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Having a virtual office in Hong Kong to operate overseas is used to be a preferable and popular arrangement of overseas clients. As time goes by, this model has to be modified with substance in light of the changing regulatory environment. Non-HK residents who do not want to relocate to Hong Kong for business but operate the company overseas should consider the following to claim offshore status:
1. Non-HK residents are free to be the sole directors and shareholders of a Hong Kong company but you should appoint a professional practice as their company's administrator to supervise its company’s affairs without making decision for the company.
2. You do not need to rent a physical office and can use virtual office as your registered office in Hong Kong for statutory compliance or even as your operating address. You should have a place of permanent establishment to do business.
3. There is no need to relocate to Hong Kong for business. Non-HK business owners are free to operate their Hong Kong company overseas and conduct businesses anywhere. However, you should travel to Hong Kong to justify you need of your Hong Kong company to carry on business. Keep all the travel expenses and supportings.
4. Always link your business with good reasons in connection with say China for business substance despite there is no physical operation in Hong Kong (i.e. think from the perspective that why do you need a HK co. if there is no physical operation in HK. There must be a good business reason such as expansion of your business in Asia as an example).
5. Keep all the business evidence for any business transactions no matter it is entertainment, traveling, agreement, etc. to justify non-Hong Kong business or non-Hong Kong-sourced income. Bear in mind you have to strike a balance of no sale or purchase made to/from a Hong Kong customer/supplier, no stocks stored in Hong Kong, no physical presence in Hong Kong, no decision made in Hong Kong vs why you need a Hong Kong company then. Always tell your service provider at the begining of your venture you want to have offshore claims as preparation and always keep good evidence and records.
Remember, the burden of proof for offshore claim of a Hong Kong company is entirely at the business owner of the company. You have to provide sufficient evidence to the Inland Revenue Department (“IRD”) to justify their approval on offshore status. It is at the entire discretion of IRD to approve your offshore claims upon totality review of facts.
Need Assistance INTERSHORES has over 20 years of corporate services experience and can assist you to build up substance based on your preferrence. Please do not hesitate to contact us at info@intershores.hk or by whasapp at (852) 6499 4686.
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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