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What is so great when choosing Hong Kong as jurisdictions for your company?
There are countless benefits for establishing company in Hong Kong (HK). To start with, HK is the leading international finance and business centre in the world and, for sure, the leading choice for foreign businesses in Asia. With its attractive and competitive tax regime, light business set up procedures, great infrastructure, excellent location, HK offers the fastest, easiest and one of the most affordable locations for businesses in Asian region. Establishing company in HK opens possibilities and a gateway to the Chinese market.
There is no “offshore” or “IBC” legislation in HK, all companies are incorporated under the same laws, regardless of if they do business offshore or onshore.
HK offers territorial taxation system, which means that, properly structured and managed, HK company can be used for international trade without paying any tax in HK, i.e., foreign source trade profit is not subject to Hong Kong income tax.
In HK there are no withholding taxes on dividends, interest or any other income, whether paid to residents or non-residents and VAT (sales Tax).
There are no local resident requirements and no restrictions on nationalities, clients form anywhere in world can set up the company and be the sole director and shareholder.
Another reason which makes HK exceptional is that HK economy ranks as the freest economy in the world (many years in a row), what it means is that every person has the fundamental right to control their own labour and property, to undertake any economic actions, and these actions are both protected by the state and unconstrained by the state. This ranking is provided by The Wall Street Journal and the Heritage Foundation. There are no barriers for foreign businesses to access the market and no restrictions on capital inflows or outflows. There are also no exchange controls.
Banking system and infrastructure in HK is excellent.
Financial markets in HK are characterised by a high degree of liquidity and operate under effective and transparent regulations, which are in line with international standards (HK gov).
HK has a three-tier banking system – licensed banks, restricted license banks and deposit taking companies. And under the Banking Ordinance they are all commonly known as authorized institutions, which can be locally incorporated companies as well as branches of foreign banks.
HK is one of the best banking jurisdictions, as the banks have generally lower banking fees, fairly low initial deposit or minimum balance requirements, while they still offer excellent banking and customer services. Opening account in HK is subjectively easy as well, providing you have all the needed paperwork with you when you attend to meet with a banker. Yes, personal visit is mostly required in HK, rarely to never remote account openings happen.
The basics that you need to establish company in HK:
There are several types of companies, among which, the most popular is a private company - Limited Liability Company (LLC), as it limits your liability to the amount of subscribed capital.
Minimum requirements to establish LLC and register the company with the Registry of Companies are:
- One director ( we offer directorship services)*
- One shareholder ( we offer shareholder services)
- Registered office/address in HK ( we will provide this)
- Secretary ( we will provide this)
- Auditor, unless the company is deemed - dormant under the Companies Ordinance, i.e. a company that has no relevant accounting transactions during a financial year. Auditor is required for conduction of audit for all the companies that have had transactions, and is due 18 months after registration (we can help with this).
*Director data in HK is publicly accessible, also registered charges of a company and disqualification orders can also be seen publicly.
Continuing that company in HK requires you:
- To maintain all of the above ( i.e., director, shareholder, secretary, office, auditor)
- To notify Registry of any changes, new share allotments, passing of special resolutions.
- To hold an annual general meeting (AGM). 1st one within 18 month form incorporation and all subsequent AGMs must be held at least once a year (interval between each not exceeding 15 month), and at these AGMs:
- audited accounts are presented;
- directors report is prepared;
- other functions, like re-election of directors, re-appointing of auditors and any other actions, if needed.
- To maintain accurate and detailed accounting records for 7 years form the transaction date.
- To file Annual Return with Companies Registry, this Annual Return must be signed by director(s), secretary and if applicable any managers/officers, and must contain particulars of the directors, shareholders and secretary, registered address, together with the Company’s capital structure. Dormant companies are exempt of filing Annual Return.
- To file Annual Tax Return (known as Profits Tax Return) along with audited accounts with Inland Revenue Department (IRD). For new companies first notification is sent only on the 18th month form incorporation date, but for existing companies every year on the 1st of April. All companies have 1 month form the date of notice to file the Tax return, extension can be requested if needed, but if extension is not requested and Tax Return is submitted late, penalties or even prosecution may occur. Annual Tax Return in it compromises - company’s balance sheet, auditor’s report and Profit & Loss Account relating to the basis period, tax computation indicating how the amount of assessable of profits (or adjusted losses) has been arrived at.
What should you take form this?
You want to open your company, which pays zero tax (so called “offshore company”) and you want it in a reputable jurisdiction, or you are not as bothered yourself of the location, as you simply want your clients to see they are dealing with HK company (prestigious jurisdiction – the financial centre ..), here is your solution- HK!
HK is not an offshore company and HK companies are accepted by banks all over the world, with no specific requirements, and for HK companies it is also very easy to open account in HK banks.
HK is also one of the safest places in the world, the crime rate in HK is one of the lowest in the world. Besides HK is also the 18th least corrupt country in the world.
Last but not least, and these are just some points, HK bank accounts are not like usual offshore bank accounts, that are designed for clients that mainly just hold their money, these banks are very well suited for businesses that are active, i.e., you can have 100 transactions in a week or day, not 10 a year!
We will gladly assist you with HK company formations and account introductions.
Thank you for reading my post! And you are welcome to leave comments, feedback, suggestions for other posts or contact me for more information.
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