What's the difference between a Hong Kong branch and a Hong Kong subsidiary?

The Hong Kong branch is a branch of the company. It has no legal person status, and cannot independently bear civil liability in its own name, but must bear it in the name of the head office. A subsidiary is an independent company with legal personality and can bear civil liability in its own name. A subsidiary has its own shareholders, registered capital and legal representative, but there are no branches. When an enterprise wants to operate across regions, it is usually to set up subsidiaries or branches in other regions. Legally speaking, a subsidiary is an independent legal person, but a branch is not. The differences between the two are as follows: First, the establishment procedures are different. In other places, there are many procedures to set up independent accounting subsidiaries, and the establishment procedures are complicated and the start-up expenses are also large, while the procedures for setting up branches are relatively simple and the expenses are relatively small; Second, accounting and tax payment are in different forms. Subsidiaries are independent accounting and independent tax returns, which are given priority by local tax authorities, while subsidiaries are not independent legal persons. The head office accounts for profits and losses and pays taxes uniformly. If there is a profit or loss, the branch and the head office can offset each other before paying the income tax. Three, different preferential tax policies, subsidiaries bear all tax obligations, branches only bear limited tax obligations. The subsidiary is an independent legal person and can enjoy various preferential policies such as tax exemption period and preferential policies; As non-independent legal persons, branches cannot enjoy these preferential policies. For example, China's preferential policies such as "two exemptions and three reductions" and "preferential tax rate" for foreign-invested enterprises can only be applied to independent legal person enterprises. Because the subsidiary and the parent company are not the same legal entity, the losses of the subsidiary cannot be merged into the account of the head office; The branch and the head office are the same legal entity, and the losses incurred in their operations can be offset by the head office. Therefore, when enterprises need to set up branches abroad or other places to expand their production and operation, in view of the unfamiliar local conditions, the production and operation are in the primary stage, and the possibility of losses is greater, we can consider setting up branches at the initial stage of entering the place, so that the losses incurred in other places can be offset at the head office to reduce the burden on the head office. When the production and operation are on the right track and the products can be sold and profitable, we should consider setting up a subsidiary to ensure that we can enjoy the local preferential tax policies when making profits. If you want to turn a branch into a subsidiary, you should apply to the local industrial and commercial bureau for registration as a legal person company, and the head office is the major shareholder or the sole shareholder for capital verification registration. At the same time, the branch will be revoked. If you want to know more about setting up a Hongkong branch, please consult Qiu Hong International Business Company.