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Given that Hong Kong has continuously topped the World Bank's Ease of Doing Business Index, a very common dilemma for foreign companies seeking to enter the Asian market would be the pros and cons of a Hong Kong offshore company. Understanding the steps to register offshore company in Hong Kong might thus help you to make your decision.
Is choosing to register offshore company in Hong Kong right for you? 1. Offshore companies are companies that do not carry out business operations or management activities within their country of incorporation. Instead, they operate internationally and trade with customers worldwide or can sometimes be used as a holding company. This allows them to qualify for numerous tax exemptions.
2. In the case of Hong Kong, offshore companies are exempt from tax when they generate their income out of the country. Given that Hong Kong is currently ranked 3rd on the World Bank’s 2020 Ease of Doing Business Index, it is likely that it will be easier and cheaper for foreigners to start a business in Hong Kong as opposed to their home country. It might also be relatively easier to maintain a Hong Kong company since the process of filing tax returns and financial reports are streamlined. Thus, setting up an offshore company in Hong Kong might be the most convenient way for a foreigner to start a business.
Steps to register offshore company in Hong Kong
Step 1: Choosing a suitable business structure Step 2:Choosing your company name Step 3: Preparation of supporting documents Step 4: Filing for registration Step 5: Corporate bank account opening Step 6: Financial reporting and taxation obligations
Step 1: Choosing a suitable business structure 1. There are three main types of business structures in Hong Kong for foreign companies, each with varying levels of personal liability protection, tax ramifications, ownership and management flexibility as well as compliance requirements. 2. These three business structures are: i. Limited liability company. This structure is suitable for new businesses since they do not require a registered foreign parent company prior to incorporation of their offshore company in Hong Kong and has minimal additional requirements. It also offers ease of management and liability protection, which is why it is the most commonly used business structure. ii. Branch office. This structure is suitable for existing businesses looking to enter the Hong Kong market. It is cheaper to operate and manage than a limited liability company since it is considered an extension of the parent company as opposed to a separate entity. However, branch offices do not offer protection from liabilities incurred while running the business. iii. Representative office. This structure is prohibited from carrying out any profit-generating activities and would thus be more suited for firms looking to conduct market research or data collection activities.
Step 2: Choosing a company name INTERSHORES will search your preferred company name with the Hong Kong Companies Registry and advise you the availability within an hour. If your preferred name is not available, we will advise alternative name for you.
Step 3: Preparation of supporting documents 1. The directors and shareholders are required to provide basic KYC documents. These documents include the names of directors and shareholders, certified true passport copies, proof of address, and CV for our internal due diligence checks. 2. We will also provide our international clients who are looking to incorporate in Hong Kong with a local office address and a local company secretary. 3. According to the business activity and corporate structure, INTERSHORES will also draft Articles of Association, business plan and other incorporation documents.
Step 4: Filing for registration 1. After you have reviewed the drafted documents, we will file for registration with the Hong Kong Companies Registry. 2. After receiving approval from the Registry, INTERSHORES will courier the Certificate of Incorporation, Memorandum and Articles of Association and other corporate documents to your preferred address or keep them in the Hong Kong registered office. The whole process of company incorporation is expected to take one day (for efiling) or 1 week (for hard copies filing). 3. According to your business activities, we will also assist in acquiring any additional business licenses as needed.
Step 5: Corporate bank account opening 1. After registration, INTERSHORES will assist you in opening a corporate bank account by our extensive network of banking partners. 2. Typically, a corporate bank account opening will take roughly four weeks. Hong Kong banks have made it mandatory for you to travel for a face-to-face interview, but we will send a representative to accompany our clients to ensure that this process goes smoothly and so that you will not face any communication barriers. Prior to the interview, we will also prepare you as to the potential questions that they might ask and prepare a business plan to be presented to the bank. 3. Once your bank account has been successfully opened, Tetra Consultants will courier the internet banking token and access codes to your preferred address.
Step 6: Financial reporting and taxation obligations 1. Accounting, financial reporting and auditing requirements i. Your company is required to keep relevant and accurate transaction records and accounts. These include the supporting documents needed to verify these transactions such as bank statements, receipts and invoices. ii. You will also be required to file an annual return (Form NAR1) with the Hong Kong Companies Registry detailing the organizational structure of your company unless you have applied for dormant status. iii. Financial statements must be filed and audited annually.
2. Taxation policy in Hong Kong i. A properly structured offshore business with no domestic business activities will not be subject to any corporate income tax. ii. An offshore company in Hong Kong must still need to register with the Hong Kong Inland Revenue Department. The deadline to complete this is within one month from the incorporation date. Upon registration, the Inland Revenue Department will issue a business registration certificate with a unique registration number. iii. The offshore status is not automatic, the company has to apply for offshore claim when submitting a tax return. The Inland Revenue will issue a full range of question to understand the company's business activities. The company has to response with sufficient supporting documents to substantial its claim of profits are derive fr overseas, not from Hong Kong. If satisfied, the Inland Revenue will grant the offshore status which has to be renewed as and when required.
How can INTERSHORES assist you to register offshore company in Hong Kong? INTERSHORES offers you a full suite of services to help you register your offshore company in Hong Kong.
Whatsapp : (852) 6499 4686 Phone : (852) 2186 6936 Email : info@intershores.hk
Disclaimer: Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice. |
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