Company in HongKong: PROS an CONS

Hong Kong is among the world’s most significant financial centers, and its legal tender, the Hong Kong Dollar, is the world’s 13th most traded currency.

?? A City of Wealth and Luxury

Hong Kong is one of the richest cities globally, boasting more Rolls Royces per person than any other region. The city also has the highest number of skyscrapers worldwide, with over 7,000 buildings exceeding 14 floors. For comparison, New York City has almost half of these. Interestingly, 40% of Hong Kong's territory is made up of country parks and nature reserves, making hiking the green trails a favorite weekend pastime.

The mystical art of feng shui remains common practice in Hong Kong. For instance, the rooftop of Central’s HSBC Hong Kong building includes two rods to deflect bad energy, facing the Bank of China building, which is built with sharp edges believed to cut and dilute good energy.

?? Key Tax Benefits in Hong Kong

• Corporate Income Tax: 8.25% on the first HKD 2 million and 16.5% on the rest of the taxable profits.
• No Sales or Value-Added Tax: Hong Kong does not levy a sales tax or VAT.
• No Payroll, Capital Duty, Transfer Tax, Net Wealth, or Inheritance Taxes.

?? Popular Reasons for Forming a Business in Hong Kong

1. Holding Businesses: These involve holding stock in overseas corporations, owning additional assets like patents and trademarks, and generating income through dividends, rentals, or trades abroad.
2. International Trading: Offshore holding companies benefit from tax-free dividends or earnings made outside Hong Kong, significantly boosting profitability.

?? Offshore Company Status

An offshore company in Hong Kong is considered a “tax resident” if its management and control are exercised in Hong Kong, making it liable to pay corporate income tax on its worldwide income at 16.5%. Conversely, a “non-tax resident” offshore company only pays tax on income generated in Hong Kong.

A Hong Kong-incorporated company may obtain offshore status from the Hong Kong Inland Revenue Department (IRD) if it meets the certain criteria.

?? Considerations and Requirements

• Resident Company Secretary: Mandatory for all companies.
• Annual Returns: Required for companies registered under the Hong Kong Companies Ordinance.
• Audit Requirement: Active offshore companies must still be audited regardless of offshore status.

?? Claiming Offshore Tax Exemption

Companies can lodge their claim for offshore tax exemption when submitting the Profit Tax Return to the IRD. An audited report must be filed with the tax return. The IRD taxation officer typically takes several months to examine the audit report, supporting documents, and details.

??? A Culinary Paradise

Hong Kong boasts one of the highest numbers of restaurants and cafes per capita. It’s also home to the cheapest Michelin-starred food on the planet. Even if you haven't incorporated a company there, make sure to visit and enjoy the culinary delights!

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