Setting up a Hong Kong Company is often seen as 'something that only the wealthy and the famous people will do'.
But is opening an offshore corporation in Hong Kong really so difficult, and is it just for huge multinationals and people with vast wealth?
The answer, of course, is NO. Take a look at what Hongda can help you to continue your success in Hong Kong.
We (can) advise you on the best solution for your business model and send you our comprehensive proposal.
After reviewing the proposal, we sign the service contract and receive your payment.
We send you an application form as well as the list of documents we need from your side.
Sit back, relax and let us take care of everything from here on out.
Hong Kong is not only positioned right on the border of Shenzhen, one of China's largest and most commercially important cities, but is also in easy travelling distance of the Asia-Pacific region: China, South East Asia, India, and Australia.
Due to its British history, Hong Kong has a very Westernised system of government and banking which make it easy to open and do business there. This is why many consider it to offer the best of both worlds; on the one hand an easy doorway to Asia, but on the other, a familiar and internationally recognised way of doing things.
Many business people love Hong Kong due to the following:
Corporate tax is pegged at 16.5%.
Personal tax is at just 2 - 17%.
There are no goods and services taxes, sales taxes, nor VAT (value added tax). You will also find that there are no capital gains taxes, no taxes on income derived from outside of Hong Kong, and no dividend taxes.
While taxes still need to be paid, you can see that the tax burden is low in Hong Kong, and this makes for a very entrepreneurial environment, especially when earning money from abroad which is untaxed.
Hong Kong is the largest FDI (Foreign Direct Investment) center for China. This owes a lot to CEPA (the Mainland–Hong Kong Closer Economic Partnership Arrangement) of 2003. It aims to strengthen ties between Hong Kong and China, especially in the sectors of investment, trade, and finance. CEPA offers free trade and liberalization of trade and services between the two areas, and therefore it's clear that this gives opening Hong Kong companies an advantage in China over those that do not.
In addition, travelling across the border to China from Hong Kong takes only around an hour, and of course for forays further inland Hong Kong is a major air and rail travel hub.
Finally, Hong Kong companies are offered better terms when opening companies in China, such as reduced investment capital demands. They're also governed by Hong Kong law, which is simpler and more familiar than its Mainland counterpart, and getting business loans and investment is also easier in Hong Kong's entrepreneurial climate.
22% of eligible age youngsters went to university in Hong Kong in 2014 (Source: Gov.hk) with many more going to university outside of the country. What's more, for foreign companies opening a Hong Kong business, it means that there is a ready supply of English and Chinese speaking graduates, and bring skills to the table that you need.
If staffing your company with locals is attractive, it's also important to know that Hong Kong citizens may travel freely into China with no need for a visa, and so moving forward if you do have dealings with China itself then your Hong Kong staff can take a role in this.
Unlike Western countries which could be said to be stingy when it comes to writing off business expenses against your company, Hong Kong business can write-off most expenditure that would be classed as 'personal' in the West as a business expense, Including apartment rental, travelling, or dining and drinks. If the above are connected to your business, then it's possible.
As we have discussed, Hong Kong is built on the principles of entrepreneurship and business, and as such business banking is relatively easy and useful.
Unlike other foreign countries, HK banking is world-renowned and accepted in the West and won't cause you any problems when transferring money to or receiving it from abroad. There are also reasonable rates for currency transfer and most bank accounts can have different currency functions, so in the case of being paid from abroad you may not even need to convert the currency into HK$ at all.
It's often stated that one of the biggest problems for foreigners opening businesses in Hong Kong is the fact that an individual must travel to HK to open the business account. In most cases this is true, and can be inconvenient, but Hongda are able to do this for you as a proxy which can be very convenient if travelling to HK is not possible. This means that Hong Kong company setup could be done entirely out of the country!
WFOE/JV: Slow registration time.The benefit of all is that if you aim to run a business in China, any will allow you to do so.
David Finch BA ACMA CMIIA CAMA
Travis Perkins PLC Director of Group Business Risk & Assurance
Travis Perkins PLC (a leading builders merchant in the UK) has been using Hongda Business Services since 2008 for accounting and professional services. Throughout this time, we have found the team at Hongda to be very helpful and professional in their dealings with us. We look forward to working with the company in the future.
Erik de Waard
Tulip Pacific Ltd. > Director
Tulip Pacific Ltd. (Business planning and interim financial management services) has been using Hongda Business Services since 2012. Hongda has helped us set up legal entities in China/HK and takes care of our annual company audits. They are the most efficient business service provider I have worked with to-date, and their professional advice has helped me better advise my own clients and provide greater value to my overall business.