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Entrepreneurs Guide To Forming An International Company In Hong Kong

Even though Hong Kong does not have any particular law that governs international company formation in Hong Kong, it has a lot of popularity as a jurisdiction to set up an international company in Hong Kong. And the main reason is the beneficial economic tax regime, ease of an international business setup, political and financial stability, and absence of foreign exchange controls.

If you want to have investment activities, international trade, and international banking activities, the best way is to set up an international company in Hong Kong. It is also the best vehicle to protect your assets for your company. Here you would find all the Hong Kong offshore company advantages along with the Hong Kong offshore company tax and other requirements for a better picture.

Forming an International Company in Hong Kong

Benefits of an International Company Formation in Hong Kong

There are many reasons for this, but the most common causes and the main reason for a person to set up an international company in Hong Kong are:

Trusted Image

Hong Kong is an international business center which benefits from a low tax regime, and has a better image than other offshore jurisdictions. This is a view that has been shown by the OECD.
Also, Hong Kong is one of the many authorities in the world that has pledged to the universal standard on the tax information and exchange. This is also one reason why a Hong Kong company is not taken negatively in the world.

Political stability

There is a direct relationship that is between the investment climate and the political stability in a country. Even though Hong Kong is under the administration of China, it has its own legislative, judicial, and economic systems.
The rule of law has priority in Hong Kong, and this is also one reason why Hong Kong has been recognized as the second-best bureaucracy in Asia. This is as per a recent survey that was taken by the PERC, the Political and Economic Risk Consultancy.

Tax benefits

Due to the business-friendly environment, the Hong Kong corporate tax regime is simple and has low taxes favoring company formation in Hong Kong. The corporate tax here is just 16.5%, while there is no withholding tax on dividends or interest, no estate duty, no VAT/GST, and no capitals gain tax.
Additionally, foreign-sourced income is exempt from the Hong Kong tax. Along with this, there are no foreign exchange controls as well, which is why it is best to open an international company formation in Hong Kong. Also, many companies do not have to pay the Hong Kong corporate tax as their income is derived from abroad, which is one of the best Hong Kong company advantages.

Ease of offshore company setup

One of the best Hong Kong company advantages is that the international company formation in Hong Kong is straightforward due to the highly alluring and business-friendly environment, devoid of needless bureaucracy or red-tape.
Furthermore, the foreign ownership policy in Hong Kong is favorable as authorizing the shares of a business to be 100% owned by a foreigner. Other than the incorporation and the registration, there isn’t any other special authorization that is needed from the government authorities before an international company formation in Hong Kong.

Incorporation Options for International Company Formation in Hong Kong

Two choices are available to set up an international company in Hong Kong and they are:

  • Purchasing a Hong Kong Shelf Business
  • Registering a New Hong Kong Business.

Purchasing a Hong Kong Shelf Business

A shelf company can be purchased, which is a “ready made” or pre-existing company that has been incorporated but not in use. Some people use these for their business for their ease of use and for banking purposes, however there are some disadvantages for these companies beneath the surface. The main reason for this are banks are becoming smarter and doing their due diligence, and they will know when a shelf company is being used as a guise for a new owner. Further, there is no way to 100% guarantee no past legal troubles or non-compliance of these established companies, thus it’s normally better to be safe and start a new.

Registering a New Hong Kong Company

In case, you decide to incorporate your own Hong Kong company with a particular name; you can select the private limited liability company which is the best and easiest option as the company can be form in one week as well.

Incorporation Facts of the International Company Formation in Hong Kong

Below shared are the things needed and the facts to setup an international company in Hong Kong:

Company Name

You would need to select a unique name for your Hong Kong company and get it approved by the Companies Registry of Hong Kong. This has to be done before the Incorporation process begins.

Directors

The requirements for the director of the company in Hong Kong are:

  • Directors can be of any nationality.
  • Directors do not necessarily need to be Hong Kong residents.
  • The directors can be both companies or even a natural person.
  • The maximum number of directors is unlimited.
  • Minimum number of directors needed is one.

Shareholders

The requirements for the shareholders for the international company formation in Hong Kong are:

  • The sole director can act as the shareholder as well.
  • The minimum number of shareholders needed is one.
  • The maximum number of shareholders in a company is 50.
  • The shareholders can be of any nationality.
  • It is not necessary for the shareholders to be Hong Kong residents.
  • The shareholders can be both a company or even a natural person.

Company Secretary

The requirements for the company secretary for the company formation in Hong Kong are:

  • It is mandatory to appoint a company secretary.
  • The company secretary has to be a local corporate company or a local person.
  • The director or the shareholder of the company cannot act as the company secretary.
  • A professional qualification is not needed.

Registered Address

An address that is a physically located in Hong Kong and is not a PO box, is required for company formation in Hong Kong.

Share Capital

The requirements for this are:

  • The share capital of any value has to be set for the company.
  • No bearer shares are permitted.

Taxation

One of the significant Hong Kong company advantages is that the Hong Kong corporate tax is 16.5% only for those businesses, for the income derived in Hong Kong. There is no tax on the income derived out of Hong Kong.

On-going Compliance

If you are about to set up an international company in Hong Kong, the company would also need to adhere to the ongoing compliance obligations that include: renewing the business registration certificate, maintaining company records and other business documents, holding timely AGMs, filing tax returns with the Inland Revenue Department, filing annual returns with the Companies Registry, Informing the Companies Registry of any changes to the organization or its members, timely annual audit of company accounts, and others.

 

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Incorporations Process of an International Company Formation in Hong Kong

To set up an international company in Hong Kong, two distinct steps are involved:

The Hong Kong Company Name approval

This  has to be done by filling out the application for it with the Companies Registry or company agent, and

Submission of the primary documents

For the company formation in Hong Kong to the Companies Registry. The documents are:

  • Copy of the parent company documents for corporate shareholders;
  • Copy of the Hong Kong identity card for the Hong Kong resident directors or shareholders;
  • Copy of bank reference letter, overseas residential address proof, passport for non-Hong Kong directors or shareholders;
  • Hong Kong company’s name, and
  • Hong Kong incorporation application form.

It usually takes about three to five working days for the processing of the application and for the offshore company formation in Hong Kong. As soon as you have set up your international company in Hong Kong and it has been incorporated, it is vital to comply with the following formalities:

Apply for Business Licenses (if required)

In case you are planning to perform any of the business operations in Hong Kong and if the activities that you are about to perform needs a business license, it is vital to get the same before you commence business operations.

Register with Inland Revenue Department

Within one month of the company formation in Hong Kong, the company has to register with the Inland Revenue Department of Hong Kong and get the Business Registration Certificate.

Open a corporate bank account

There are many choices of banks in Hong Kong with whom you can easily open a corporate bank account. But most of them would need you to be physically present at that time so that you can open the account in the bank. Other than you can also choose an international bank account in another country for your Hong Kong company. Startupr can assist you with opening an account along with the incorporation process, and even choosing the right account for your business.
Within fourteen days of the incorporation of the company, the following documents have to be submitted to the Companies Registry:

  • Registered address notification;
  • Consent to act as director;
  • Appointment notification of directors and secretary, and
  • Other documents requested by the Companies Registry.

Conclusion

Hong Kong is one of the most popular places to incorporate a company, and if you have decided to open an international business, the best way is to hire a professional firm for this since they are much familiar with the environment and the procedures. Moreover, instead of spending time and traveling, you can quickly get your company opened sitting in your home country and take the help of the professional agency. Additionally, the right agency would also assist you with the tax forms and annual return filing for the bank account opening. Startupr can help you with everything, and you would not even need to visit the country. Hire the best to get the best services!