An offshore company in Hong Kong: a convenient and secure tax-free harbor with a good reputation, quality banking and secretarial services
There are only a few offshore territories in the world respected even by the fiercest opponents of tax competition and offshore business. Hong Kong is one of them. Hong Kong offshore companies are traditionally classified as “transparent” because they must undergo an annual audit. To be able to operate in this jurisdiction the registration of the company in Hong Kong is required. The procedure of registering a company in Hong Kong is quite simple and usually takes about two weeks.
Hong Kong is a Special Administrative Region of the People’s Republic of China formally considered its territory (one country two systems). And in China in January 2007, a law to combat money laundering was passed , which further strengthened the reputation of Hong Kong as a convenient and safe tax harbor. Hong Kong’s taxation system is modeled after the British one: uses territorial principle of taxation and precedent law. Consequently, the registration of a new company in Hong Kong, followed by the creation of offshore non-resident company on its territory means full exemption from all taxes. The main regulatory act applicable within the territory is Income Tax Ordinance.
There are four types of income tax for the offshore company in Hong Kong:
- Tax on profit
- Salary tax
- Tax on property
- Tax on interest income
Taxable income of an offshore company is considered an income , only if it is derived in the administrative area of Hong Kong, or from sources that also belong to it. If income does not fall into either of these categories, or extracted from foreign sources, offshore company will not pay any taxes. Thus, the registration of the company in Hong Kong is the best way to minimize the taxes.
Other offshore company taxes in Hong Kong include:
- Inheritance tax;
- Stamp duty;
- Capital gains tax;
- Business registration tax;
- Rental payments offshore company.
The general types of taxes in Hong Kong include:
- Import duties and excise taxes;
- Hotel accommodation tax;
- Entertainment expenditure tax;;
- Air passenger departure tax.
Types of offshore companies in Hong Kong
The most beneficial and commonly recognized form of registration of company in Hong Kong is closed joint stock company (private company limited by shares) where the liability is limited by share capital. It is also possible to establish an offshore company limited by guarantee or offshore with unlimited liability. According to the Recognition of Trusts Ordinance, the existence of trusts in Hong Kong is also possible. The period of the trust existence is 80 years (or the life duration + 21),where 21 years is the period of capital accumulation.
Having passed the registration procedure of the company in Hong Kong, offshore can have any name except for the one that points to a connection with the royal family or the government. Unfortunately, there is no possibility of reserving the name of an offshore company. Moreover, the offshore company in Hong Kong can not be registered under the name which is identical or similar to the name of an already existing legal entity. Any name that is considered to be offensive or suggesting criminal activity is not acceptable. Prior to registration of a new offshore company, its name should be tested for repeatability.
Learn more about offshore companies, get in touch with us!