COUNTRY
Hong Kong
HONG KONG OFFSHORE COMPANY
Setting up a Hong Kong offshore company is a popular option for legally reducing global taxation due to its various tax benefits.
The company can take advantage of Hong Kong’s lack of capital gains tax, holding tax on limited foreign earnings, and exemption from Hong Kong’s corporate income tax on foreign-sourced income.
Additionally, as Hong Kong has signed 36 double taxation avoidance agreements, it can provide added protection against double taxation for international business operations. Furthermore, Hong Kong’s strategic location and strong economic ties with mainland China make it an ideal entry point for businesses looking to expand into the Chinese market.
KEY REQUIREMENTS FOR HONG KONG OFFSHORE COMPANY
TIMELINE FOR REGISTERING AN OFFSHORE COMPANY IN HONG KONG
Shareholders
A Hong Kong offshore company requires a minimum of one shareholder, with a maximum of 50 shareholders allowed. Shareholders can be both companies or natural persons, and do not need to reside in Hong Kong. Shareholders can be from any country, and nominees are also accepted. The shares of the company can be owned locally or abroad, and a single director can also serve as a shareholder.
Share Capital
The Hong Kong Companies Registry must approve the chosen name before the company can be incorporated.
Directors
A Hong Kong offshore company requires a minimum of one director, with no maximum limit on the number of directors. Directors can be both corporations or natural persons, and do not need to reside in Hong Kong. Directors can be from any country, and nominee directors are also accepted.
Company Secretary
The company is required to appoint a company secretary. The company secretary can be a corporate resident or a local person and does not require a professional degree. However, the company secretary cannot be a sole director or shareholder.
Registered office address
The company must have a registered office address in Hong Kong, where all official communications and legal documents will be sent. This address is also publicly available on the Hong Kong Companies Registry.
Taxation of an Offshore Company
Hong Kong is known for its low-tax jurisdiction, and its offshore companies are one of the most popular options for legally reducing global taxation. The Hong Kong offshore companies are exempt from taxes on foreign-sourced income and capital gains tax, which makes them an attractive option for businesses looking to minimize their global tax liability.
However, it’s important to note that the tax laws and regulations in Hong Kong are subject to change, and it’s essential to understand the tax implications of setting up an offshore company in Hong Kong.
An offshore company in Hong Kong is considered a “tax resident” if its management and control are exercised in Hong Kong. In this case, the company is liable to pay corporate income tax on its worldwide income at the rate of 16.5%. On the other hand, if an offshore company is considered a “non-tax resident,” it’s only liable to pay tax on the income generated in Hong Kong.
Furthermore, Hong Kong has signed 36 double taxation avoidance agreements with different countries, which provide added protection against double taxation for international business operations. These agreements allow offshore companies in Hong Kong to claim foreign tax credits or a reduced withholding tax rate on certain types of income they receive from abroad.
It’s important to consider that the tax laws and regulations in Hong Kong are subject to change, and it’s recommended to consult with a professional firm such as Relin Consultants to ensure that your company is in compliance with local tax laws and regulations. We can also help to understand the tax implications of setting up an offshore company in Hong Kong and how to maximize the tax benefits.
INCORPORATION PROCESS OF HONG KONG OFFSHORE COMPANY
Registering a new Hong Kong offshore company
In this option, the business owner can establish and register a new offshore company in Hong Kong on their own. The existing company can be a shareholder of the new corporation if it already has one abroad or in Hong Kong.
The offshore company formation process in Hong Kong is similar to the normal incorporation process. The process includes choosing a company name, submitting the necessary documents, and paying the registration fee. You can refer to Hong Kong Company registration for additional information.
Purchasing a Hong Kong Shelf Company
In this option, the business owner can invest in a pre-existing “Hong Kong shelf company,” a company that has already been established, registered and is currently dormant. This option is suitable for business owners who want to start conducting business immediately, as the company is already registered and the necessary licenses and permits are in place.
However, it’s important to conduct due diligence and check the company’s history before purchasing a shelf company. It is also important to note that when purchasing a Shelf Company, the company will have a history that may be difficult to change and may not be suitable for certain types of business.
Applying for Offshore status from the Inland Revenue Department
A Hong Kong-incorporated company may obtain offshore status from the Hong Kong Inland Revenue Department (IRD) if it meets certain criteria.
- Offshore Status Criteria: The company must not have any Hong Kong-sourced income or if it does, it should be insignificant. The management and control of the company should be exercised outside of Hong Kong.
- Application Process: The company must submit an application for offshore status to the Hong Kong IRD, along with the required documents, such as a copy of the company’s certificate of incorporation, articles of association, and business registration certificate.
- Supporting Documents: The company must also provide supporting documents, such as a list of shareholders, a list of directors, and evidence of the company’s business operations outside of Hong Kong.
It’s important to note that the application process and requirements may change over time and it’s recommended to check with the Hong Kong Inland Revenue Department or consult with a professional advisor to ensure that you have the most up-to-date information and to understand the process of obtaining offshore status for a Hong Kong incorporated company.
WHY CHOOSE RELIN CONSULTANTS TO INCORPORATE AN OFFSHORE COMPANY IN HONG KONG
At Relin Consultants, we have a dedicated team to help you with the process of incorporating an offshore company in Hong Kong. We assist you in preparing all the necessary documents and paperwork and take care of submitting them to the Companies Registry. Our team will also help you open a corporate bank account with a reputed bank in Hong Kong and obtain all the necessary licenses and permits for your business activities.
We make the process of incorporating an offshore company in Hong Kong simple and hassle-free for you. Contact us at Relin Consultants to learn more about our company incorporation services in Hong Kong.
PROS AND CONS OF OFFSHORE COMPANY IN HONG KONG
PROS
Easy incorporation
One of the world’s easiest places to conduct business is Hong Kong. Offshore company setup in Hong Kong can be done quickly and easily without unnecessary red tape or bureaucracy.
Furthermore, Hong Kong has a welcoming foreign ownership policy by allowing foreigners to control 100% of a company’s shares. Hence before establishing a Hong Kong corporation, no special authorizations from the government are needed.
No need for a local physical office
The government does not require the new Hong Kong business to have a local physical address. Instead they just need to be notified of the registered address. It is fairly typical to use the registered address of the company secretary’s office address.
Tax Benefits
The taxes in Hong Kong are some of the lowest in the world. The tax code is clear and encourages Hong Kong offshore companies formation. The corporate income tax rate in Hong Kong is 0% for an offshore company. There are no estate duties, capital gains taxes, VAT/GST, or withholding taxes on dividends or interest payments.
Additionally, Hong Kong has no foreign exchange regulations and does not tax money earned from abroad. As a result, a Hong Kong offshore business that receives money from abroad is not subject to Hong Kong taxes.
No resident director requirement
Since Hong Kong has a policy that supports offshore companies established by foreign investors, there is no requirement that the company must appoint a Hong Kong resident director for offshore company formation in Hong Kong.
Trusted Image
Contrary to popular belief, Hong Kong is not considered a traditional offshore tax haven. Instead, it is classified as a low-tax jurisdiction with a simple and transparent tax system. This has been recognized by the OECD, which has acknowledged Hong Kong’s commitment to adhering to global standards for the exchange of tax information.
As a result, setting up an offshore business in Hong Kong does not carry the same negative connotations or legal risks as in traditional tax havens. The jurisdiction is viewed as a legitimate and compliant business environment with a strong reputation for transparency and compliance.
CONS
Limited Access to Financing
Setting up an offshore company in Hong Kong may limit a company’s access to financing options, as some banks and financial institutions may be hesitant to provide loans or credit to offshore companies.
Audit requirement
An offshore company that is active must still be audited irrespective of the offshore status.
FAQs
Is Hong Kong an offshore country?
Hong Kong is not considered an offshore country in the traditional sense. It is a Special Administrative Region (SAR) of China and has its legal and economic system. Hong Kong is known for its low-tax jurisdiction, and its offshore companies are one of the most popular options for legally reducing global taxation. However, it’s not considered a traditional tax haven.
Hong Kong has a simple and transparent tax system and is considered a low-tax jurisdiction. The tax rate for corporate income in Hong Kong is a flat rate of 16.5%. Also, Hong Kong has signed 36 double taxation avoidance agreements with different countries, providing added protection against double taxation for international business operations.
How much does it cost to open an offshore company in Hong Kong?
The cost to open an offshore company in Hong Kong can vary depending on the type of company and the services chosen.
However, generally speaking, the cost of incorporating a company in Hong Kong can be relatively low compared to other jurisdictions. It can cost between US$ 2,000 and US$ 5,000 for offshore company registration in Hong Kong.
Why is HK tax-free?
Hong Kong is known for its low-tax jurisdiction, but it’s not entirely tax-free. It has a simple and transparent tax system with a low corporate income tax rate of 16.5%. Hong Kong does not impose taxes on foreign-sourced income, capital gains tax, or holding tax on limited foreign earnings. This makes it an attractive option for businesses looking to minimize their global tax liability.
The reasons for Hong Kong’s low-tax system are historical and strategic. Historically, Hong Kong’s economy was built on trade and commerce, and the government wanted to encourage foreign businesses to set up operations in the territory.
To achieve this, it adopted a low-tax policy to attract foreign investment and companies. Strategically, Hong Kong’s low-tax system is also related to its role as a gateway to the Chinese market.
By keeping tax rates low, Hong Kong can attract foreign businesses that want to take advantage of its proximity to mainland China and its status as a global financial center.
Can my offshore company in Hong Kong conduct any business activity?
Hong Kong does not have any restrictions on the types of business activities that an offshore company can conduct. An offshore company in Hong Kong can conduct any lawful business activity, as long as it is not engaged in any illegal activities such as money laundering or fraud.
What are offshore banks in Hong Kong?
Offshore banks in Hong Kong are banks that primarily serve non-resident customers, such as individuals and companies that are incorporated or based outside of Hong Kong. They offer a range of services, including deposit accounts, foreign currency accounts, trade financing, and other banking services.
These banks are authorized by the Hong Kong Monetary Authority (HKMA) and are subject to the same regulatory and supervisory framework as other licensed banks in Hong Kong.
Offshore banks in Hong Kong can offer a range of benefits to non-resident customers, such as:
- Access to the Hong Kong and international financial markets
- Ability to conduct transactions in multiple currencies
- Financial privacy and confidentiality
- Protection of assets and wealth
However, it’s worth noting that offshore banking in Hong Kong, like in other jurisdictions, is subject to regulations and compliance standards to prevent money laundering and illegal activities, hence it’s important to ensure that you are choosing a reputable bank and comply with all the local regulations.
Can I register an offshore company in Hong Kong remotely?
The establishment of the offshore company can be done remotely. Neither a director nor corporate shareholders are required to be present for opening an offshore company in Hong Kong.
However, the process and requirements may vary depending on the specific jurisdiction and type of company being registered.
LATEST BLOGS
Businesses of all sizes are now utilizing outsourcing payroll services. The way small and midsize businesses conduct their business has taken on a new dimension as a result. Would it make sense for your company to outsource payroll? Here are a few explanations for why so many people have opted for outsourcing payroll services. 10 [...]
IRAS created and developed the Singapore GST Assisted Self-help Kit (GST ASK) to help businesses review the accuracy of their GST submissions and quickly find and fix previous GST problems. In order to avoid the fines that are frequently imposed for any inaccurate GST reporting, it also enables the business to discover the problems and [...]
South Korea free economic zones (KFEZ) aim to increase regional and national commercial competition and foster balanced regional growth. This project is being managed by Korea's economic zone planning office. The Korean government offers a range of tax advantages to foreign businesses and individuals, as well as a less demanding regulatory framework, a comfortable way [...]