Why Form a Hong Kong Company
A Hong Kong company formation structure, is the perfect choice if you’re looking to trade with China and other jurisdictions in the region.
Hong Kong is the ideal location for frictionless trading and carrying out a wide array of commercial transactions, all conveniently done in English, a language that is widely spoken throughout this important Asian international business center.
Registering your Hong Kong company is quick, easy, and affordable, and there are no minimum share-capital requirements to complicate matters for you. All you need is one director and shareholder to form a limited liability company (LLC), plus there are no restrictions on having foreigners in either of those roles.
Additionally, the Hong Kong tax system is simple, easy to understand, and advantageous for international investors.
Due to the island’s system of territorial taxation, trade profit from foreign sources, capital gains tax, profit from offshore funds, and most interest are exempt from tax. Hong Kong also has a broad network of double taxation treaties covering taxes on profits, salaries, dividends, and royalties, which facilitates assessing the tax implications of cross-border transactions.
Last but not least, Hong Kong has an excellent international banking system and world-class communications and transportation infrastructure, making it easy to connect with business partners and colleagues throughout the globe.
Why a Hong Kong Company Could Be Ideal for You
There are many advantages proffered to the modern-day investor when setting up a company in Hong Kong:
100% Personal Ownership: Foreign investors that choose to register a company in Hong Kong are allowed to own 100% of their company or companies. This jurisdiction does not impose a limit on the percentage of a company that can be owned by an investor. All you need is one person who can operate both as director and shareholder, and you do not need to be a Hong Kong resident to carry out either of these roles.
Business Friendly Corporate Tax Rate: You will benefit from the island’s low corporate tax rates, which are 8.25% for inward profits under roughly 235 thousand Euros and 16.5% for whatever exceeds that amount. Outward profits or those coming from foreign earnings are tax exempt via the jurisdiction’s offshore tax claim program.
Little to No Taxes on Other Things: Hong Kong doesn’t levy capital gains, dividends, hotel accommodation, good and services, sales, value-added, or withholding taxes. Furthermore, as a free port, the island exempts tax and excise duty on total exports as long as you have a license that is easy to procure. Finally, income and property taxes are relatively low.
Solid Rule of Law: Hong Kong’s set of rules and regulations make it an attractive place where to establish your base of operations. The jurisdiction’s robust legal system relies on the rule of law, an independent judiciary system, and the tradition stemming from English common law. This makes Hong Kong’s legal system one that is fair, efficient, clear, and transparent, yet another advantage for well-traveled and seasoned businesspeople like yourself.
Freedom to Do Business: On a yearly basis, Hong Kong ranks as one the friendliest and most flexible jurisdictions for businesspeople. The range of businesses that can be opened is extensive and includes sectors such as trading, e-commerce, manufacturing, consulting, and financial asset holding. Plus, opening a bank account with your Hong Kong company can be done quickly and easily.
Strategic Geopolitical Location: Hong Kong is perfectly located if you’re looking to do business with China. Travel to the mainland is fast and easy, and linkages have been strengthened via the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). Similarly, Hong Kong has established a free trade agreement with ASEAN nations, a move that has boosted these relationships in a wide array of areas including trading, investments, IPs, and economic and technical co-operations, among others.
World-Class Facilities, People & Lifestyles: Hong Kong delivers when it comes to transportation and communication hubs, as well as its skilled workforce and stylish infrastructure. Boasting of one of the busiest airports in the world and an efficient transportation hub including ports, high-speed railways, and more, Asia will always be at your doorstep if you decide to call Hong Kong home. Likewise, Internet connectivity is among the best in the world, and the local professionals, who have a solid grasp of English, are skilled, knowledgeable, and hardworking. Last but not least, although on the expensive side, the quality of life is top notch; an excellent school system, world-class housing, and high-end entertainment, restaurants, and shopping make it an attractive destination for thousands of investors.
Hong Kong as a Booming International Financial Center
In case you didn’t know, Hong Kong has set itself up as one of the world’s leading international financial centers.
As the global main gateway into China and an offshore hub for renminbi, Hong Kong has caught the eye of thousands of investors looking for a stable, friendly, and favorable base of operations for their business. Whether it is fintech or the financial services, businesspeople continue to flock this island off of mainland China to carry out their business.
The numbers speak for themselves.
According to the Hong Kong Monetary Authority (HKMA), in 2021, there were close to 280 thousand professionals plying their trade in the financial services sector, an industry that contributed close to 22% of the island’s annual GDP.
Furthermore, 200 of the world’s largest banks have set up shop in Hong Kong, while the local stock market has ranked #1 in IPO fundraising seven times in the past 12 years. Additionally, Hong Kong remains the best location for international fund and private wealth management in Asia with $4,558 billion assets under management.
Finally, and probably most important, two-thirds (65%) of China’s inward and outward investment started and passed through Hong Kong, marking the island’s importance to international businesses looking to make the leap into China or bolster their standing in the world’s second largest economy.
Hong Kong’s Advantageous Tax System
As mentioned above, Hong Kong has one of the world’s friendliest tax systems for businesses. Here are some of its main highlights:
- No capital gains, dividends, hotel accommodation, good and services, sales, value-added, or withholding taxes.
- Corporate tax rate on inward profits (those sourced in Hong Kong) at between 8.25 and 16.5% depending on the size of the company and the profits accrued.
- No taxes on outward profits or those earned from foreign sources by applying for an offshore tax claim.
- A basic salary tax of 2 to 17% of assessable incomes.
- A 15% tax on the net assessable value of a property.
- Extensive network of double tax treaties (45 and counting) to help you avoid double taxation.
How We Can Help with your Hong Kong Company Formation
Forming a Hong Kong company is quick, easy, and straightforward, and the entire process will generally take between five and seven working days.
Meridian Trust will help you register your company with the Business Registration Office of the Inland Revenue Department and arrange for the issuance of your Company's Business Registration Certificate. Additionally, we can assist you with the opening of a local bank account and setting up a fully serviced local office if needed.
Once your company is established, we will provide you with secretarial, administration and local management services to keep it running smoothly, always in good legal standing, and with up-to-date accounting records and audited financial statements.
Besides these basics, we put our decades of relevant experience in legal and tax matters at your service, helping you navigate the jurisdiction’s legal framework and minimize your tax obligations to the fullest.
Start your Hong Kong Company now.
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