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| Set up a Company in Hong Kong | |||||||
Foreign investors choose to set up a company in Hong Kong to take advantage of the city's attractive tax laws. In summary, Hong Kong is a low tax jurisdiction with simple tax laws. Tax benefits available to entrepreneurs include: | |||||||
| 1. | A Hong Kong limited liability company must prepare annual audited financial statements complying with Hong Kong Financial Accounting Standards. The financial statements accompany an annual corporate tax return submitted to the the Hong Kong Inland Revenue Department (IRD) by 31 March. | ||||||
| 2. | An entrepreneur deciding to set up a company in Hong Kong benefits from i) an absence of capital gains taxes ii) an absence of withholding taxes iii) an absence of annual net worth taxes iv) an absence of accumulated earnings taxes on companies that retain earnings rather than distribute them and v) an absence of goods and services tax (GST) or value added tax (VAT).
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| 3. | Hong Kong corporation tax is a flat 17.5% on trading profits earned in Hong Kong. International profits accounted for in the company will not be subject to Hong Kong corporation tax if certain conditions are met. One such condition is that the international income must not be remitted to a Hong Kong bank account. Consequently, foreign direct investment (FDI) in Hong Kong reached US$63 billion in 2008 (Hong Kong Census and Statistics Depaprtment), up 15.5% from 2007 (US$54.4). Corporate profits tax is expected to be trimmed by one percentage point every two years for the next 10 years. | ||||||
| 4. | Entrepreneurs enjoy legal tax exemptions on local and international dividends accounted for in the company. Consequently, setting up a company in Hong Kong is one of the most attractive international investment options in the world. Hong Kong is the global headquarters for almost 4,000 companies. | ||||||
| 5. | Individuals resident in Hong Kong (both employees and entrepreneurs) are liable to income tax on employment and personal income sourced in Hong Kong, including pensions. Examples of income and benefits liable to salaries tax include salary and bonuses, commissions and expenses (e g living allowances, educational expenses etc). Income tax is charged progressively, up to a maximum rate of 17%. Foreign income remitted to Hong Kong is legally tax-exempt, making Hong Kong an attractive jurisdiction for wealthy entrepreneurs to reside. | ||||||
| 6. | A double tax treaty is signed by two countries to prevent the duplicate taxation of international income. Additionally, a double tax treaty reduces withholding tax on payments to non-resident individuals and companies. Unfortunately, Hong Kong has a double tax treaty network only with China, Thailand, Belgium, Luxemburg and Vietnam. As a result, for some investors a Singapore company is the preferred global corporate structure. | ||||||
| Contact Us | |||||||
| For further information on how to set up a company in Hong Kong, email email@healyconsultants.com or call us in Hong Kong at (+852) 8331 1911. | |||||||
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