Despite the few drawbacks of setting up a company in Hong Kong such as the need to travel to Hong Kong to open a corporate bank account, rising expat packages, and the low quality of conversational English, Hong Kong is still one of the key investment locations for businesses looking to enter the Asian market.
There are many key benefits that Hong Kong provides companies including a stable
1. Hong Kong offshore company
A. Setting up an offshore company in Hong Kong is an excellent way to house a company’s global corporate profits while minimizing taxes. If there is no trade conducted within Hong Kong, companies will be legally tax-exempt.
B. An offshore company can be quickly set up in Hong Kong. Incorporation takes 1 week and there are only 1 director and 1 shareholder required. Both can be of any nationality.
C. Hong Kong’s banking system is considered one of the most secure in the world and the government has strong Client confidentiality guidelines.
D. Setting up an offshore company in Hong Kong is not considered a tax avoidance strategy and as such it is easy to open corporate bank accounts.
Differences between a Hong Kong LLC and offshore company
- An offshore company is unable to conduct business within Hong Kong
- An offshore company pays no taxes on earnings from outside of Hong Kong. Hong Kong LLCs pay a 16.5% corporate tax rate for all income from trade within the city.
- Offshore companies in Hong Kong cannot apply for immigration visas or hire staff.
Types of company in Hong Kong
• Limited companies are unrestricted in the activities that they perform, thus it is a popular option for most companies looking to set up in Hong Kong;
• Limited companies in Hong Kong will benefit from tax exemption on income from overseas operations. Thus, Hong Kong is the ideal location to set up a holding company or company headquarters;
• There are minimal requirements to set up a company in Hong Kong including i) only one director (of any nationality), ii) only one shareholder (of any nationality), and iii) a resident secretary; • Hong Kong limited companies are based on English limited companies;
• Limited companies are separate legal entities and can carry out activities distinct from their owners;
• Corporate shareholders are common, but corporate directors are not allowed under Hong Kong company law;
• All active companies in Hong Kong must submit audited accounts with tax returns at their annual general meetings;
• There are no minimum share capital requirements and no government approval is required to incorporate a limited company in Hong Kong;
• Hong Kong allows a company’s shared capital to be denominated in any currency including USD, GBP, EUR, and HKD, making Hong Kong an ideal location for multinationals looking to expand
Branch offices are considered extensions of their parent company. As such, a branch office does not have a separate legal identity;
• Positive or negative financial impact for a branch company will be attributed to the parent company.
• Hong Kong branch offices can conduct trade within the scope set by the parent company but can only carry out business in Hong Kong with appropriate licenses;
• A branch office in Hong Kong can start operations up to a month before registering with the Hong Kong Companies Registry. Foreign companies setting up branch companies in Hong Kong will need to register as a “Registered NonHong Kong Company” within one month of setting up;
• Branch offices in Hong Kong are permitted to invoice local customers, sign local sales contracts and receive income from local customers;
• A branch office is ideal for companies that need to start business immediately or companies with small operations selling only in Hong Kong;
• There is no requirement for a branch office in Hong Kong to submit audited accounts with their annual returns and tax filings.
• A representative office is not permitted to make direct sales in Hong Kong;
• Activities for representative offices in Hong Kong are limited to i) promoting the parent company’s business, and ii) carrying our market research; • If a company only has a representative office in Hong Kong, it is required to appoint a local agent or distributor to sell goods and provide services to local customers;
• A representative office is ideal for companies looking to enter Hong Kong to carry out market research and explore business opportunities due to the limitation in business activities.