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Although Hong Kong does not have any specific law that governs offshore company formation, it is one of the most popular jurisdictions for setting up an offshore company owing to its low tax regime, absence of foreign exchange controls, political and economic stability, ease of offshore company setup, etc. Setting up an offshore company in Hong Kong is the perfect vehicle for conducting offshore banking activities, international trade, investment activities, and for asset protection.
This guide sets out the advantages of Hong Kong incorporation, the options for registering an offshore company in Hong Kong, Hong Kong Offshore Company formation requirements and Hong Kong incorporation procedure and timeline.
Hong Kong Offshore Company – Incorporation Benefits The most common reasons behind setting up an offshore company in Hong Kong are:
1. Ease of offshore company setup: Hong Kong is ranked as one of the easiest places to do business in the world. Setting up a Hong Kong company is simple and easy, devoid of unnecessary bureaucracy or red-tape. Moreover, Hong Kong adopts a favorable foreign ownership policy by entitling the shares of a company to be 100% foreign-owned. There are no special authorizations that are required from government authorities prior to Hong Kong company set up.
2. Tax benefits: Hong Kong taxes are among the lowest in the world. The tax system is simple and favors offshore company setup. Hong Kong’s corporate income tax rate is 16.5%. There is no capitals gains tax, no VAT/GST, no estate duty, and no withholding tax on dividends or interest. Furthermore, foreign sourced income is exempt from tax in Hong Kong and there are no foreign exchange controls in Hong Kong. Thus, a Hong Kong offshore company that derives income from abroad is free from tax liabilities in Hong Kong. This is one the biggest advantages of Hong Kong Incorporation.
3. Political stability: There exists a direct relationship between political stability and the investment climate. Despite Hong Kong being a Special Administrative Region of China, it retains its political, economic and judicial systems. The rule of law takes precedence in Hong Kong and it has emerged as the second best bureaucracy in Asia, according to a recent survey conducted by the Political and Economic Risk.
4. Trusted Image: Hong Kong is often criticized as being an offshore tax haven. In reality, it is not a tax haven but simply a low tax jurisdiction. This view has also been endorsed by the OECD. Hong Kong is also one of the jurisdictions that has committed itself to the international standard on tax information and exchange. As a result, an offshore company in Hong Kong is not viewed negatively or with suspicion.
Hong Kong Offshore Company – Incorporation Options There are two options available for Hong Kong Offshore Company setup:
1. Registering a new Hong Kong company. 2. Purchasing a Hong Kong shelf company.
Registering a New Hong Kong Company If you want to incorporate a Hong Kong company with a specific name, you can opt for Hong Kong Incorporation of a private limited liability company. Hong Kong Company Registration is simple and easy and can usually be completed within one week's time.
Purchasing a Hong Kong Shelf Company If the name of the company is not important and if you cannot afford to wait until a new company is incorporated, you can purchase a ready-made Hong Kong shelf company. A Hong Kong shelf company, as the name suggests, is a company that has already been incorporated in Hong Kong and put on the shelf to be sold at a later date. A Hong Kong shelf company is in essence a company that has been legally registered in Hong Kong and does not possess any assets or liabilities. Once you purchase the shelf company you are free to change its name, increase its share capital, appoint a director, shareholder and company secretary and also change its registered address. Businesses that opt for a shelf company are those that need to do business urgently (such as applying for a tender or entering into business deals) and require a Hong Kong company registration number immediately. Shelf companies that are several months or years old are useful in conveying corporate longevity. It communicates to stakeholders that the company has been around for a while.
If you want to know more, please do not hesitate to contact us:
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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