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5 Reasons to Form a Company in Hong Kong

Hong Kong is often a “preferred choice” for most foreigners to set up a company. It is one of the major leaders in business and finance, which implies that it is an excellent jurisdiction for business incorporation and for businesses targeting the Asian market.

Also, Hong Kong being a politically stable country, it is indeed a great place to secure your wealth. It has a simple tax regime, world-class infrastructure and it’s the perfect base to do business in mainland China. Shouldn’t Hong Kong be on your radar?

Reasons to Form a Company in Hong Kong

If your Headquarters is in Hong Kong, half the world’s population is less than five hours’ flight away.

In this article, we will guide you through top 5 reasons why Hong Kong is the “perfect” destination to form your business.

1. Hong Kong’s Convenient Tax Regime

Hong Kong offers a favorable tax system for both individuals and businesses. If you are doing business with clients residing in Hong Kong, you will be charged only 16.5% tax on your profits over the year. However, if your Hong Kong company does not conduct business in Hong Kong, it would be non-taxable from the Hong Kong government.

However, you are eligible for “Offshore” status only if you are not doing business with anyone in Hong Kong. If you need any clarification or assistance with the tax laws in Hong Kong, your company incorporation service provider may help you in claiming the status depending on the level of service.

2. Company Formation in Hong Kong Is Easy & Affordable

To put it differently, setting up an offshore company would cost you around USD800 – USD1,200 for a company set up. It all depends on the reputation and the level of service.

Please Note: There are recurring monthly or yearly fees to keep your company registration, along with additional services. Such as;

  • Business Registration Certificate
  • Filing of annual return form
  • Profits Tax Reporting and Annual audit
  • Employer’s return
  • Company secretary renewal

The offered services vary from one service provider to another, So be sure to consider both the quality of service and price for your company. The registration process will take 5 to 7 days. For opening a Hong Kong bank account, you need to personally present in Hong Kong.

3. Go Global With A Solid Reputation

Hong Kong is one of the most popular destinations for company formation. When it comes to reputation Hong Kong serves as first-class finance/business center, with high-profile offices and banks.

Also, Hong Kong isn’t for the most part seen as a tax haven. Setting up an organization in a locale that is mainstream as a tax haven could contrarily influence your organization’s status.

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4. China

Setting up your company in Hong Kong is probably the best thing you can do if you sell to China. It is a short distance to China, which means that logistics won’t bother you or cost you much. Also, business travel is relatively cheap and transporting goods won’t put a load on your budget.

Interesting Fact: Hong Kong is the special administrative force to China, which mean that you can do business in China with a zero tax policy. A zero tax policy means you will not have to pay extra taxes. Therefore, your company would still need to pay taxes within China.

5. You Can Deduct More Tax As Write-Offs

There are numerous reasons why people choose Hong Kong as their preferred jurisdiction for establishing and expanding their business operations. And, below are the top factors that explain why people prefer Hong Kong above all;

  • Ease of setting up and operating a business in Hong Kong
  • Proximity to mainland Chinese market
  • Hong Kong offers a highly attractive tax regime. There is a low rate of personal and corporate tax; no value added tax, no sales tax or capital gains tax, no withholding tax on dividends and interest or collection of social security benefits.

Regardless of whether you need to pay taxes because of your business activities in Hong Kong, you won’t pay high taxes in any case, as Hong Kong tax regulations are lowers compared to other countries.

Takeaway

Hong Kong’s stable political environment, favorable tax system, and finance/business center make it a strong candidate for offshore company formation.

We still recommended to do your due diligence, research, and talk with those who have set up a company in Hong Kong. Otherwise, contact your service provider to help you decide if setting up a Hong Kong company is the right move for you!