When considering the set up of a company in an offshore jurisdiction, Hong Kong is often going under the radar. Business people dismiss Hong Kong, Singapore, United Kingdom, and other jurisdictions that are solid economically because they often after jurisdictions that offer tax-free perks for businesses.
It's true that Hong Kong doesn't adopt zero tax policy for all business activities, which is the main reason why they ar not considered as a tax haven. However, Hong Kong's reputation as a first-class financial center, as well as the stable political environment, excellent finance and banking services and other perks should be your top considerations.
Now, one could argue that opening an offshore company in Hong Kong is not as easy other jurisdictions - those that are, say, located in the Carribean; however, there are prominent reasons why Hong Kong should be one of your top choices as the headquarters of your company today – here are 3 of them:
1. Asian economic uncertainty makes Hong Kong even more attractive than ever for offshore company formation
China's weak growth, along with the U.S. Dollar-pegged currency, has eroded the country's global competitiveness. Retail shops are struggling, Tourist arrivals are in decline, and the threat of real estate bubble burst are some of the major problems faced by Hong Kong. All turn Hong Kong's focus on the old, reliable industry: Banking and finance.
The senior economist at Standard Chartered Plc Kelvin Lau considers Hong Kong as an ideal platform for banking and finance, which are crucial for the country's economy over the next five to ten years. Interestingly, we can learn from the same source that Hong Kong plays a bigger role as a safe haven for Asian Pacific's wealthy individuals – the role that is pretty much played by Switzerland and Liechtenstein for years.
Still focused on customers from mainland China, Hong Kong is now widely open its door for global entrepreneurs and business owners who want to establish their HQs and benefit from the country's reputation and tax policies.
2. Hong Kong-based companies are allowed to open business bank accounts
While many other jurisdictions are only accommodating either offshore company formation or offshore bank account opening, Hong Kong offers you both: While Hong Kong banks don't open personal accounts to non-residents, they will open business accounts for companies setup in the jurisdiction.
Please note that you may need to travel to Hong Kong for opening a bank account. Please contact us for more details.
3. Unique offshore tax arrangements for business
Running a business headquartered in Hong Kong means that you are taxed based on your business operations.
Generally-speaking, if your business transaction is carried out outside Hong Kong, it's not taxable. However, if your business has a presence in Hong Kong (e.g. Customer base, employees, and suppliers,) you will need to pay 16.5 percent in tax on your net profits.
There's one exception, though: Due to the special relationship with China (Hong Kong is a special administrative region of China) you are allowed to do business transactions in the country, tax-free.
For more details, read this page from Wikipedia.
Hong Kong is a stable jurisdiction with a world-class reputation. Although the country is negatively impacted by the global economic turmoil, especially in Asia Pacific region, their banking and finance industry is still attractive.
With the flexible company structure, minimal capital/legal requirements, and fast incorporation process, Hong Kong is an offshore jurisdiction to consider, especially if your business is targeting the China market.
If you have any questions about offshore company formation and/or bank account setup in Hong Kong, please don't hesitate to contact us.