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, which aims to attract highly skilled or talented persons who will settle in Hong Kong in order to enhance its economy, except nationals of Afghanistan, Cuba, Laos, Korea (Democratic People’s Republic of), Nepal, and Vietnam
• The General Employment Policy, which sets out the entry requirements for persons who wish to enter or stay in the HKSAR for professional employment
• Investment as Entrepreneurs, which is for persons who wish to enter or stay in the HKSAR in exchange for establishing or joining in business as entrepreneurs under the General Employment Policy

The Quality Migrant Admission Scheme

• The Quality Migrant Admission Scheme (QMAS) seeks to attract highly skilled or talented individuals who will settle in Hong Kong. Applicants are required to fulfill a set of prerequisites before they can be awarded points in one of the two points-based tests below (qualified individuals from the Talent List are eligible for bonus points under the QMAS):
• The General Points Test — Has a passing mark of 80/225 and comprises five categories, namely age, academic or professional qualifications, work experience, language proficiency, and family background.
• The Achievement-Based Points Test — For applicants who have received an award of exceptional achievement (such as Olympic medals, Nobel Prizes, national or international awards) or applicants who can show that their work has been acknowledged by their peers or has contributed significantly to the development of their field (for example, a lifetime achievement award from their industry). Applicants who have met one of the criteria under this test will be awarded 225 points; otherwise, no points will be awarded and the application will be rejected.

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:

• The applicant has a good education background, normally a first degree in a relevant field of employment
• There is a genuine job vacancy
• The applicant has a confirmed offer of employment and is employed in a job relevant to the academic qualifications or work experience that cannot be taken up by the local workforce
• The remuneration package including income, accommodation, medical, or other fringe benefits is broadly commensurate with the prevailing market level for professionals in Hong Kong

Investment as Entrepreneurs

• ·    The Investment as Entrepreneurs category sets out the entry requirement for persons who wish to enter or stay in the HKSAR as entrepreneurs under the GEP, in other words, to establish or join a business in the HKSAR.
• ·   The applicant should have a good education background, normally a first degree in a relevant field. The applicant will need to establish or join a start-up business and be in a position to make a substantial contribution to Hong Kong’s economy, with consideration factors including, but not limited to: business plan, business turnover, financial resources, number of jobs created locally, and introduction of new technology or skills.
• Overseas Chinese nationals holding People’s Republic of China passports who meet the criteria stipulated above as well as the normal immigration requirements may apply for the HKSAR Investment as Entrepreneurs visas if the applicant has permanent residence overseas or the applicant has been residing overseas for at least one year immediately before the submission of the application. (‘Overseas’ refers to places outside mainland China, the Hong Kong Special Administrative Region, and the Macao Special Administrative Region.)
  

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%.

•         Step 1: Choose a Company Name

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.

•  Step 2: Choose the Type of Company

 Hong Kong offers several types of companies, including limited liability companies (LLCs) and branch offices. LLCs are the most common type of offshore company in Hong Kong and provide limited liability protection to shareholders.

•    Step 3: Choose a Registered Agent and Address

 All Hong Kong companies are required to have a registered agent and address in Hong Kong. The registered agent will handle all official correspondence on behalf of the company, while the registered address will be the official address for the company's correspondence.

•   Step 4: Prepare the Required Documents

 To register an offshore company in Hong Kong, you will need to prepare the following documents:

1.  Certificate of Incorporation
2. Articles of Association
3. Business registration certificate
4. Memorandum of Association
5.   Incorporation form
6.  Identity proof and address proof of directors and shareholders
   

•        Step 5: Submit the Documents to the Companies Registry

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.

• Step 6: Open a Corporate Bank Account

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.

•   Step 7: Fulfill the Ongoing Compliance Requirements

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.

 In Conclusion, registering an offshore company in Hong Kong can be a highly effective strategy for entrepreneurs looking to take advantage of Hong Kong's business-friendly environment and favorable tax system. By carefully following the registration process and fulfilling ongoing compliance requirements, you can establish a successful offshore company in Hong Kong and reap the benefits of increased profitability and growth.