Many businessmen in Russia are beginning to think about starting their own business abroad. And the trends of modern politics, including economic ones, point the way to the East - to the countries of Southeast Asia. One of the most promising places for doing business is Hong Kong. But the remoteness of this city, ignorance of the intricacies of organizing and doing business in Hong Kong, lack of language skills and other factors often seem to be an insurmountable obstacle to starting a new stage of activity. But is it really that complicated? Should or shouldn't a Russian entrepreneur take the risk of starting his own business in a distant and unknown land? We asked five main questions of International Wealth, which has been helping residents of our country to organize business abroad for many years.
- Hong Kong is a unique place not only in Southeast Asia, but all over the world. It is a special administrative region in China, which has been the leading financial center of the world and Asia for several decades. It is also the "central entrance" to the serious business structures of mainland China, which certainly have their offices in Hong Kong.
The level of economic freedom is highest in Hong Kong. The head offices and representative offices of the world's leading companies and corporations are concentrated here. Having decided to open your own business in this city, you find yourself in the very thick of the world economy, in direct access to the international sphere of activity and acquire the status of its participant.
- Registering a company in Hong Kong on your own is no more complicated than in our country, and maybe even easier. For the procedure, you will need a director and a shareholder. Our company will help you with this task.
The owner of the company can have any citizenship and be both an individual and a legal entity. When carrying out registration actions, the owner participates in the verification process, which takes place via video link in the online format.
His personal presence may be required if you plan to open an account in Hong Kong.
You don't need a real office to run your business. You can use a corporate shareholder; among the directors there can be both legal entities and individuals, but one of the directors must be an individual.
The authorized capital of the company can be equal to 1 local dollar. Moreover, it will not be checked, if desired, it can be increased - without full payment.
Many entrepreneurs who want to start a business in Hong Kong want to know what prospects this region offers for them. According to business experts, Hong Kong is one of the most comfortable places in the world to open your own company. It is one of the largest international financial centers without foreign exchange controls and customs duties. By 2016, Hong Kong's foreign exchange reserves reached $ 360 billion, several times exceeding the money supply in circulation in the metropolis.
It's pretty easy to open your company in Hong Kong. Firstly, the registration process lasts only a few minutes (only the production of stamps will need to wait a couple of days), and secondly, it can be done remotely, that is, without being in Hong Kong itself.
However, these are not all the advantages of organizing a business in this region.
The benefits of starting a company in Hong Kong also include:
Of course, doing business in Hong Kong has its drawbacks. These include:
However, all these disadvantages are relative, and there are many more advantages. As practice shows, it is not at all difficult to find a secretary, and financial statements will demonstrate the level of business conduct by foreign partners and clients.
In Hong Kong, there are the following types of organizational and legal forms of business activities:
Harsh Chinese laws have bypassed this region, so it is much easier to register a company in Hong Kong than in China. How to open an offshore company in Hong Kong without even having been there? We will talk about this and much more in this article.
Why do many businessmen decide to register a company in Hong Kong? Hong Kong is a well-known major financial center, so having a Hong Kong company is prestigious and respectable. Unsurprisingly, it was ranked second in 2018 in the Annual Global Competitiveness Index, which highlighted its strengths such as perfect law enforcement and legal systems, efficient government agencies, social stability, and a free and open market. So when you invoice, say, your client on behalf of a company in Hong Kong, a picture of a truly global organization is drawn in their head.
But Hong Kong is more than just a prestigious location for international business. The company is also attracted by its favorable tax system with a 16.5% tax rate on profits earned in the territory of the city-state. And for the first HK $ 2 million of earned income in Hong Kong, a tax rate of 8.25% has been applied recently. But what's even better is that you can qualify for offshore status if you do not conduct any business directly in Hong Kong, which provides for a zero percent corporate tax.
The government's disposition towards business is also proved by the fact that various measures are constantly being taken to attract businessmen to the metropolis. For example, a new corporate form was recently introduced for open-ended investment funds, which have no limit on the number of shares issued. In addition to the already existing unit trusts, such funds can now be created in the form of companies, as in most other countries, and they will be called "open-ended fund companies" (OFC). Such companies are allowed to have variable capital and are given the opportunity to freely issue new shares and redeem them at the first request of the shareholder. Also, these companies are exempt from income tax.
Local laws are based on British standards as Hong Kong has long been a British colony. Thanks to this, in order to own a Hong Kong company it is not at all necessary to know the Chinese language - all documents are filled in English.
Hong Kong also has a large number of different agreements with other countries. Among them, in addition to the well-known agreement on the liberalization of the services market between Hong Kong and the PRC, it is worth mentioning the recently signed free trade agreement with the Association of Southeast Asian Nations, which greatly simplifies customs and technical barriers between Hong Kong and ten ASEAN states. One of the most recent trade agreements of Hong Kong was the Free Trade Agreement with Georgia, signed on June 29, 2018 during the Belt and Road Summit in Hong Kong. “The agreement will come into force at the end of this year. We will make every effort to complete all internal procedures on time so that our producers can take advantage of this agreement as soon as possible, ”said Gennady Arveladze, Deputy Minister of Economy and Sustainable Development of Georgia, who signed the document. He stressed that it is about "a lot of benefits" for producers. And Hong Kong Minister of Commerce Edward Yau said: “Agreements like these are critical to the development of global commerce. Georgia is an important state, with the help of which we will be able to enter the Eurasian market first, and then - the Eastern European market. I am convinced that this agreement is a new stage in the development of our economies. " It is worth noting that in 2017 the volume of trade between Hong Kong and Georgia amounted to 320 million Hong Kong dollars (40.8 million US dollars).
Also on May 24, 2018, Hong Kong signed a double taxation agreement with Finland. It allocates tax rights between the two jurisdictions, which will help investors better assess their potential tax liabilities from cross-border economic activities. For example, any Finnish tax paid by a Hong Kong company will be allowed as a credit against tax payable in Hong Kong on the same profit. And for Finnish companies, this means that the tax they pay in Hong Kong will be deducted from the amount of tax payable in Finland on the same income. This is Hong Kong's 40th Double Taxation Agreement, including 16 agreements with member states of the European Union.
Another attractive factor in Hong Kong is its excellent financial system. But we'll talk about banks in Hong Kong below. The main idea is that here you can own a multi-currency account and use high-quality online banking services in English.
By the way, if you want to compare Hong Kong with its main global competitors, then you will have an interesting article "Hong Kong and Singapore are an excellent choice for opening innovative companies."
Hong Kong's huge startup ecosystem is the fifth fastest growing ecosystem in the world and home to over 3,000 startups. With a population of over 7.4 million, Hong Kong is today a competitive financial and business hub, also referred to as an international hub for innovation.
One of the busiest cities in Asia, Hong Kong is the ideal place to do business. For 23 years, it has been the freest economy in the world. Its well-developed infrastructure, sound business policy and strategic location make it a preferred destination for both large and small companies, as well as the best gateway to the opportunities offered by mainland China and the rest of Asia.
According to government figures, there were 3,184 startups operating in Hong Kong as of the end of 2019, an increase of 21% from 2018. The number of people working in startups grew by about 31% in the same period to 12,478, amid generous government support to boost entrepreneurship.
The largest number of startups in Hong Kong are financial technology, followed by e-commerce, distribution business and consulting services. The majority of Hong Kong startup founders are locals, as well as citizens of the UK, US and mainland China.
Thus, thanks to tax and other incentives from the government, the number of startups in Hong Kong has more than doubled in four years. In addition to its undeniable commercial advantages, the legendary Hong Kong entrepreneurial spirit and its boundless energy create the ideal conditions for starting a business. All of this is supported by a powerful network of incubators and accelerators, a group of venture capitalists, many government programs, and a friendly startup community linked by dozens of different events, workshops and associations.
Hong Kong was ranked 5th in Asia and Oceania in the 2018 International Property Protection Index for intellectual property, patents and copyright protection. Protection is an important factor for any technology company.
With all this in mind, it's no surprise that Hong Kong is home to a rapidly growing number of startups in fields as diverse as fintech, healthcare, IoT, smart city technology, and more. You too can join them and take advantage of the benefits that Hong Kong has to offer.
If you are interested in launching a startup in Hong Kong, first you need to familiarize yourself with the main features and nuances that you need to know before taking this step.
If you want to start a startup in Hong Kong, the first thing you need to decide on is the type of company you will be registering. In Hong Kong, foreigners are allowed to register different types of companies, but private limited companies remain the most popular for many reasons. Such companies can take advantage of all programs to support startups, as well as tax incentives provided by the government.
Regarding the taxation of this type of company in Hong Kong, the tax rate for the first 2 million HK dollars of profit is 8.25%, and for anything higher - 16.5%. However, low tax rates are not the only advantage of the Hong Kong tax system. We wrote about the advantages of Hong Kong tax residency against the background of recent changes in the world in this article.
Registering a company in Hong Kong is a quick and easy procedure. You can find out about the requirements for Hong Kong companies here.
Offshore Pro Group invites you to register or buy an offshore company in Hong Kong to promote and protect your business. In this article, we will look at its features and why it is really profitable to open a company in Hong Kong.
The term "offshore", in fact, is not legal, which means that it does not have a legally supported definition. Most often, offshore jurisdictions are called jurisdictions that provide foreign legal entities and individuals with the opportunity to register a company or open bank accounts on their territory and operate under simplified rules of taxation, accounting, etc.
Such attractive offshore conditions usually do not suit the governments of European countries, nor the banks located there, which refuse to cooperate with the owners of companies registered in offshore. High-tax states are actively fighting offshore territories, developing "gray" and "black" lists of countries. Countries that fall on these lists are subject to various sanctions and countermeasures if they refuse to cooperate and accept the conditions offered to them. Also called offshore companies that are located in offshore zones and conduct their business outside the low-tax jurisdiction.
But the offshore companies in Hong Kong discussed in this article are not “offshore” in the traditional sense of the word. As we remember, the main feature of offshore companies that attracts many entrepreneurs is low tax rates or no taxation at all. So, in Hong Kong there is a territorial principle of taxation, according to which a Hong Kong company does not pay income tax if it operates only outside Hong Kong. This is the main “offshore” position of Hong Kong companies. Also, there are no most of the taxes familiar to other countries: capital gains tax, VAT, dividend tax, etc. In all other respects, they are obliged to follow all international standards of doing business: pay an annual fee for registering a business, keep accounting records, undergo an audit, submit income statements to the local tax authority, etc. Moreover, information about the owners of Hong Kong companies is in the public domain.
From all of the above, we draw the following conclusion: Hong Kong belongs to mid-shore jurisdictions that combine some elements of offshore zones, but are generally considered high-tax and respectable jurisdictions. In addition to Hong Kong, Singapore, Ireland and Switzerland are often referred to as mid-shores. Mid-shores enjoy a good reputation with their Western colleagues, are included in the white lists of countries, and European banks willingly cooperate with them. All from the fact that these countries adhere to international transparency standards and diligently implement them in their national legislation, and are also known for their stable banking and financial sectors.
For more details on how to obtain offshore status for your Hong Kong company, see the article: "Corporate Taxation in Hong Kong".
Offshore companies in Hong Kong are perfect for export-import operations with the Asia-Pacific region - when customs clearance of goods, a structure with a Hong Kong company will not raise any suspicions. In addition, it is home to some of the world's largest maritime and airport. For example, in July 2018, the volume of freight and mail traffic at Hong Kong International Airport (HKIA) amounted to as much as 433 thousand tons, and the number of passengers amounted to 6.7 million people - this is a record number (2.2% more than in July last year). The number of takeoff and landing operations also increased to 36.685 thousand (1.1%). In general, in January-July 2018, HKIA served 43.6 million passengers and 2.9 million tons of mail and cargo, which in both cases is 3.1% more than last year's figure for the same period. All these numbers testify to the scale and popularity of Hong Kong airport.
Also, an offshore in Hong Kong can be used as an investment company with transparent reporting, which increases the chances of getting the necessary loan. In general, a legal entity in Hong Kong is a universal tool for conducting a wide variety of activities. For more information on popular types of business where Hong Kong companies are used, read the article: "Company Formation in Hong Kong".