Services in Hong Kong
WHY OFFSHORE COMPANY IN HONG KONG?
- A city-state located to the south of China with coastal access to the Pearl River Delta and the South China Sea
- Currency: Hong Kong Dollar (HKD)
- Special Administrative Region (SAR) of the People’s Republic of China (PRC)—under principle of “one country, two systems”, the Chinese government agreed to allow Hong Kong’s capitalist system to remain unchanged until 2047. The government also agreed that it would not interfere with Hong Kong’s ability to maintain an independent taxation system.
- Ideal location for companies engaged in financial services—absence of withholding tax, interest tax, capital gains tax and VAT
- Boasts one of the busiest ports in the world
- Reliable and efficient financial center (3rd largest in the world after New York and London)
- Hong Kong signed the Closer Economic Partnership Arrangement (CEPA) with PRC, making it a natural conduit between the West and Mainland China
- Has a sound legal system based on English Common Law and laissez faire non interventionist attitude on the part of government
- Ranked as one of the freest economies in the world—based on free and open trade
- Not perceived as a tax haven.
Corporate tax is levied on corporate profits. Most corporate tax regimes levy a tax on both the corporation (when profits are earned) and on the shareholder (when profits are distributed as a dividend). This is often called the “double tax.” By choosing to incorporate in a jurisdiction with a favorable corporate tax regime, a company may reduce, and in some cases, eliminate the impact of this double tax. Many jurisdictions around the world have enacted specific legislation that make “offshore” companies exempt from corporate tax and other provided that the offshore companies satisfy certain requirements—these jurisdictions are the focus of this report.
Hong Kong levies its Corporate (or “Profits”) tax according to ‘territorial principles”. This means that the focus in levying the tax is on the source of profits rather than the form or status of the business (i.e. offshore vs. resident). Under the territorial tax regime, a company’s income will be subject to the Profits tax if: the company engages in a trade or business in Hong Kong, the income arises from this trade, and the income is derived from within Hong Kong. The profits tax is levied at a rate of 16.5% (15% for unincorporated businesses). All foreign-source income is exempt from taxation. Dividends and capital gains are also exempt from taxation. However, certain gains on the disposal of assets may be subject to profits tax if disposal constitutes a transaction in the nature of trade. Incorporated companies in Hong Kong also benefit from the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
CEPA allows Hong Kong businesses to gain greater access to the Mainland market and serves as a “springboard” for Mainland enterprises to reach out into the world economy. Additionally CEPA ensures that all goods, imported from Hong Kong into the Mainland, are given a tariff free treatment and that Hong Kong service suppliers also enjoy preferential treatment when entering into the Mainland market. Finally, both sides have agreed to enhance their co-operation within various trade and investment facilitation areas to improve the overall business environment.
Dividends distributed from a Hong Kong company and interest payments made from a Hong Kong company are exempt from withholding tax. Royalty payments are generally exempt from withholding tax. However, royalty payments made to unaffiliated nonresidents for the use of intangibles in Hong Kong are deemed taxable. The amount subject to taxation is equal to 30% of the gross amount of the royalties paid, resulting in an effective rate of 4.95%. If the royalty is paid to an affiliated nonresident for the use of intangibles in Hong Kong, 100% of the royalty amount is deemed to be taxable, resulting in an effective rate of 16.5%.
Hong Kong has limited provisions in the tax law governing businesses carried on with closely connected nonresident persons, but has not adopted the OECD guidelines.
In Hong Kong, the personal income tax covers all income arising in or derived from Hong Kong (i.e. employment and pension). Interest income and capital gains are exempt from personal income tax. Hong Kong has a progressive income tax scheme. The marginal tax rates range from 2% to 17%, with a cap at a standard rate of 15% on chargeable income (without deduction of personal allowances).
Hong Kong does not have a Value Added Tax (VAT).
Hong Kong does not have a payroll tax. Owners of real property are taxed on any rental income derived from their property in Hong Kong. The tax is charged at the standard rate of 15% and applies to the net assessable value of the property. The net assessable value of the property is determined by rent, plus service charges, plus fees paid to the owner, minus an allowance of 20% for repairs and maintenance.
A company deriving rental income from a property is subject to profits tax and may deduct the amount of property tax paid from the amount of profits tax due. Social Security payments are required to be made for employees with monthly income equal to or greater than HKD 5,000.
The employer is required to deduct 5% from the employee’s compensation and pay it to the Mandatory Provident Fund (MPF). The employer’s contribution is an additional 5%. Self-employed persons also contribute 5% of relevant income, but may choose to do so on either a monthly or annual basis. The maximum deduction is HKD 1,000 per month and all benefits derived from these contributions must be preserved until the scheme member attains the age of 65. Recent Social Insurance Law (SIL) legislation has made it mandatory for businesses to make contributions for foreign employees.
An inheritance or estate tax (also known as the “death tax”) is a tax on the value of a deceased person’s estate. The estate includes everything the person owned at the time of his or her death, including: money, real estate, financial securities, and insurance policies. None of the countries examined in this memo levy an estate tax.
With over than 7 years experience we helped hundreds of companies to successfully set up in China’s development zones.
GMG service Fee & Duration of registration Company in Hong Kong:
$3464 USD. 7-10 business days
Also for your security & comfort you can contact us first, with your injury and after we will provide you Online Invoice with The Service Agreement.
Also GMG provide next Hong Kong services:
- CHANGE DIRECTOR IN A HONG KONG COMPANY
- EQUITY TRANSFER AGREMENT IN HONG KONG
- ASSITANCE AND DOCUMENTS PREPARATION TO OPEN A BANK ACCOUNT
- LEGALIZATION OF DOCUMENTS TO OPEN A COMPANY IN CHINA
- INTERNATIONAL LEGALIZATION, HAYA APOSTILLE, IN HONG KONG
- BUSINESS ADVISORY
- ANNUAL EXTENSION & SECRETARY SERVICES & LEGAL ADDRESS
- ANNUAL ACCOUNTING SERVICES & TAX FILLING
- CONSOLIDATION OF ACCOUNTING WITH HEADQUARTERS