What benefits clients will can bring using Hong Kong company for offshore operations ?
1) Under the Basical law of Hong Kong, the money is freely remitted in and out of Hong Kong. Therefore, clients easierly transfer money from and out of Hong Kong through online banking facilities. For security reason, the maximum daily remittance amount is US$2,600,000. If come visit to the branch of Hong Kong banks , there is no limit of amount transfer in or out of Hong Kong;
2) Under the tax law of Hong Kong, the money transfer between bank accounts either in Hong Kong or outside Hong Kong has no tax in Hong Kong;
3) Under the tax law of Hong Kong, the profits of the business outside Hong Kong is legal tax free. Hong Kong tax department cannot charge tax on offshore profits. As Hong Kong tax department only charges for local tax the profits of which are made in or derivered inside Hong Kong;
4) Hong Kong has no Value Added Tax (VAT). Unlike other countires which they need to buy VAT invocie before they allow to issue invoice, once client has registered a company in Hong Kong, they can issue invoice themselves and ask client for payments without special procedures or arrangements;
5) Hong Kong has no Capital Tax System. Offshore capital tax item is already tax free; even capital tax item is made or derived side Hong Kong, it is still tax free. So clients can enjoy also doing business in Hong Kong and enjoy legal tax free of capital business transactions items;
6) Hong Kong has no dividend tax system. Offshore dividend is alredy tax free; even dividend has been received from the company inside Hong Kong, it is still tax free;
7) Hong Kong has no interest tax system. Offshore interest (bank) is already tax free; even interest has been received from the local banks in Hong Kong, it is still tax free;
8) Overseas Hong Kong employment is legal tax free. If clients use Hong Kong company to employ people outside Hong Kong or employ Hong Kong and work outside Hong Kong, it is regarded as offshore sources, and can enjoy legal tax free;
9) Director benefits or bonus or remuneration or fees all are legal tax free. Most clients will appoint themselves as legal shaeholder or director of the Hong Kong company, and engage in offshore business operations. In this case, they will receive a huge amount of director benefits or advantages or fees or other costs, which are legal tax free in Hong Kong;
10) Hong Kong is using UK legal system. Hong Kog was colony of UK. Now she is part of China, however, under the Basica Law of Hong Kong, Hong Kong is still using UK Legal System (so called One Country Two Systems). The Hong Kong courts are independent from other official institituons. Clients use Hong Kong company to do offshore businesses, in case it meets unfair transactions, clients can get legal proceeding using Hong Kong legal systems; The enforcements can bring outside Hong Kong.
11) The structure of Hong Kong company. Most clients will register a Private Limited Liability company, it is limited in liability so client can get protection from limited liability. It is private in nature which means the internal affairs of the company cannot be disclosed to the public like the tax or company accounts information. Hong Kong Company Registry has lanched online registration process, so it makes easier to register a Hong Kong company. It takes one hour we can get the formation done for client, and, having company number, client can sign important contract without delay.
What elase you need to consider if you need to register an offshore company or Hong Kong Offshore company ? Please go to Hong Kong offshore company section.
From our experience, there are FIVE important points clients need to consider whether they regiser an offshore Hong Kong company as their offshore company.
1) Legal Tax Free – Hong Kong is using territoral tax system, it means tax is only charged if the profits are made inside Hong Kong. Clients use Hong Kon to do offshore services/tradings enjoy legal tax free;
2) Privacy Protection – Hong Kong has public system. However, through special arranagements that we can provide nominee shareholder through legal trust documents under Hong Kong Trust Law, clients become legal beneficiary instead of shareholder and can enjoy 100% legal privacy protection. Also through special arrnagements that we can provide nominee director through legal Power of Attorney documents under Hong Kong Trust Law, clients become legal Attorney instead of director and can enjoy 100% legal privacy protection;
3) Opening bank accounts in Hong Kong or overseas – Hong Kong is a well kown Financial Centre. With registering Hong Kong company, it becomes easier to open company bank accounts in Hong Kong and outside Hong Kong and do offshore business;
4) Exchange of information – The world governments have co-operative together by some agreements that they will share the information themselves for the purpose to tackle the tax evasion. The co-operative agreements include:
a) Tax Information Exchange Ageeemnt (TIEA) – This is the tax exchange data between countrires they will exchange bank information and company registration. So for example, we will not recommend UK client to open a company or bank account in Aruba as UK and Aruba have signed up the TIEA;
b) FATCA Agreement – The U.S government has launched Foreign Account Tax Compliance Act that foregn banks are required to report the bank information back to US Tax Authority in case for US clients. So for example, we will not recommend US clients to open a company or bank account in the lists of FATCA agreements;
c) Exchange of Information between EU Member States -Under European Law, EU 27 Member States will exchange information automatically in regarding to the banks and company registration data between EU Member States. Therefore, for example, we will not recommend clients from EU Member States to open a bank acccount or a company within EU member States;
5) Creation of business proof record – Under the tax law of Hong Kong, a Hong Kong establisted company is required to submit the profits tax return for assessment purpose. Submitting a tax return and assessing the company fincial affairs is not meant that it is required to pay tax, but converely it is to confirm under a legal way that you get approval of Hong Kong Tax Department that you are legal tax free. So you create a legal and reliable business proof from Hong Kong Tax Department that your wealthy comes from legal way.
You cannot get it from other offshore jurisdictions. In other offshore registrations, they will classify them as IBC so it is by law it is not required to pay tax in their own jurisdictions, so they do not ask for keeping business records. If something happens, probably offshore or even local banks or police forces may ask for your sources of income/wealthy, if you have no business proofs, your Money ($) are probably forfeited and returned as Government Properties.
If you need further enquiries before considering whether to open an offshore Hong Kong company or other offshore companies, please visit our Q & A sections or e-mail to us for further issues under Contact Us section.
If you need to register a Hong Kong company, please go to Hong Kong company setup section.
If you need to register an offshore company, please go to relevant Offshore company setup section.
To study how to open an offshore bank accounts in Hong Kong or outside hong Kong, please visit Offshore bank accounts section.
To learn other professional services we can provide to you, please visit Other Professional Services section.
To study the fees schedule, please visit Fee Sechedule section.