Hong Kong, known as the Special Administrative Region (SAR) of China, locates at the head of the Pearl River Delta.
In more than 20 years, since 1997, Hong Kong has kept moving forward with its prosperity and dynamism. Thanks to its high standards of living as well as the benefits of setting up Hong Kong companies, foreign investors are attracted as they have figured out more opportunities here.
Hong Kong’s benefits of easy incorporation
Almost all open-oriented jurisdictions facilitate foreigners to set up companies and encourage their investments. One superiority of Hong Kong is that overseas entrepreneurs are permitted to have complete ownership of their enterprises registered in its territory.
There is no limit to holding percentage; therefore, they have the right to own their corporates either primarily or entirely. People can incorporate effortlessly with up to 50 individuals in the structure of a Private Limited Company.
There is at least one person needed, who can be both director and a shareholder, to set up a corporation in Hong Kong. It does not require directors to be residents. Significantly, Hong Kong offers a moderate amount of share capital which can be 1 HKD minimum.
The company formation procedure is fast and simple
Generally, an enterprise can be incorporated remotely through a professional service firm in Hong Kong. It takes only 1 day, or even an hour, to accomplish an E-registration with Hong Kong Company Registry (CR) for company structure with individuals. Hard copies of the incorporation documents are provided within a week later.
Parent companies may be shareholders of subsidiaries. This progress is longer, about 7 working days, as CR asks for a physical version of NNC1 signed by shareholders.
Attractive tax system
Numerous investors are searching for Hong Kong’s “tax haven” are due to many reasons. One key point is that Hong Kong benefits investors with its low-tax regime.
Hong Kong adopts a two-tiered tax rate for corporate profits:
- 8.25 percent for assessable profits under 2 million HKD
- 16.5 percent for the exceeded part
This policy is appraised as business-friendly as it is one of the most competitive rates in Asia, while some other countries’ corporate taxes range from 17 percent to 30 percent.
Moreover, corporations established in Hong Kong can take advantage of a tax exemption by the Inland Revenue Department (IRD) for their gains from the outward of the country. This validation is called Offshore Claim, which is granted under a letter form with up-to-5-year activeness.
To summarize, Hong Kong maintains three fundamental types of tax:
- Corporate profits tax: Inward profits are taxed at 8.25 to 16.5%. Outward profits are not taxable.
- Salary tax: 2% to 17% of assessable incomes.
- Property tax: 15% on the net assessable value of the property.
Taxes not applicable in Hong Kong:
- Capital gains tax
- Dividend tax
- Hotel accommodation tax (HAT)
- Value-added tax (VAT), Goods & Services Tax (GST), or Sales tax
- Withholding tax on interest and dividends. However, royalties and certain service fees are subject to withholding tax.
Free economy and trade
Heritage Foundation recognized Hong Kong’s advantage as the freest economy in the world this early 2019. Hong Kong SAR has retained its first rank for over 20 years, as a result of providing trade and monetary freedom with the integrity and transparency of its governments.
Hong Kong accepts corporates to run almost all types of businesses it must be legal, such as trading, E-commerce, manufacturing, consulting services, and even financial asset holding. Hong Kong-based enterprises can open bank accounts anywhere without restrictions from the Hong Kong government.
Furthermore, there is no chargeable tax for goods imported to Hong Kong, excluding motor vehicles, liquors, tobacco, hydrocarbon oil, and methyl alcohol.
Considered a free port, Hong Kong exempts tax and excise duty on total exports. You need to apply for licenses for some goods for shipment from and to Hong Kong; however, the licensing process is uncomplicated.
Therefore, it can be seen that money transfers and currency exchange are admissible for any type. For these reasons, most people state Hong Kong as the world’s third-easiest country to do business in the 2020 report by World Bank.
Straightforward access to Mainland China
Lying on the Southeast coast of China, Hong Kong fascinates investors with its vitally strategic location.
People are possible to travel to China’s cities within a single day. Hong Kong plays a significant role as a preferential gateway to China markets based on the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
Hong Kong advances business enlargement to not only Mainland China, but also Asian countries. Free Trade Agreement (FTA) was signed between Hong Kong SAR and ASEAN and has been effectual since 2017, which is an essential tool to develop their connections in terms of business trading, investments, intellectual property, dispute settlement, and economic and technical co-operations.
Hong Kong is moving forward to associate with its other partner markets to consolidate its status.
Hong Kong is not only one of the largest commercial centers but also the heart of Asia. With well-developed and interconnected transportation, it takes only from 5 to 8 hours to fly to any country in this area.
Hong Kong International Airport remains in the top ten list of the busiest airports globally in 2022. The transport network is among the most efficient, with railways, trams, ferries, double-deckers, and minibusses.
Furthermore, this jurisdiction owns an outstanding shipping hub and telecommunications. The ideal natural conditions of Victoria Harbor enhance its ability to handle different kinds of vessels, making it one of the most active ports.
Another key factor of Hong Kong’s evolution is the hotspot and broadband speed which is one of the highest worldwide. Hong Kong is among the earliest territories to launch 5G technology as early as April 2020.
There is huge manpower that is highly trained, flexible, and energetic in Hong Kong. Hong Kong residents can adapt to international business as English is their second official language alongside Chinese.
In addition, immigrants from the West and other Asia countries bring Hong Kong a variety of languages such as French, Japanese, Filipino, etc.
Quality of life
Though Hong Kong is assorted among the most expensive countries to live in, either entrepreneurs or immigrants are fascinated by its benefits from life qualities.
Various public means of transportation are high-qualified but cheap and reliable. Hong Kong has been perceived as a livable country with efficient banking, public, and entertainment services.
Besides, the diversity of foods and consumer goods gives people a vast options for their daily lives. Moreover, foreigners choose Hong Kong to relocate undoubtedly due to its excellently world-ranked education system.
Did you know?
Hong Kong approved about 170 nationalities to visit Hong Kong without a visa for 7 to 180 days. To attract skillful foreign talents and professionals, Hong Kong offers work visas and student visas for under 2 years.
There are many kinds of visas suitable for particular subjects including investment, dependent, training, etc. to raise abroad attention to the Hong Kong market.
Read more: Hong Kong Dependant Visa Explained
To summarize, Hong Kong has become one of the world’s influential international financial centers. The country is famous for its combination of uncomplicated incorporation, reasonable taxes, open-oriented and accessible markets, and a developed living environment.
Last but not least, the workforce productivity and excellent infrastructure have strengthened the reputable status of Hong Kong. With the benefits for Hong Kong company formation, investors make it their preference for business incorporation and expansion.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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