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How to start an offshore company in Hong Kong

Ever thought of internationalizing your business? In a bid to experience the maximum benefits of launching a business in Asia, entrepreneurs from around the world are looking to start an offshore company in Hong Kong.

Starting a company in Hong Kong offers numerous opportunities and benefits to new startups, in the form of low taxes, solid business infrastructure and low barriers to incorporating a company.

Curious to know why you should form an offshore company in Hong Kong? Keep on reading! We have gathered all the essential information about it in this article.

What is a Hong Kong Offshore Company?

As a foreigner, setting up a company in Hong Kong away from your home country can be regarded as a Hong Kong offshore company. Even though you may not be familiar with opening an international company, you may be surprised with the benefits that these have to offer.

If you want to experience the maximum benefits of setting up an international business, offshore company formation may be your best choice.

Setting up an offshore company in Hong Kong is the perfect vehicle for:

  • International banking activities
  • International trade
  • Investment activities
  • Asset protection

This type of business vehicle is the best way to minimize international taxation with the business friendly tax structure of Hong Kong. The low corporate taxes of 8.25% on profits under $2 million HKD and 16.5% onwards makes Hong Kong one of the lowest tax jurisdictions in the world. The Hong Kong government also exempts tax on profits for Hong Kong companies from foreign-earned sources, or those outside of Hong Kong. In addition to this, generally companies in Hong Kong are not subject to withholding tax nor capital gains.

Top benefits of Hong Kong Offshore company formation

The many benefits of Hong Kong offshore company formation is the main reason why Hong Kong is one of the main destinations for new startups and investments in Asia. Below are the main benefits you should know:

Ease of setting up an offshore company

All over the world, Hong Kong is known for its ease of doing business. With a lack of bureaucracy and red-tape facilities, setting up a Hong Kong company is simple and straightforward. Moreover, Hong Kong follows a favorable foreign ownership policy based on the shares of a company, allowing 100% foreign-ownership, unlike some other countries in Asia.

Tax benefits

While launching a business, every business owner has tax in the back of their mind. This area can affect the operations of your business. With a tax system that is simple and straightforward, setting up an offshore company in Hong Kong will help save you both time and money to help grow your business. This is one of the biggest advantages of Hong Kong offshore corporations.

The corporate income tax rate in Hong Kong offshore is as low as 8.25%, for profits under $2 million HKD. There is no capital gains taxes, estate duty, withholding taxes, VAT/GST, and withholding tax on dividends or interest. What’s more, there are no foreign exchange controls, and foreign-sourced income is exempted from tax in Hong Kong.

Political Stability

In Hong Kong, there is a direct relationship between political stability and investment climate. Being a Special Administrative Region, Hong Kong retains its political, economic, and judicial systems, separate from Mainland China. And due to easy formation rules and processes in Hong Kong, it has emerged as the second best bureaucracy in Asia, as per the report by the Political and Economic Risk Consultancy (PERC).

Asset Protection

All Hong Kong limited companies offer protection for the assets of the company. Thus you can reduce the risk of doing business under your name when conducting business internationally. If you want to keep your business interests private or secure from future claims, offshore registration in Hong Kong would be your best choice. Future claims include judgment creditors, bankruptcy, and other litigants from adverse competitors, adverse claimants, and other parties.

The Easy Company Formation Process

Then how easy is the Hong Kong company formation process? Well, being nominated as one of the easiest places in the world to do business, Hong Kong’s incorporation process is pretty simple and easy.

There is no requirement for invested share capital, Hong Kong companies can be 100% foreign owned, and forming a company can be done in a matter of days! These main factors play a huge role in why many entrepreneurs choose Hong Kong as the location to start their company.

Hong Kong Offshore Company Requirements

There are not too many requirements for a Hong Kong offshore company registration. Below are the documents required for forming your Hong Kong company:

  • The main details of the company, including:
    • Company name
    • Share capital
    • Number of shares taken up by each shareholder
    • Personal information of the shareholders and directors
    • Registered address/business address
    • Brief description of business activities
    • Source of funding

The other documents required for incorporation (for corporate shareholder and directors):

  • Copy of the company documents such as the Certificate of Incorporation, the Articles of Association, the related documents for showing the UBO (ultimate beneficial owner) along with the UBO’s copy of Hong Kong identity card / International passport, and copy of residential address proof.
  • For Hong Kong shareholders and directors:
    • Copy of residential address proof.
    • Copy of Hong Kong identity card.
  • For non-Hong Kong shareholders and directors:
    • Copy of International passport and overseas residential address proof.

Hong Kong Offshore Company Registration

With offshore company formation in Hong Kong, Startupr can assist you every step of the way to ensure a smooth and easy process for launching your company. We have developed our own unique software system, Backoffice, to help with tracking every detail of your company and require annual filings, all in one place.

Let’s see how you can incorporate your company with the help of our Backoffice system-

  • The first step is to select your company name. The name should be unique, and not used by other organizations. You can fill the company name check available on our website, which will help you know if your name is free to use.
  • Next, follow the steps in the Backoffice system, which will help guide you on what information is required for incorporating your company.
  • When we receive your application, Startupr’s exclusive Backoffice ensures that your form is correct before submission.
  • After checking the form, our team will contact you about any further due diligence and follow up on all the requirements for the company directors and shareholders. 
  • As soon as we are done with checking the completion of your application, you are then requested to process the payment
  • After this, your company incorporation will begin

Through our Backoffice system, you will also get access to the company incorporation documents, after your company is formed.

Ongoing Compliance filings

After you finish the offshore company formation in Hong Kong and start conducting your business, there are some future company filings you should be aware of. Here is a short summary of the most important filings:

Filing the Annual Return 

Within 42 days of the 1st anniversary of incorporation, the company needs to file an annual return. Failure to file this on time may result in penalties from the government. The Annual return includes general information of the shareholders, directors, registered office, company secretary, share capital, and much more.

With our back-office system, Startupr will notify you before the date so that you file this on time for your business.

Renewal of the Business Registration Certificate

The Business Registration Certificate is also required to be renewed before the expiry date. Startupr will help the company file this with the company renewal of the annual return.

Conducting the Annual General Meeting

The AGM, also known as the Annual General Meetings, has to be held once every year. In place of the Annual General Meeting, a written resolution is permissible. Startupr can help the company with this process and keep the documentation of this for future reference.

Filing of Employer’s Return 

With the IRD (Inland Revenue Department), business owners need to file the Employer’s Return to report the amount of remuneration, wages, salaries, pension, etc.

Filing of the Profits Tax Return

The company is required to file its annual accounting and financial statements every year. This financial information will normally be handled by a CPA firm in Hong Kong to produce an audit report, which will be used to file the company’s Profits Tax Return.

How can Startupr help you?

If you are looking for offshore company registration in Hong Kong, Startupr’s Back office can easily help you to register your company. Our transparent pricing, creative and flexible approach, honesty & reliability, and unwavering focus on client satisfaction helps provide our clients with the best services possible. Contact Startupr today to register your offshore company!