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Incorporation In Hong Kong
Large multi-national corporations set up overseas companies to reinforce the competitive edge of the group as a whole, and hence maximize profitability. For example, they can reduce taxation expenses legally by booking some incomes to lower taxation regions, such as Hong Kong.
We,TBA & Associates , assist small and medium size corporations and individuals to set up their companies and bank accounts in Hong Kong, through which they can enjoy the privilege as large corporations.
After you set up your company in Hong Kong, it is not a must for you to stay there while you can remote control your Hong Kong Company by making use of our all-round office back up services selectively to meet your business requirement. You do not need to employ any staff or rent an office, as we can provide you a full serviced virtual office in HK including mailing address with mail re-forwarding services, telephone and fax lines for your Hong Kong company, at exceptional low rates.
One example of its benefits is Hong Kong taxes are among the lowest in the world, and the tax system is simple. There is no capital gains tax, no withholding tax on dividends and interest, no collection of social security benefit, no sales tax or VAT and estate duty will be abolished this year. Profit derived from offshore business is exempted from tax. For a trading company, offshore business refers to goods sourced outside Hong Kong, such as China, Korea, Japan, Taiwan, etc. and shipped directly to overseas countries such as USA, Europe, Australia, Middle East, Africa, other Asian countries, etc. and vice versa. Under these circumstances, you can easily obtain tax benefits by booking such transactions in your Hong Kong Company.
Freest economy in the world, no foreign exchange control, low taxes and simple tax system, major financial centre, English common law legal system, prime geographic location, gateway to China, business orientated culture, free flow of information and world class infrastructure on the whole make Hong Kong a business platform that you cannot miss. If you are engaged in trading business connected with Asia, it is already worth for you to consider forming a company in Hong Kong.
Our company was founded in 1998 and has been providing six major lines of services in Hong Kong and China, namely:
- Formation of company services,
- Company secretarial services,
- Accounting and taxation services,
- Trade supporting services,
- Application for visa and other certificates services, and
- Financial consulting services.
Services include but not limited to the following:
company secretary; nominee shareholder/nominee director; registered office address; temporary virtual office; opening of bank account; accounting and statutory audit; preparation of management account; tax advice; filing of tax return.
We shall be very pleased to provide you full assistance with your HK incorporation and complete assistance to open your corporate bank accounts.
A HK Limited Company can be incorporated with Minimum One Shareholder and Minimum One Director, which we can provide you, if requested (Nominees). The only officer you need is a Local Company Secretary, as required, but which we can provide you.
In this specific case of HK, and once you will not be dealing within or with HK, your company will be always 100% tax exempted.
Below you will find all relevant information about the advantages to incorporate in HK and also all our fees and services you can count on from our technical and tax planning advisors team.
In case you may wish a faster incorporation, we will then suggest you to buy a shelf company (ready-made) from the list below.
Why Hong Kong?
Reliable Banking System
HK, being an International Finance Centre & a Tax Haven, has a lot of branches of major international banks which are trustworthy and have a lot of branches all over the world. HK banks will only need a passport copy and the address of the client to comply with the HK law, which also requires that no HK banks can disclose their clients' details to any one without their permission. We always assist our clients to open bank accounts with a major international bank in HK.
Well-Established Legal System
HK has a well-established legal system, which is based on the English legal system.
HK has a lot of genuine trading activities. Therefore an offshore company with a HK correspondence address will have an advantage over those without a HK correspondence address.
No Exchange Control
HK has no exchange control. Money can be deposited, withdrawn or transferred out of a HK bank account freely without paying any taxes, including withholding taxes.
All banks in HK are under the HK law, not to disclose any customer's information to any one without the customer's prior consent, except if the customer is suspected for money laundry or criminal offence, or the HK Inland Revenue Department suspects that he/she has evaded HK taxes (not taxes in other countries). Further the HK Inland Revenue Department is not allowed by the HK law to disclose any information to any one, including local or overseas governments.
We provide mail forwarding service & telephone/fax service with dedicated telephone and fax lines with all voice/fax messages sent to you by email, on REAL TIME.
Formation procedures for offshore companies are simple. There is no need to come to HK for company formation or opening of HK bank accounts, and the bank accounts can be operated at overseas without coming to HK
Hong Kong is on the south east coast of China and consists of a large number of islands and a part of the mainland totalling approximately 1,064 sq km. On 1 July 1997 all of Hong Kong reverted from British Control back to China and became a Special Administration Region “SAR” within the People’s Republic of China (PRC).
Utilising Hong Kong For International Trade Base For International Trade
The Hong Kong Limited Company has become a popular vehicle within the field of international trade, with currently over 950,500 Hong Kong companies registered in the city.
The basic concept central to most trading structures set up by foreign companies using a Hong Kong trading entity is that of outsourcing their back office functions, while retaining full control of their international trading business. This can best be explained by example, as shown below.
Many importers from North American, European, and Pacific Rim countries have been buying products from China, India, and many other Asian countries over several years, to sell to their home markets – typically to large retail chains, or through their own stores.
As their businesses grow and develop, most of these importers look for an effective way to manage this process while giving them an international presence, often enable their larger customers to buy FOB from an Asian port, and expand their sales into new markets around the globe.
The importer now has a truly international business with a local presence in Hong Kong, they retain control of their expanding business and its costs (with the trade services outsourced to Atrium), and the profits are retained in their Hong Kong company – usually tax free under Hong Kong's territorial tax system.
With this structure set up and maintained by Atrium, importers get a Hong Kong virtual office (prestigious office address in Central with mail forwarding, telephone, fax and email), full trade services (including PO's, LC processing, banking, shipping documentation, liaison with freight forwarders), preparation of management accounts and audited profits tax returns, preparation of contracts, employment related matters and trade financing. Atrium can also assist by setting up Representative Offices in China so that the importer can have their own staff on the ground to work with their suppliers typically on quality control and shipments.
In recent years, foreign trading companies have been increasingly establishing their own manufacturing facilities in China and other Asian countries, to ensure that they have full control of their supply chain and enable them to sell into local Asian markets (particularly China).
In China, many manufacturing plants set up by foreign companies have been established through Joint Venture arrangements, or direct investment (through the establishment of a Wholly Foreign Owned Enterprise or WFOE) usually in conjunction with a local advisor. While the opportunity for such trading companies can be substantial, the associated benefits are also significant.
The process outlined for the importer in the first example above, becomes the building block for the manufacturer. In addition, Atrium’s consolidated approach through its Hong Kong and China offices, enables the manufacturer to set up the right structure the right way - effectively identifying and controlling many of the risks from the outset.
As was the case with the importer, Atrium can set up and maintain this structure for the manufacturer. The manufacturer gets a Hong Kong company, a WFOE in China, Hong Kong virtual office (prestigious office address in Central with mail forwarding, telephone, fax and email), full trade services (including PO's, LC processing, banking, shipping documentation, liaison with freight forwarders), preparation of management accounts and audited profits tax returns, preparation of contracts, employment related matters and trade financing. Atrium can also assist other back office functions relating to quality control and shipments.
The Future Of Hong Kong
Under the 'one country - two systems' philosophy, the SAR has executive, legislative and independent judicial power. The capitalist system, legal structure and lifestyle remain unchanged. Hong Kong remains a free port with a free flow of capital and a freely convertible Hong Kong dollar.
With China pushing forward with the modernisation of its own economy, the PRC has expressed the wish that Hong Kong should assist in this endeavour. It has stated that its future development will be based on market led reforms with socialist characteristics and this has led to the opening up of its economy to foreign investments. It is widely recognised that Hong Kong is and will continue to be a significant gateway to China.
Operating from 2004, Hong Kong and Mainland China has been developing the Closer Economic Partnership Arrangement (CEPA). The Arrangement is to ensure Hong Kong is "economically interlocked" with the Mainland and that CEPA has offer lower entry thresholds for smaller players (capital/trading history requirements) in Hong Kong and 100% ownership of many China ventures. It makes Hong Kong the simplest, most profitable route into/out of Mainland China. CEPA offers preferential access to China’s markets, commitments made by China under WTO. It adds to the long list of reasons why international businesses choose Hong Kong as a base for their China and Asia operations nowadays.
Infrastructure And Economy
Hong Kong has excellent communication facilities and a major new international airport. Separating Hong Kong Island and the Kowloon peninsular is Victoria Harbour, which is recognized internationally as one of the world’s perfect natural harbours. It is estimated that 100,000 containers per month pass through the port, which is arguably the busiest in the world. Hong Kong is the leading South East Asian centre for both finance and commerce and ranks as the world’s third largest financial centre after New York and London. The Hong Kong Stock Exchange is the most active in Asia outside Japan.
The official languages are English and Chinese, with English being used in the commercial and political context and Cantonese Chinese used widely in industry and domestic trade.
The Hong Kong Dollar, which is officially pegged to the US Dollar. (1 US$ = HK$ 7.74 to HK$ 7.78)
Type Of Law
Common Law based on English Common Law
Principal Corporate Legislation
Companies Ordinance (Cap 622)
Type Of Company For International Trade And Investment
Private Company limited by Shares.
Procedure To Incorporate
Submission of Memorandum and Articles of Association, and a Declaration of Compliance. A Notice of Situation of Registered Office is also required to be filed within fourteen days of the date of incorporation.
Restrictions On Trading
Cannot undertake banking or insurance activities or solicit funds from or sell its shares to the Public.
Powers Of Company
A Hong Kong Company has all the powers of a natural person.
Language Of Legislation And Corporate Documents
Chinese and English
Registered Office Required
Yes, must be maintained in Hong Kong.
Name Approval Required
It is not possible to reserve a name. It is essential to check that there is no similar or identical name on the Registrar, which would prevent the company being incorporated
A name that is similar to or identical to an existing company; a name that constitutes a criminal offence or otherwise contrary to the public interest; a name that implies royal or government patronage.
Names Requiring Consent Or Licence
Building society, Chamber of Commerce, co-operative, imperial, Kaifong, mass transit, municipal, royal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, fund Management, asset management and investment fund.
Suffixes To Denote Limited Liability
Disclosure Of Beneficial Ownership To Authorities
Hong Kong is one of the few countries in the world that tax on a territorial basis. Many countries levy tax on a different basis and they tax the world-wide profits of a business, including profits derived from an offshore source. Hong Kong profits tax is ONLY charged on profits derived from a trade, profession or business carried on in Hong Kong. Consequently, this means that a company which carries on a business in Hong Kong, but derives profits from another place, is not required to pay tax in Hong Kong on those profits. Hong Kong sourced income is currently subject to a rate of taxation of 16.5%. There is no tax in Hong Kong on capital gains, dividends and interest earned.
The principle of Hong Kong profits tax is that it is a tax on profits that has its source in Hong Kong rather than a tax based on residence. Income sourced elsewhere, even remitted to Hong Kong, is not subject to Hong Kong profits tax at all. Consequently, if a Hong Kong company's trading or business activities are based outside Hong Kong no taxation will be levied.
A factor that determines the locality of profits from trading in goods and commodities is generally the place where the contracts for purchase and sale are effected. 'Effected' does not only mean that the contracts are legally executed. It also covers the negotiation, conclusion and execution of the terms of the contracts.
If a business earns commission by securing buyers for products or by securing suppliers of products required by customers, the activity which gives rise to the commission income is the arrangement of the business to be transacted between the principals. The source of the income is the place where the activities of the commission agent are performed. If such activities are performed through an office in Hong Kong, the income has a source in Hong Kong.
Certain sums, like royalties, paid or payable to non-resident persons for use of or right to use certain intellectual property are subject to withholding tax. The payer who claims deduction for the use of the intellectual property against its assessable income is required to withhold a prescribed percentage from the payment while that recipient is not subject to Hong Kong profits tax. The prescribed percentage is 4.95% on
the gross payment if the payer and the recipient are not related, but 16.5% if the payer and recipient are related. The recipients of the royalties may enjoy different treaty rates under double taxation agreements.
Double Taxation Agreements
Hong Kong has comprehensive double tax agreements with Austria, Belgium, Brunei, Czech Republic, France, Hungary, Indonesia, Ireland, Japan, Liechtenstein, Luxembourg, Malaysia, Malta, Netherlands, New Zealand, Portugal, Switzerland, Spain, Thailand, United Kingdon, Vietnam and the Mainland China respectively to relieve taxation on income, for instance, dividends, interest income and royalties.
The Hong Kong Inland Revenue Department allows a deduction for foreign tax paid on a turnover basis in respect of income which is also subject to tax in Hong Kong. Therefore, businesses operating in Hong Kong do not generally have problems with double taxation of income.
The respective comprehensive double tax agreements with Canada, Jersey, Kuwait, Mexico and Quatar will become effective from 1st April 2014 to relieve the applicable double taxable on various incomes.
The Business Registration Fee, currently HK$2,250 on the date of incorporation and then annually on the anniversary of the incorporation. (Special tax concession arrangement by the HKSAR is granted until 31st March 2014; the Business Registration fee of each company is HK$250).
Financial Statement Requirements
A Hong Kong company must keep accounting records for at least 7 years, which may be kept at the registered office address or elsewhere at the discretion of the directors. Every company must appoint an auditor who must be a member of the Hong Kong Institute of Certified Public Accountants and hold a practicing certificate. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the Hong Kong Inland Revenue Department.
Company Requirements & Formation Procedures
It is easy to form a limited company incorporated in Hong Kong (HK). There are almost no restrictions provided that there are no existing HK companies with identical names and no well-known companies with similar names. It requires at least two directors and two shareholders; a resident company secretary and a HK registered office. However, none of the directors or shareholders is required to be HK residents. Our Firm may provide the services of HK resident company secretary and registered office. Further, a HK company's name must end with the word "Limited", but is not required to contain the words "Hong Kong".
The minimum number of directors is one, who may be natural persons or bodies corporate, but at least one of them must be a natural person. Directors can be of any nationality, and need not be resident in Hong Kong.
A Hong Kong company must appoint a company secretary, who may be a natural person or a body corporate, but the company secretary must be resident in Hong Kong.
A Company Secretary is required to execute the following:
- preparing minutes of a board meeting convening an annual general meeting;
- preparing a notice of an annual general meeting;
- preparing minutes of an annual general meeting;
- preparing an annual return and submitting the same to the Companies Registry: and
- ensuring that the requirements of the Companies Ordinance are properly complied with based on the information provided by the directors
Further, a HK company is required to submit audited accounts to the Inland Revenue Department every year, except for the first audited accounts, which can be submitted within eighteen months. Its financial year-end date can be fixed at any date in a year. The commonly used year end dates in Hong Kong are 31 March and 31 December.
The minimum number of shareholders is one.
The minimum number of shareholders is one.
Standard authorised share capital -HK$ 10,000 (not required to be paid-up)
Minimum paid up - HK$ 2
Bearer shares allowed - No
Minimum number of shareholders/members - One
Minimum number of directors - One
Corporate directors permitted - Yes
Local directors required - No
Local meeting required - No
Local Company secretary required - Yes
Disclosure And Reporting Requirements
Disclosure of beneficial owner - Yes
Government register of directors - Yes
Government register of shareholders/members - Yes
Annual return - Yes
Submission of accounts - Yes
Audit required - Yes
The Procedures To Form A Hong Kong Company
1. For forming a company, a client is not required to come to HK. A client shall fill in and submit to us the Formation Form for providing the details of proposed company name, shareholders, directors, secretary and registered office. Then we shall check and confirm if it is registerable within one to two days by e-mail.
2. We shall prepare all the documents for incorporating a company, including Memorandum and Articles of Association, appointment of first directors and secretary, notice of registered office and application for business registration certificate. We will e-mailthe forms which to you or send to you by DHL.
3. The client will sign all the documents (but not dating any) and return the same back to us.
4. We shall arrange the filing of the documents to the Companies Registry and apply for business registration certificate.
5. After obtaining the business registration certificate from the Inland Revenue Department, the documents (including chops and certified true copies) will be sent to the client, and then the company can be used.
6. The procedures are usually completed within two weeks (excluding transit time of documents).
Tailor-made approach suits your requirements in the company name, the share structure, number of shareholder/ director and some clauses in the articles of the association. Just talk to us for your needs in forming a tailor-made company and our staff will assist you.
Buying a Shelf Company is, more commonly, as an alternative to form a tailor-made company. You may buy a Shelf Company by selecting the name of the ready company. It is normally having 10,000 shares of HK$1 and 1 issued share. Existing subscriber will transfer the issued 1 share to you (if you require more shares allotted to you or additional shareholders, we will charge additional service fee). The subscribers will sign a declaration letter confirming that the company is clean and no business activity since its incorporation. This approach is fastest way to incorporate a company.