Entrepreneurs prefer setting up a Hong Kong offshore company for international trade due to its plethora of benefits, including tax advantages, straightforward compliance regulations, and reliable banking systems.
For entrepreneurs seeking to create a Hong Kong offshore company for overseas import and export, we are here to provide essential information and guidance so you can make the most advantageous decisions for your business.
What is a Hong Kong offshore company for overseas trade?
Put simply, it is a business registered in Hong Kong with the primary purpose of purchasing low-cost goods in one country (e.g., China or Cambodia) and selling them to customers in high-income marketplaces such as the US, Europe, and Australia.
In this case, the items purchased by Hong Kong offshore company are directly delivered from their origin country to a foreign nation for sale. Put differently, all of the company’s activities take place beyond Hong Kong’s boundaries.
Businesses often choose this option to reduce costs and taxation, since foreign-sourced income is exempt from Hong Kong’s corporate tax. Additionally, the offshore company doesn’t have to adhere to any of Hong Kong’s import or export regulations.
For instance, if you acquire products from China and then sell them to Korea without storing anything in Hong Kong, no profits taxes will be imposed on those sales.
Advantages of Hong Kong offshore company for oversea trade
- Territorial basis of taxation, only incomes sourced from Hong Kong are taxable
Hong Kong’s territorial basis of taxation means that profits earned from trade activities outside of Hong Kong are not subject to tax in the territory. This makes Hong Kong the right spot for businesses looking to minimize their tax liabilities.
Another benefit of Hong Kong’s territorial basis of taxation is that it eliminates the need for complex cross-border tax planning. This can save your business significant time and money when compared to jurisdictions with a worldwide system of taxation.
- Easy offshore company registration and compliance
Hong Kong is one of the easiest places to set up an offshore company for trade. There are no complex requirements or procedures, and you do not need to have a minimum amount of capital to start incorporation.
The key documents of a legal business in Hong Kong are a Certificate of Incorporation and a Business Registration Certificate, which you can obtain from the Companies Registry.
With an offshore company in Hong Kong, you can save costs on the rental or purchase of office space, warehouses, and stores. Moreover, there is no need to keep audited accounts for your business operations.
- No sales tax or VAT, withholding tax, capital gains tax, dividends tax, or estate tax
Hong Kong has a simple and efficient tax system that is beneficial for businesses. There is no sales tax or value-added tax (VAT), withholding tax, capital gains tax, dividends tax, or estate tax. This provides trading businesses with a significant tax advantage.
- The nationality of the business owner is not restricted
One of the great advantages is that the nationality of the business owner is not restricted. This means that you can start a business in Hong Kong regardless of your citizenship, and take advantage of its benefits while trading overseas.
Moreover, you’re not required to disclose information regarding directors, shareholders, or B/O to authorities, which protects your business privacy and confidentiality.
- Online registration of Hong Kong Limited Company is allowed
One of the key reasons why trading businesses choose to set up in Hong Kong is the ease with which they can do so. Online registration of Hong Kong Private Limited Companies is allowed, and this process can be completed at the touch of a button. This means that businesses can get up and running quickly, and start running almost immediately.
Start an offshore company in Hong Kong for overseas trade
Some drawbacks of Hong Kong offshore companies to consider
Despite Hong Kong’s myriad benefits, it has some drawbacks that you should be aware of.
The main one is that Hong Kong’s offshore companies are not allowed to transact within the territory, and there may be additional barriers when it comes to trading activities outside of Hong Kong.
Furthermore, you will be unable to benefit from Hong Kong’s Double Taxation Agreements (DTAs) with other nations and might even appear as a “shell company” in the eyes of Hong Kong authorities and potential customers, which can detrimentally affect your reputation.
Finally, Hong Kong’s government takes strict action against businesses suspected of money laundering or financing terrorism. Therefore, it is vital to ensure that your offshore company is compliant with Hong Kong’s laws and regulations.
If you’re looking to trade overseas, Hong Kong’s offshore companies is one of the best tools to do it with. The benefits of trading in Hong Kong far outweigh any potential hassle.
However, you should also be aware of Hong Kong’s regulations in order to ensure that your overseas trading activities are legitimate and legal.
If you have any questions or need help with setting up an offshore company in Hong Kong, don’t hesitate to contact our consultant for practical advice, drop us a message via email@example.com today!
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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