In recent years, entrepreneurs from all over the world are investing in different locations to expand their businesses. There has been an increase in the number of offshore companies during this time. And if you are in search of a suitable location for setting up an offshore company, then there could be no better place than Hong Kong. Hong Kong has a vibrant and business-friendly environment that favors entrepreneurs and gives them opportunities to be successful.
Hong Kong has always been a favorite choice for starting an offshore company due to its low tax regime and easy offshore company setup. If you are planning to start an offshore company in Hong Kong, then you must keep certain things in mind. Because of the benefits of starting an offshore company in Hong Kong, you must set up an offshore company there. In this article, you will know the details of an offshore company, the requirements, and the process for starting an offshore company in Hong Kong.
What is a Hong Kong offshore company?
A Hong Kong offshore company is a business entity that is incorporated in Hong Kong’s business landscape and is set up in a way that it operates majorly from outside of Hong Kong but comes under Hong Kong’s jurisdiction. Entrepreneurs usually set up an offshore company in Hong Kong to manage their financial activities such as international trading, asset security, investment holding, and many such activities. Due to the strong legal framework, beneficial tax system, and vibrant market of Hong Kong, it is a perfect place to establish an offshore company and manage the assets and international business procedures.
What are the benefits of starting an offshore company in Hong Kong?
Starting an offshore company in Hong Kong has a multitude of benefits and can be highly profitable for entrepreneurs and investors. These benefits are discussed below in detail.
1. Tax Exemption
Hong Kong is well known for the simplicity of its lax laws and relatively low tax regimes. Offshore companies are a great example of Hong Kong’s simple and low tax regime, as the taxes in Hong Kong are imposed only on the gains which are earned entirely in Hong Kong. And, as most of the gains in an offshore company are earned outside Hong Kong, it is not liable to be taxed there. Moreover, the tax rates in Hong Kong are low in comparison to other destinations for offshore companies.
2. Ease of Company Formation
Hong Kong offshore company formation is highly simple and understandable. Starting a company in Hong Kong is extremely easy as there are no red tape procedures or bureaucracies to confront. The procedures for setting up an offshore company in Hong Kong can be easily understood by foreign entrepreneurs, which makes it even easier for them to establish an offshore company there.
3. Reputed Image
Hong Kong has a highly reputed image, making it a trusted location for offshore companies. In the past few years, Hong Kong has been able to maintain its appearance as a favourable location for businesses due to its strategic location as it opens doors to expand the company at the global level. Moreover, the ease of doing business in Hong Kong allows entrepreneurs to gain high profits.
Offshore Companies vs Onshore Companies in Hong Kong
Both offshore and onshore companies have different purposes and are often used for varied business operations. Both types of companies offer distinct benefits making Hong Kong a profitable business location. Offshore companies are businesses that are registered in Hong Kong but perform the majority of their operations outside the borders of Hong Kong. They enjoy tax exemption in Hong Kong, which saves them from paying taxes on their profits gained outside the territory. They take advantage of the tax laws of Hong Kong, which reduces the tax burden on these companies.
On the other hand, onshore companies primarily operate in Hong Kong. They also come under the jurisdiction of Hong Kong and have to follow the policies and laws in Hong Kong. Onshore companies are most suitable for businesses that want to focus on the local audience and want to tap into the regional market of Hong Kong.
Requirements for Starting an Offshore Company in Hong Kong
If you desire to start an offshore company in Hong Kong, you must fulfill some requirements before doing so. The requirements for starting an offshore company in Hong Kong are mentioned below.
1. Registration Documents
The first and foremost thing required to start an offshore company is registration documents. A completed registration application, company’s passport, proof of the company’s registered Hong Kong address, and company’s articles of association.
2. Office Address
You must register an address in Hong Kong as your office address. It will serve as an official address for your documents and for receiving any mail or documents from the government.
3. Company Secretary
All offshore companies in Hong Kong must appoint an individual or a corporation as their company secretary. They must appoint the company secretary within 14 days of the company’s incorporation.
4. Directors and Shareholders
According to the laws in Hong Kong, offshore companies should have at least one director and one shareholder to establish the offshore company. The director and the shareholder can be different or the same person and of any nationality.
5. Annual Requirements
There are some annual filing requirements that offshore companies must comply with. These yearly filings are needed to be submitted to the Inland Revenue Department and the Companies Registry. The annual filing requirements include audited financial statements, tax returns, and annual returns.
Process for Starting an Offshore Company in Hong Kong
It could be challenging to start an offshore company without following the correct procedure. You must follow a planned and well-defined procedure to start an offshore company in Hong Kong. This part of the article will provide you with the process to successfully start an offshore company in Hong Kong. Without any further delay, let’s move on to the process.
1. Choose a Company Name
To start with the process of starting an offshore company in Hong Kong, you must choose a suitable name for your company. The name you are selecting should be unique and should not be used by any other organization. You can choose a name for the company that represents your products or services, or it can be something related to the goals of your company.
2. Prepare the Incorporation Documents
The next step to starting an offshore company in Hong Kong is preparing the incorporation documents. Various incorporation documents are required to create an offshore company. These documents include articles of association, certificate of incorporation, business registration certificate, registered office address in Hong Kong, company’s business plan, memorandum of association, directors and shareholders’ information, and statutory declaration of compliance. You can get help from a legal consultant in Hong Kong to prepare and file all the documents correctly.
3. Register the Company with the Hong Kong Companies Registry
To register the company with the Hong Kong Companies Registry, you must follow the above-mentioned steps and then follow the forthcoming ones. After the preparation of the documents, you are required to submit them to the Hong Kong Companies Registry along with the necessary fees. Then, the Companies Registry will go through your documents and approve them if all the documents are correct. After the successful registration of your company, you will be provided a Certificate of Incorporation for the company.
4. Obtain the Necessary Licenses and Permits
You must obtain certain licenses and permits to start an offshore company in Hong Kong. These licenses and permits can be obtained through various organizations in Hong Kong based on the nature and operation of the offshore company. These licenses and permits include business registration certificates, offshore company formation licenses, work visa permits, tax registrations, industry permits, and operating licenses.
5. Open a Bank Account
To start an offshore company in Hong Kong and manage the finances, you must open a bank account. You have multiple bank options to choose from to open a bank account in Hong Kong. You should check all the requirements and compare the functions of all the banks to choose the right bank for your bank account.
6. Annual Compliances
Lastly, offshore companies have to maintain annual compliance with the legal framework of Hong Kong. The annual compliance for offshore companies includes annual return filing, annual tax returns, preparation of audited financial statements, business registration renewal and compliance with corporate governance requirements formed by Companies Ordinance and Securities and Futures Ordinance.
Start your offshore company in Hong Kong today with Startupr?
There is a complete process to start an offshore company in Hong Kong. If you are having difficulties understanding the process, then you must read the above article to clear all your doubts. The above article has a detailed explanation of what an offshore company is, the benefits and requirements of starting an offshore company in Hong Kong, and the process of creating an offshore company in Hong Kong.
If you want a trusted partner for starting an offshore company in Hong Kong then you can completely rely on Startupr. It is the perfect companion for creating an offshore company in Hong Kong as it takes care of the monotonous administrative work, giving you ample time to focus on growing the company. Startupr has thousands of satisfied customers who have shown faith in Startupr and have got great results.