Why do many businessmen decide to set up a company in Hong Kong? Hong Kong is a large and famous financial center, so having a Hong Kong company is prestigious and respectable.
Set up company
It is not surprising that recently the city became a runner-up of Annual Global Competitiveness Rating. Such its strengths as perfect law enforcement and legislative systems, efficient government agencies, social stability, and a free and open market are highly appreciated.
But Hong Kong is more than just a prestigious destination for international business. The investors are also attracted by its favorable tax system with a 16.5% income tax rate earned in the city-state. And for the first 2 million Hong Kong dollars of earned profit in Hong Kong, a tax rate of 8.25% has recently been applied. But what’s even better is that foreign company in Hong Kong can claim an offshore status if it does not conduct any business directly in this city-state. This status provides a zero percent corporate tax.
Why set up offshore company in Hong Kong
Government assistance to business development is also proved by various measures that are constantly being taken to attract businessmen to the region. Local laws are based on British standards since Hong Kong has long been a British colony. As a consequence, in order to establish a company in Hong Kong, the knowledge of the Chinese language isn’t required since all documents are filled out in English.
Hong Kong also has a large number of different agreements with other countries. In addition to the well-known agreement on service market liberalization between Hong Kong and China, it is worth mentioning the recently signed free trade agreement with the Association of Southeast Asian Nations. It greatly simplifies customs and technical barriers between Hong Kong and the ten ASEAN states.
Moreover, Hong Kong has over 40 double taxation agreements, including 16 agreements with EU member states. Another attractive factor in Hong Kong is its excellent financial system. The main idea is that setting up offshore company in Hong Kong you can own a multi-currency account and use high-quality online banking services in English.
Ways to register company in Hong Kong
Having no residence permit, foreign company registration in Hong Kong means that you can only open a limited liability company. At the same time, your company must have a registered office and a representative at the place of registration. This can be a secretary or a company that has the appropriate license. The agency address in Hong Kong can also be used as your company address.
To have successful foreign company registration in Hong Kong the following documents are required:
- Confirmation that your company will have a unique name.
- A copy of your passport.
- A copy of the document confirming the place of residence.
- Filled in a standard form for company registration. It will require you to indicate your personal data like passport number, address of residence, as well as information regarding the company: director, shareholders in Hong Kong, etc.
For a company with a simple structure, you can go through electronic registration and get a certificate of company Hong Kong registration within a few hours.
For complex structure companies, you will need to pre-sign documents according to NNC1 form and the statute of the company, as well as send the originals of the company’s documents to the registrar by post.
So, you decided to register offshore company in Hong Kong. The most popular business registration form in Hong Kong is a limited liability company. This legal entity, like others, is required to comply with various provisions of the Company Ordinance (chapter 622 of the Hong Kong Law). Basically, these provisions involve the timely disclosure and provision of information about the company, its board members, shareholders, etc. and any changes to this information to the Registrar of Companies.
In accordance with local laws, any person who submits an application for setting up a limited company in Hong Kong is simultaneously considered to be applying for registration of a business. After successfully completing the registration procedure, the Company Register issues a Registration Certificate and a Business Registration Certificate together.
Usually, the registration of a limited company in Hong Kong with the submission of documents and courier delivery takes no more than a few weeks. The procedure consists of several stages: selecting a name for the company, secretary and legal address, as well as collecting documents.
Benefits to open company in Hong Kong
As noted above, under certain conditions, a Hong Kong-based company may receive offshore status and not pay income tax. This is possible if:
- You have no customers, suppliers and real office in the city.
- Company goods do not pass through the region.
- All business transactions take place outside Hong Kong.
But these are just the main points. The tax service considers each case individually. What is also important to note is that obtaining an offshore status today requires a lot of time. What was a fairly simple and fast process in the past can take several months nowadays.
Offshore company Hong Kong price for annual service isn’t high. The main servicing expenses consist of:
- payment of annual government fees;
- payment for the services of an accountant, secretary, and auditor;
- office rental costs.
The cost of accountant services will directly depend on the transaction volume of your company, and the cost of secretary and legal address services are small annual amounts. Establishing a foreign company you have a great opportunity to take full advantage of Hong Kong for your business.
Quick and easy offshore company formation in Hong Kong
As you can see, set up company in Hong Kong is quick and easy. However, several aspects of doing business in Hong Kong are worth understanding:
- Hong Kong’s liberal economy allows you to quickly and inexpensively register your company.
- You can run a business from any corner of the planet, paying small annual fees to the agency for the office, secretary of accounting and auditing services.
- The authorized capital of the business should be only 10,000 Hong Kong dollars.
- You are eligible to open a multicurrency bank account.
- A company established in the city-state will help open the way to mainland China if you plan to do business there.
- A simple and transparent taxation system (from a profit of up to 2 million Hong Kong dollars, the company pays 8.25% and 16.5% over this amount).
- You will only have to pay income tax if your business is Hong Kong-based.
If you open a business in Hong Kong, remember that you will need to renew your business certificate annually, as well as fill out an income statement. Also, for the normal functioning of the company, Hong Kong offers to open accounts in banking institutions, which are one of the largest in the world. In 2019, due to the US-China trade war and protests in Hong Kong, local authorities proposed that banks simplify the process of opening Hong Kong bank accounts for small and medium-sized businesses in order to encourage entrepreneurship and attracting new investments. As a result, the number of required documents and the opening time have decreased.