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Advantages of A Hong Kong Company

Asia has no shortage of thriving business hubs that have lured investors to its shores. One of these hubs is Hong Kong. The country has been a popular choice as a business destination because of the vast potential it holds, serving as a way for investors to enter an international market. These are among the advantages of a Hong Kong company that investors stand to benefit from.

It’s location, stable economy, political environment that is trustworthy and pro-business environment are all reasons that have successfully attracted investors to Hong Kong. Investors also stand to benefit from the tax-friendly jurisdictions. If you are thinking about setting up a company in Hong Kong, there are some key points and advantages of a Hong Kong company that you should note.

Although this former British colony is considered part of the Republic of China, it is classified as a Special Administrative Region (SAR) within the republic and therefore, it maintains its own legal system.

 

Overview About Companies in Hong Kong

Hong Kong has no “offshore” legislation, and this means that all companies are incorporated under the same legislation. Whether the business is conducted onshore or offshore, all companies will be incorporation under the same legislation. However, any company that does not derive sources of income from within Hong Kong will not be subjected to tax. This makes in effectively an offshore company in everything but its name, since it is still incorporated in Hong Kong.

A private limited company in Hong Kong can be established in as little as 10 working days. At least one director and one shareholder is required for the incorporation process. You would also need a company secretary to be present. The director and shareholder does not have to be local, but the company secretary does.

 

Advantages of Setting Up a Hong Kong Company

One of Hong Kong’s primary attractions is how easy and inexpensive it is to set up a business. Foreigners also have the advantage of owning 100% of the company that they establish. They can be the sole director and the shareholder of that company too, as Hong Kong as no requirements that directors and shareholders need to be only local residents. There is also the low cost of incorporation which is another advantage of a Hong Kong company. There is no minimum requirement for the share capital payment needed.

With its world-class business infrastructure, investors have security and peace of mind knowing that this is a stable country to conduct business in. Setting up a business in Hong Kong does not require a physical address, as in this case, a holding address is enough to suffice. Because the country is seen as a major trading entity, incorporating a Hong Kong company is viewed as “legitimate” and less likely to be viewed as a tax avoidance vehicle.

For 17 years, Hong Kong has held the record for being the country with the world’s freest economy. It also is leading the ranks ahead of countries like USA, Japan, UK, Germany as one of the least corrupted nations in the world. Because of this, the country is also viewed as a global leader when it comes to banking and business. Almost every major international bank has a branch office in Hong Kong, which makes it easy for investors to easily find a suitable bank to arrange for the required finance and credit facilities. Thanks to its well established business infrastructure, international trading and fund transfers are not a problem either. There is also no exchange control in Hong Kong, which means that funds can be freely remitted in and out of Hong King without any restriction.

Another advantage of a Hong Kong company is the stability and worldwide recognition that it offers. English is also spoken as one of its two main languages, with the other being Cantonese. This makes running a business in the country a smooth and easy process, especially when English law is prevalent. In fact, the country’s legal system is a key point that separates it from Mainland China. All official documents are in English, because it is the main business language.

Given its location, Hong Kong is also viewed as the best route to do business in China. With the Closer Economic Partnership Arrangement (CEPA), huge markets have opened up for Hong Kong’s goods and services, greatly enhancing its economic cooperation between Mainland China. Hong Kong’s exports to the mainland have zero import tariffs if they meet CEPA’s origin rules for goods. Preferential market access for Hong Kong companies is also available for companies in 44 service sectors. These sectors include banking, logistics, transport, mining, legal and audio visual. This makes setting up a company in Hong Kong a considerable advantage for investors.

Hong Kong companies have another advantage of being able to open multi-currency bank accounts. The tax system within the country is also simple and straightforward. The territorial source principle of taxation is used, and this means that profits which are derived outside of Hong Kong are tax-free. There are also no capital gains taxes, no net worth tax, and no withholding tax on interests, royalty and dividends. Foreign dividends will also not be subjected to income tax. Investors also stand to benefit from the country’s access to double taxation treaties.

Investors won’t find it a problem to acquire the necessary talent pool needed to run their Hong Kong company. There is no shortage of professional individuals available in the country, trained in all facets of international business matters. Highly educated, skilled, productive, computer-literate, disciplined, well-versed in English and willing to learn, Hong Kong’s talent pool is ready and waiting for investors to tap into this skilled workforce.

These are the advantages of a Hong Kong company, a bright and exciting prospect for any investor looking to delve into this market.

 

Looking to Incorporate a Business in Hong Kong? We Can Help!

3E Accounting is a leading service provider for company incorporation, accounting, tax, payroll, immigration and compliance services that assist start-ups and SMEs in Hong Kong get off to the right start with their business. Should you wish to establish a business in Hong Kong, contact us today for more information and let us help you get started.