ADVANTAGES OF RUNNING A BUSINESS IN HONG KONG?

Thanks to the simple tax system, Hong Kong is one of the top global cities for setting up a business. The straightforward incorporation process allows worldwide entrepreneurs to enjoy low setup costs and a simple tax structure. Also, the Hong Kong government is playing a supportive role in fostering growth.

How to incorporate a new limited company?

Incorporation in Hong Kong just involves a few steps, which fits most of the businesses.

• Pick a company name that is unique from others.
• Prepare a set of registration documents including an Article of Association, shareholder, and director particulars.
• Submit your registration, normally it takes 1-2 working days.
• After the registration, you can apply for a business bank account.

No matter if you are residing in Hong Kong or not, you can set up a limited company in Hong Kong with a few steps.

What are the taxation benefits?

Businesses in Hong Kong enjoy one of the most tax-friendly systems in the world. On the one hand, Hong Kong only imposes profit tax for businesses. On the other hand, Hong Kong does not impose sales tax or VAT, withholding tax, capital gains tax, tax on dividends, and estate tax.

Profits tax for the first HK$2 million of profits of corporations is 8.25%. Profits above that amount will be subject to a tax rate of 16.5%. For unincorporated businesses (i.e. partnerships and sole proprietorships), the two-tiered tax rates will correspondingly be set at 7.5% and 15%. It maximizes the non-tax profit.

Hong Kong follows a territorial taxation principle, meaning it only taxes profits derived from or arising in Hong Kong. If your income is earned outside Hong Kong, that amount is subject to tax-free.

If you are running innovative technology and environmental-friendly industries. Hong Kong Government will provide additional tax exemption.

What can you gain from the taxation?

Offshore Income

Again, Hong Kong follows a territorial taxation principle. If your income is earned outside Hong Kong, then you can claim that amount as an offshore income. That amount is subject to tax-free.

Debt Financing

Enterprises can finance via borrow money from an outside source. As the interest paid for the debt can be reduced the income before tax.

Double Taxation Agreements

Hong Kong has entered into Double Taxation Agreements (DTAs) with several jurisdictions. DTAs are also referred to as tax treaties. They prevent double taxation and fiscal evasion, and foster cooperation between Hong Kong and other international tax administrations by enforcing their respective tax laws.

What are the advantages of incorporating a limited company in Hong Kong?

As said businesses can enjoy low tax rates and some benefits from taxation in Hong Kong. They can have the following benefits as well:

International Profile

Profile and international access are sometimes undervalued, but they are critical to innovation, access and business opportunity.

International trade

Hong Kong as a free trade port, encourages and maintains strong support and access to international markets while leveraging on transportation and transformation of goods.

Confidentiality

The Personal Data (Privacy) Ordinance (Cap. 486) (Ordinance) regulates the collection and handling of personal data. So the personal information of shareholders and directors is only disclosed to the public with a limitation.

Establishing a business in Hong Kong offers potential benefits over the rest of the world. Such as tax advantages, confidentiality, and ease of international business. No matter you are a startup or an international enterprise. Hong Kong is a good platform to dream big.

For further information, please contact us.

You may want to read: Step 3 of Setting Up a Hong Kong Limited Company