Hong Kong is another popular
offshore company formation destination due to its low tax rates, strategic
location, and open economy. Hong Kong has a simple and transparent tax system,
with a corporate tax rate of just 16.5% and no tax on foreign-sourced income.
Hong Kong also has a highly developed financial system, making it an attractive
location for businesses in the financial sector.
Hong Kong has a reputation for being one of the easiest places to do business, with a highly efficient and transparent regulatory environment. The incorporation process is relatively straightforward, and the government offers various support services for new businesses, such as funding and mentorship programs.
Applicants must complete a points-based test under the Quality Migrant Admission Scheme
Four–eight months
Eligible to apply for permanent residence after seven years
Some of the many advantages of Hong Kong include:
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Benefits of Registering an Offshore
Company in Hong Kong
1) Favorable Tax System
Hong Kong has a simple and transparent tax system, with a low tax rate of 16.5%. Hong Kong's tax system is also territorial, which means that companies are only taxed on income generated within Hong Kong. This makes Hong Kong an attractive destination for offshore companies looking to minimize their tax liabilities.
2) Strategic Location
Hong Kong's location in the heart of Asia makes it an ideal location for companies looking to expand their business in the region. It is well-connected to other major Asian markets, including China, Japan, South Korea, and Taiwan, making it a gateway to these markets.
3) Business-Friendly Environment
Hong Kong is known for its business-friendly policies, which make it easy to do business in the country. The government has implemented measures to simplify company registration and reduce bureaucracy, making it easy for companies to set up and operate in Hong Kong.
4) Efficient Banking System
Hong Kong has a highly efficient and stable banking system, which is an essential factor for offshore companies. The city is home to some of the world's largest banks and has an excellent reputation for financial stability.
Hong Kong has a robust legal system that protects intellectual property rights. The city has enacted laws to protect trademarks, copyrights, patents, and other forms of intellectual property, making it an ideal location for companies that rely on intellectual property.
6) Skilled Workforce
Hong Kong has a highly educated and skilled workforce, with a large pool of talent from diverse backgrounds. This makes it easy for companies to find the right talent for their business needs.
7) Access to Funding
Hong Kong is a hub for venture capital and private equity investment, with a thriving startup ecosystem. This makes it easy for offshore companies to access funding and grow their business
Hong Kong Residence by Investment
In September 2003, the Immigration Department of the Government of Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China introduced the Capital Investment Entrant Scheme. Prior to the introduction of the scheme, individuals seeking residence in return for investment in the HKSAR had to rely on a subset of the employment visa, known as the Employment Visa Based upon Investment in Hong Kong (the business investment visa). Although its Capital Investment Entrant Scheme was suspended in 2015, the Hong Kong Special Administrative Region (HKSAR) offers several other residence programs.
Residence by investment options
The Capital Investment Entrant Scheme was officially suspended on 15 January 2015. However, there are other alternatives for individuals who wish to apply for Hong Kong residence. These are:
The Quality Migrant Admission Scheme
The General Employment Policy
The General Employment Policy (GEP) sets out the entry requirement for persons who wish to enter or stay in the HKSAR for employment as professionals. Applicants who possess special skills, knowledge, or experience of value not readily available in Hong Kong may apply to work under the GEP if the following criteria are met:
Investment as Entrepreneurs
Procedures and time frame
In order to obtain any of the above
visas, the applicant must submit all the relevant application forms and
supporting documents. Upon the Immigration Department’s receipt of all the required
documents, it normally takes four to eight months to process the visa or entry
permit applications.
Approval of applications is entirely discretionary and is subject to changes in government policies. The director of immigration reserves absolute discretion to refuse any application, even if all criteria for eligibility are met. Successful applicants will normally be granted a limited extended stay of 24 months (only without other conditions of stay upon entry). Applicants may apply to extend their stay in the HKSAR before their limit of stay expires. Such applications will only be considered if the applicants continue to meet the eligibility criteria under entry for investment, the QMAS, or the General Employment Policy.
Tax in Hong Kong
Taxation in Hong Kong is based on a
territorial source principle. Hong Kong companies only pay tax on profits
sourced in Hong Kong, and the rate of taxation currently is 17.5% on assessable
profits. There are no withholding taxes on dividends or interest and no taxes on
capital gains. However, withholding tax on royalties does apply, currently at
5.25%, and is only imposed on royalties paid to non-resident recipients not
related to the payers. If they are related parties, then a tax rate of 16.5% is
applicable.
Hong
Kong companies are ideal vehicles for international trading or consulting
activities that do not have links in Hong Kong. These businesses can therefore
be conducted free of tax. The same is true for companies that hold real estate
that is located outside Hong Kong. There is no capital gains tax, and dividends
received or distributed by a Hong Kong company are also tax-free. Even the
standard rate of profits tax applicable to Hong-Kong-sourced income is very
competitive, at 16.5%.
The first step in registering an offshore company in Hong Kong is to choose a company name. The name must not be identical to any existing Hong Kong company name, and it must not be offensive or misleading. You can check the availability of your desired company name on the Hong Kong Companies Registry website.
Once you have prepared all the required documents, you can submit them to the Hong Kong Companies Registry. The registration process typically takes around 5-7 working days.
Once your offshore company is registered in Hong Kong, you will need to open a corporate bank account. Hong Kong offers a wide range of banks, including international banks, making it easy to find a bank that meets your business needs.
After registering your offshore company in Hong Kong, you will need to fulfill ongoing compliance requirements, including filing annual tax returns, maintaining proper accounting records, and holding annual general meetings.
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