Why Setting up your Business Company in Hong Kong?
Hong Kong Advantages
Hong Kong’s Tax System:
Hong Kong boasts a straightforward, predictable, and low tax system, offering a highly tax-friendly environment. The city levies only three direct taxes, and the tax filing process is uncomplicated. As per the 2014 Paying Taxes study involving 189 economies, Hong Kong ranks among the most tax-efficient nations globally. This tax-favorable status is primarily due to the limited direct taxes and the availability of generous allowances and deductions that reduce your taxable income.
Key Tax Figures in Hong Kong:
- Profits Tax is capped at 16.5 percent.
- Salaries Tax is set at a maximum rate of 15 percent.
- Property Tax is charged at 15 percent.
Notably, Hong Kong offers several tax exemptions:
- No Sales Tax or Value-Added Tax (VAT)
- No Withholding Tax
- No Capital Gains Tax
- No Tax on Dividends
- No Estate Tax
Tax Return Submission Simplified:
Filing tax returns in Hong Kong is an appealing aspect of its business environment. Many individuals opt to complete their tax returns independently, a straightforward process, and can conveniently submit them online. Alternatively, numerous accountancy firms, both large and small, provide cost-effective tax services and advice.
Advantages of Incorporating in Hong Kong:
Legitimacy in Business: Hong Kong is a significant trading hub, which enhances the perceived legitimacy of incorporating a Hong Kong company. It’s less likely to be viewed as a tax avoidance or minimization vehicle.
English Language: English is an official language and the primary business language in Hong Kong, ensuring all reporting information and documentation can be produced in English.
Simplicity: Hong Kong’s tax system is uncomplicated and straightforward.
Foreigner-Friendly: No restrictions exist on the use of foreigners as Shareholders or Directors in a Hong Kong company.
Corporate Director and Secretary: Corporate entities can serve as Directors and Secretaries.
Ease of Incorporation: Incorporating a Hong Kong company is a swift and straightforward process.
Low Costs: The cost of incorporation and ongoing maintenance is budget-friendly.
No Minimum Share Capital: No minimum share capital requirement is imposed.
Minimal Requirements: Only one Director and Shareholder are required to establish a limited liability company.
Territorial Taxation: Due to territorial taxation, foreign source trade profit is not subject to Hong Kong income tax.
No Capital Gains Tax: Hong Kong does not impose capital gains tax.
No Withholding Tax: Interest, dividends, and royalty payments are not subject to withholding tax.
Tax Credits: Tax credits for foreign tax paid are available, subject to specific conditions.
No Net Worth Tax: Hong Kong does not impose a net worth tax.
Robust Infrastructure: Hong Kong offers an excellent banking system and cutting-edge communications infrastructure.
Free Port Status: Hong Kong is recognized for its free port status and straightforward customs procedures. Duty is levied on only a limited range of products, with recent initiatives making imports of wine and beer duty-free, promoting a thriving wine import, export, and storage business.
About Hong Kong:
Once a British Colony and now a part of the Republic of China, Hong Kong is a prominent global business center located on the southeastern coast of China. It officially became part of China on July 1, 1997, and is classified as a Special Administrative Region (SAR) within the Republic of China. Hong Kong maintains its distinct legal system, predominantly based on the British legal framework, with English and Chinese as the official languages.
Notably, there is no specific ‘offshore’ legislation in Hong Kong; all companies, regardless of their business nature, are incorporated under the same legal framework. However, companies that do not derive income from Hong Kong sources are exempt from taxation, effectively positioning them as offshore companies in all but name. Hong Kong’s success as a business destination can be attributed to its excellent infrastructure and robust regulatory framework.
Hong Kong stands as one of the world’s most reputable and reliable financial centers, boasting one of the freest economies globally, as measured by the Index of Economic Freedom. These attributes make it an exceptional jurisdiction for company incorporation.
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