Hong Kong Company

The Hong Kong is famous internationally. Many foreign investors like investing their capital in Hong Kong. What makes Hong Kong so attractive? Let’s share some of the advantages of the jurisdiction of Hong Kong for offshore company formation:

The Government of Hong Kong interferes the least in the economic matters of companies of Hong Kong. It is more oriented towards marketing, provides an open choice for the nature of business to the persons investing in Hong Kong and according to the global statistics, Hong Kong tops the list of providing freedom of economy.

When one has to transfer money from an account in Hong Kong to any other part of the world, he/she will have to undergo trivial checks and controls and no restriction on the type of currency. Yen of Japan, Dollars of U.S and GBP are supported for making payments between the rest of the world and Hong Kong.

There is no tax imposed on the profits that are gained by an offshore company under the Hong Kong laws for taxation. The tax is imposed only on local business. However, there is a trivial tax of 16.5% of the total gains earned by a local company of Hong Kong. If any overseas company registers in Hong Kong, it will be considered as an offshore company. For instance, if a company registered in Hong Kong buys stuff from China and trades them to America then the profit gained will not be taxed.

Tax Rate: The tax rate in Hong Kong on the local businesses of the region are quite trivial. It is not more than 16.5 % of the total profit generated by the business. There are no extra charges in the form of VAT tax, business taxation or taxation on capital etc.

Procedure of forming Hong Kong company: The method for the formation of a company in Hong Kong has little necessities. A foreigner can be assigned the directorship or membership with shareholding in the company in Hong Kong. The professionally local corporations may elect a secretary and provide the location of registered office.

You do not need to invest capital if your company is being formed in Hong Kong. As a member having shares in the company, you just have to sign the documents of memorandum and company’s articles for claiming that you will put up in the capital of the company. Hence, the person holding shares, is not necessarily required to make a payment to the company.

Using freely the name of the company: In certain parts of the world it is not freely permitted to companies to make use of certain terms in their names. Such as, international, holding, group etc. But, in Hong Kong there is a permission granted to companies that have such terms in their names, to utilise their names freely. However, it should be taken care that none of these names had already got their registered in Hong Kong.

The procedure of forming an offshore account in Hong Kong is quiet simple. Just needs submission of copies of Hong Kong’s company formation documents, passport of the applicant, evidences of the location, and a general idea about the type of business being run in Hong Kong. These documents should be given to the international bankers who will after accepting them, assign the company an international account with the benefits of online banking. This procedure may take some days or if fortunate enough, a single day.

The Lawful framework of Hong Kong, derives its structure from the regulations implemented in U.K. and other countries of Commonwealth.

Generally, the type of companies in Hong Kong is private with a limited liability.

As per the rules of Hong Kong, an overseas company is permitted to hold the directorship and shares in any company of Hong Kong. That means, a BVI’s corporate body can be the director as well as the shareholder of Hong Kong’s company.

The regulations regarding trust can find their implementation in Hong Kong. For instance, if someone invests and desires that nobody comes to know about his/her identity, then he/she can assign a trustee to his/her shares as a beneficiary. He will have to keep the ownership of a trust deed as a proof to his/her proprietorship over the business. But implementing laws of trust is not permissible, in different parts of the world such as in China.

For a company in Hong Kong, the maintenance of yearly records is a compulsion. Also, the registration of statutory audits should be done each year to the departments concerning taxes.

It may seem after reading the last point that it is a disadvantage, but it is very beneficial to offshore companies. So to move further, first of all, the significant fundamental regulations of Hong Kong need to be understood.

Under the law which is given by Hong Kong Inland Revenue Department (IRD), it has been made mandatory clearly by Section 51 that any company in Hong Kong has to maintain its records properly as well as data relevant to its accounts. Hence, it may help in calculating the total cash flow, loss, and other expenditure for taxation.

According to Section 14 Inland Revenue Department law, the gains that are made by any company running its business in the bounds of Hong Kong has to be subjected to a profit tax. Also making it clear that any business outside the border of Hong Kong will not be made liable to any profit tax. The case studies like HK-TVB and Hang Seng Bank support the rule that no taxes are imposed on offshore profit. Therefore, only tax of profit at local level is imposed in Hong Kong.

The law for companies in Hong Kong has made it compulsory for the companies to keep their records of accounts safe in books so that financial statements can be prepared every year. For this purpose, a person has to be assigned as an auditor every year, whose task would be to submit an auditor’s report catering all the business deals taking place in Hong Kong.

Why is this done? The first reason for doing this is to present the auditor’s reports in general meetings annually so that the persons holding shares get a chance to go through them and discuss about it and give their approval. Another cause is that it is a compulsion for the investors to register these files with the Inland Revenue Department (IRD). It should also be informed to IRD that the company has gained a heavy amount of profits after running its business and hence an exemption from the tax on profits should be requested. Then, after going through general processes, IRD will issue a notice notifying that an exemption from profit tax has been granted to your company. Moreover, there are safe records with the government proving about the legality of your source of income.

Such a procedure cannot be found in any other country. It involves:

• The records are maintained by the offshore company along with its account’s minutes.

• A person is assigned the task of auditing the accounts and prepare a report of audits.

• A general meeting is held every year for the approval of an audited account and the report is submitted to IRD.

• The documents related to the audits are shared with IRD and it is then claimed to get exemption from profits tax on offshore gains.

• Later, the IRD gives your company assurance that no tax will be imposed on the cross border profits gained by your company. For example, check the sample of a letter in the order form portion.

Is it not wonderful that as a person making an international investment, you will be involved in overseas business and will just have to hire someone who helps you with your company’s records and paperwork, prepares the annual reports of accounts for your company and claims an exemption from the tax due to offshore profit. That means, you will have to pay no tax even if the cash flow is up to millions or billions of dollars.

Here are the bank networks we are providing our services on:

• Banks of Hong Kong by visit.

By our services, we can assist you in opening an offshore account in an international bank. Moreover, you will not have to visit these banks for every jurisdiction. But the following documents should be given:

• Documents of company formation.

• Copies of passport.

• An evidential copy of address (It should be noted that some bankers, may require evidences for business for clients belonging to risky countries such as North Korea).

As the policies for opening bank accounts may vary from bank to bank, a better approach would be that we analyse your case after the application is filed. This will help us in suggesting you banks that are more suitable for your case so that you are helped in expanding your business overseas and benefit from tax free profits.

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