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Incorporation in Hong Kong

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Incorporation in Hong Kong

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Advantages to set up your Business Company 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.

Why Hong Kong

A former British Colony but now part of the Republic of China, Hong Kong is considered a major international centre for business. Located on the south east coast of China it became part of China on the 1st of July 1997. Hong Kong is classified as a Special Administrative Region (SAR) within the Republic of China and has retained its own legal system. The legal system in Hong Kong is, unsurprisingly, based on the British system with the official languages being English and Chinese.

There is no ‘offshore’ legislation in Hong Kong, all companies are incorporated under the same legislation regardless of whether they do business on or offshore. However companies that do not derive any income from sources in Hong Kong are not subject to tax thereby effectively making it an offshore company in all but name. An excellent infrastructure and strong regulatory framework are contributors to the success of Hong Kong as a major destination for business.

Hong Kong is one of the world most established and reliable financial centres. The economy in Hong Kong is considered to be one of the freest in the world (as measured by the Index of Economic Freedom) therefore it is an excellent jurisdiction in which to incorporate a company.

Hong Kong Corporate and Tax Advantages

Hong Kong has one of the most tax-friendly economies in the world. Why? HK only imposes three direct taxes and has generous allowances and deductions which reduce your taxable amount.

  • Profits tax is capped at 16.5 percent
  • Hong Kong is a major trading entity and therefore the incorporation of a Hong Kong company is likely to be perceived as ‘legitimate’ and therefore less likely to be seen as a tax avoidance/minimisation vehicle.
  • English is an official language and is the main business language. All reporting information and documentation can be produced in English.
  • The Hong Kong tax system is simple and straight-forward.
  • There are no restrictions on the use of foreigners as Shareholders or Directors at a Hong Kong company.
  • Corporate Director and Secretary are allowed.
  • The incorporation of a Hong Kong company is simple and quick.
  • Low cost of incorporation and maintenance.
  • No minimum requirements for share capital.
  • Only one Director and Shareholder is required to form a limited liability company.
  • Due to the system of territorial taxation foreign source trade profit is not subject to Hong Kong income tax.
  • There is no capital gains tax in Hong Kong.
  • There is no withholding tax on interest, dividends and royalty.
  • Foreign dividends are not subject to Hong Kong income tax.
  • Tax credits for foreign tax paid are available in Hong Kong; however it is subject to some conditions.
  • There is no net worth tax in Hong Kong.
  • Hong Kong has an excellent banking system and communications infrastructure.
  • Moreover, Hong Kong is also known for its free port status and easy customs procedures. Duty is paid on very few products, for example, tobacco. One major recent change has been to make the import of wine and beer duty free. This has encouraged a thriving wine import, export and storage business serving retail and individual buyers.

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