running both = double the cost· First-hand insight in the works

    Two sets of books, two compliance regimes, tax filing in both places; moving funds is where you most easily cross the line

  • Don't trust agents who 'guarantee the tax breaks / guarantee the rebate'· First-hand insight in the works

    Fraudulently claiming export tax rebates is a criminal offence; Shenzhen has already prosecuted cases

Next steps
  1. 01First decide whether you have cross-border or FX needs → if not, just open a Shenzhen company and don't spend the extra money.
  2. 02If you do → open a Hong Kong company and work out the holding structure (your ownership structure affects eligibility for BUD and the like).
  3. 03Want the Qianhai / Hetao breaks → first check whether your industry is on the encouraged list and whether you can genuinely operate within the zone.
Related pagesIncorporate a Hong Kong companyQianhai vs Hetao: how to use the two Shenzhen–Hong Kong low-tax sweet spotsBUD Fund

Policy references: Cai Shui [2024] No. 12/13 (Qianhai personal / corporate tax), Cai Shui [2024] No. 2/5 (Hetao).

Sources