A Guide for Opening an Offshore Company in Hong Kong for Entrepreneurs
- Michelle Yang
- 2021년 1월 6일
- 4분 분량
What is an offshore company in Hong Kong?
The main characteristics and features of offshore companies are:
Exempt from Taxes
In most countries, offshore companies are exempt from taxes. Hong Kong is an attractive place to form an offshore company because profits earned outside of Hong Kong are not taxed.
Business activities happen outside the country
Offshore companies are usually prohibited from trading in the countries they are registered in. You may want to keep this limitation in mind as there could be local commercial opportunities at the time you incorporate or they could develop in the future.
Degree of Anonymity
Basic company information (including shareholders, directors, secretary, and company address) will be registered and filed with Company Registry. The Company Registry makes this information public.
If an offshore company in Hong Kong wishes to make company information confidential, it can do so by appointing nominees as the shareholder and director. The nominees’ information will be made public.
This can be accomplished with the help of a third party service provider or appropriate accounting firm.
Fast and easy to incorporate
In Hong Kong, it usually takes between 4 to 7 days to set up an offshore company. The company can be registered and incorporated online.
When should entrepreneurs consider opening an offshore company?
You are expanding your business and there is an increase in investment or shareholders. Many investors, especially institutional investors, prefer to invest through an offshore company.
Other entrepreneurs also consider opening an offshore company for these purposes:
as a holding company
for import and export between other countries
for online or tech businesses
for international business
tax planning and relief
for estate planning
for enhanced privacy
development of intellectual property
to get higher return on investment in stocks, commodities, forex, and international securities
Here are some examples of situations where businesses would want to consider setting up an offshore company in Hong Kong.
For international business Tony operates a cement company in Brazil. He wants to export to other countries to grow his business, but run into some problems to create an international corporation.
Tax planning and relief for an online business
Lisa runs a website-building freelance business in France as a self-employed person. She has outgrown her self-employed status. As a self-employed person, she would be paying flat rate tax of about 33% on her revenue, including on business and personal taxes. Proceeding as a self-employed freelancer in this business would kill Lisa’s business. Lisa looks around to see which country with low corporate taxes, would enable her to incorporate a company offshore. She also wanted a place with a stable and trusted government with a good reputation in international business as she was getting more international clients.
Benefits of setting up a Hong Kong offshore company
Hong Kong is a financial offshore hub at the end of the day, China is still very dependent on Hong Kong for trade, FDI, equity and debt capital, and foreign exchange.
If you’re thinking of setting up an offshore company these may be some plus points to doing so in Hong Kong:
Set up is easyLaunching a business in Hong Kong is simple, secure, and free from unnecessary red-tape. Hong Kong allows foreign ownership and for company shares to be 100% foreign-owned. Special authorizations before setting up the Hong Kong company setting are not required. In addition, companies only need one shareholder and one director, who can also be the sole shareholder.
No taxesThe tax system is simple and favors offshore company setup. Furthermore, foreign-sourced income is exempt from tax in Hong Kong and there are no foreign exchange controls in Hong Kong. Thus, a Hong Kong offshore company that derives income from abroad is not taxable in Hong Kong. This is one the biggest advantages of Hong Kong Incorporation.
Access to China and the rest of East Asia, and Southeast AsiaAccording to the National Bureau of Statistics of China, approximately two-thirds of all the FDI into China came via Hong Kong. In 2018 Hong Kong exported $25.3 billion to China, which was Hong Kong’s #1 destination and accounted for 20% of all of its exports. In terms of capital flows, over the last decade approximately 80% of the IPOs outside Mainland China have been issued in Hong Kong.
English as second official languageDue to the region’s history as a British colony, English is an official language in Hong Kong. This has one major benefit for the majority of expatriates: street signs, as well as official documents, are always written in both Chinese and English.
Low Share CapitalThe minimum paid up share capital is 1 HKD. The minimum number of shares is one to form an offshore company. The recommended paid up share capital is USD 1,000 or its equivalent in any foreign currency.
Fast Registration In Hong Kong, it is quick and easy to set up an offshore company. Incorporation takes between 4-7 days and can all be done online.
Limited LiabilityThe company’s shareholders will have limited liability protection up to their share capital contributions.
Good base for firms and businessesHong Kong has a well-developed financial infrastructure, regulatory structure, reliable online banking system, free (but still safe) transfer of money, low tax rate and sound legal system.
Who can set up an offshore company in Hong Kong?
Good news: Yes, foreigners are eligible to open and own 100% of an offshore company in Hong Kong.
You can even open your company without travelling to Hong Kong (e-registration and paper registration are both allowed). However, the government requires your company to have a registered physical address for your office, and a company secretary based in Hong Kong.
You don’t actually need to rent a physical office or hire a full-time company secretary. At Osome can provide this service to you for HK$5000 per year.
The difference between opening a company onshore vs offshore
If you are considering between setting up an offshore company and an onshore company in Hong Kong, we’ve put side by side the requirements for registering both these types of companies below. The main differences are highlighted.
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