Why Create an Offshore Company in Hong Kong? [Explanations]

offshore company hong kong


Hong Kong is one of the most open and outward-looking economies in the world, making free trade the cornerstone of its economy.

Unmatched location in Asia

Hong Kong is the location privileged at the geographical and economic level of Asia. Indeed, the leaders
companies in Hong Kong have quick and easy access to all major
markets in the Region. This central position is one of the main reasons
of the city’s popularity as a location for operations regional.

Gateway to China

Hong Kong has a valuable advantage due to its proximity to mainland China. Hong Kong served gateway to China for over a century and a half and is the best
place in the world to obtain expertise, information and adapted facilities to break into the huge Chinese market.

Expert opinion

The Heritage Foundation, The Wall
Street Journal and the Cato Institute in the United States and the Fraser Institute of Canada
have always noted Hong Kong as the freest economy in the world.

Hong Kong in a nutshell:

  • The central point of its economy is free enterprise, free trade and free markets open to all;
  • No barriers to trade – no tariffs, no quotas, no exceptions;
  • No restrictions on inward or outward investments;
  • No exchange controls;
  • No nationality restrictions.

1. Country overview

Geographic location Independent Territory in Southeast China
Capital Hong Kong
Zone and population Area of 1,104 km2 and population of 7 million
Language Chinese and English
Currency Dollar Hong Kong
International dialing code +852
Business Hours and BankingRegular office hours are from 9 am to 5 pm or more (depending on the type of business) during the week and from 9 am to 1 pm on Saturday The big banks are open from 9 am to 4:30 pm on weekdays and from 9 am to 7 pm / 12:30 pm on Saturdays. Closed on Sundays and holidays.
Fellowships Fellowships Hong Kong
Political structure Special Administrative Region of the People’s Republic of China

2. Why create a company in Hong Kong?

Hong Kong is one of the best cities for companies with one of the most flexible and supportive governance regimes in the world.

Here are some examples of benefits of using Hong Kong as a point of entry into China for business.

2.1 Advantages of entering China via Hong Kong

Economic Partnership between China and Hong Kong

The Closer Economic Partnership Agreement (CEPA) is the first agreement concluded between China and Hong Kong creating a free trade area strengthen cooperation in the promotion of trade and investment to improve the overall economic environment.

Foreign investors can therefore benefit from greater economic liberalization.

2.2 – Other benefits

  • Quality of business environment in Hong Kong;
  • Financial and commercial center of world scale;
  • Proximity with China;
  • Guaranteed anonymity of shareholders and directors;
  • Banking secrecy is respected;
  • The best fame and image in the middle of offshore and international companie

3. How to start a business in Hong Kong

Starting a business in Hong Kong is simple with transparent procedures and easy to perform. It will be appropriate first to choose the name of the company and then proceed to the choice of the legal status according to the needs of this last.

3.1 – Step 1 : The choice of the corporate name

  • The social name

The first step is to check the index of company names on the Companies Register for see if the proposed name has already been registered. If the name is not the same as the one already listed on the company name index, the company registration may then be subject to registration.

  • The registration certificate

The registration certificate can be issued within 24 hours when applying online application or 4 working days in case of paper submission.

The certificate must be renewed annually at the current rate $ 2,450 Hong Kong. A tax on capital is also to pay to the enterprise registrar at the time of incorporation fee of HK $ 1 per HK $ 1,000 of authorized capital.

About companies foreigners, they must establish a place of business in Hong Kong and register with the Register of Companies as a non-Hong Kong company
and file certain documents such as a copy of the incorporation corporation certificate, the name and address in Hong Kong of a person residing in Hong Kong.

3.2 – Step 2: The choice of legal structure

There are different statuses corporate law in Hong Kong.

  • Private Limited Company (LTD)

The LTD can be compared to the company limited liability company (SARL). This legal form is the most widespread in Hong Kong because it allows foreign entrepreneurs to create a corporation owned 100% by its shareholders, without residing on the territory.

Legal Criteria:

  • Between 1 and 50 shareholders maximum;
  • 1 minimum director;
  • Assignment of shares: agreement of all shareholders necessary;
  • No minimum capital;
  • Appointment of a mandatory Secretary.
  • Other types of legal status

Outside the LTD, other legal statuses are planned:

  • A Public Limited Company;
  • The Company Limited by Guarantee;
  • General Partnership: from 2 to 20 partners;
  • Limited Partnership: at least 1 partner with unlimited liability;
  • Sole Proprietorship: 1 individual entrepreneur with unlimited liability;
  • The Unlimited Company: at least 2 partners with unlimited liability and solidarity of the debts and liabilities of the company;
  • Branch and subsidiary: This is for foreign companies wishing to have a secondary school in Hong Kong. They must be registered in the Commercial Register as a “registered non-Hong Kong company” within one month of its implementation.

4. Taxation in Hong Kong

4.1 – The tax on profits

Companies carrying on a business, profession or business in Hong Kong are subject to income tax in Hong Kong or from Hong Kong. However, certain royalties received from a Hong Kong payer by a foreign entity that does not otherwise carry on business in Hong Kong are subject to withholding tax in Hong Kong.

  • Tax base

The tax base in Hong Kong is territorial. Determining the source of profits or revenues can be extremely complicated and often involves uncertainty. This requires a case-by-case examination. For certainty in this and other tax matters, taxpayers may request advance tax ruling from the tax authorities, subject to certain fees and other procedures.

  • Income tax rate

The corporate tax rate on profits is 16.5%, making it the lowest rate in the region (for example, compared to 25% in China and 17% in Singapore).

  • Tax exemption for non-resident funds

Non-resident persons, including corporations, partnerships and trustees of trust companies, are exempt from tax in Hong Kong if their Hong Kong operations are limited to certain specified transactions and ancillary transactions to such transactions, such as that transactions in securities futures and foreign currency in particular.

4.2 VAT

No VAT in Hong Kong.

4.3 – Income Tax

Individuals are subject to a tax on wages at a progressive rate ranging from 2% to 17%.

4.4 – Capital Gains, Dividends, Turnover Tax

No tax on capital gains, dividends and turnover.

4.5 – Other taxes

Other applicable taxes include property tax and stamp duty.

No salary, employer or professional taxes.

5. Audit and Accounting

5.1 – Accounting requirements

Companies based in Hong Kong are required to prepare financial statements giving a fair and accurate view of their accounts.

These financial statements must be prepared and presented in accordance with the Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Institute of Chartered Accountants (HKICPA). HKFRS includes all Kong Financial and Accounting Standards approved by the HKICPA Board.

5.2 – Statutory Audit Requirements

Under Hong Kong law, each Hong Kong-based company must designate one or more independent auditors. The designated auditor must be a member of HKICPA and have a certificate of practice issued by the Institute.

6. Employment and Human Resources Law

6.1 – Hours of work

Hong Kong labor law does not provide for provisions governing the maximum number of hours of work for an employee.

6.2 – Minimum wage

The average hourly wage of employees in respect of any pay period should not be less than the legal minimum wage of HK $ 28 per hour. This is applicable to all employees except for example trainees.

6.3 – Contract

Employees are also entitled to such benefits, as days of rest, paid annually, sickness benefits, severance pay, etc.

7. Trade

7.1 – Restrictions on foreign investment

In general, no restrictions apply in particular to foreign investors and enterprises wholly owned by foreign capital are permitted.

7.2 – Import and export

The Hong Kong government is firmly committed to free trade and free enterprise. As a result, few controls are carried out on imports, exports and re-exports.

Hong Kong does not have big restrictions on imports. A prior license or other certificate may be required for the importation of certain categories of goods, including customs duties on goods, weapons and ammunition, dangerous drugs, pharmaceuticals, etc.

Frequently asked questions

Who can set up his company in Hong Kong?

All natural and legal persons (companies) of all nationalities.

Do I have to work in Hong Kong to create my company?

No, you can start your business in Hong Kong and work from another country.

Is it complicated to set up a company in Hong Kong?

No, creating a company in Hong Kong is very easy. If you speak English, no problem.

About StanTax

Firm of consultants and specialists of 20 years of experience in tax optimization, creation of offshore company, professional bank account and in financial arrangements for investments.

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