Comprehensive, Step by Step Guide for Offshore Company Formation in Hong Kong

The influx of foreign entrepreneurs trooping to Hong Kong to start new businesses cannot go unnoticed. The city’s strategic location, low tax regime, political and economic stability, as well as the absence of stringent foreign exchange controls have made it a safe haven for investors looking forward to starting both limited liability and offshore companies. Of great encouragement to investors is also the fact that the process of starting a company of any nature in Hong Kong is relatively easy, and once you have all the requirements in place, it will be just a matter of days before you can have your newly incorporated company ready to transact. If you are an investor, with your eyes trained at Hong Kong, here is a simple, but a precise guide on offshore company formation in Hong Kong.

Why Incorporate an Offshore Company in Hong Kong

It is not out of spite that hundreds, if not thousands of investors and corporations are interested in offshore incorporation ltd in Hong Kong. It is a subtle indication that the city has a lot to offer to these investors. We cannot also ignore the fact that HK is not just the perfect getaway to Mainland China, but also it is a world-class city, with magnificent infrastructure and systems that any sane investor would love to tap into and establish ventures that will lead to maximum profitability.

But that notwithstanding, here are some of the cool benefits entrepreneurs and corporations get when they incorporate offshore companies in Hong Kong-:

It is Easy to Set Up Offshore Companies in Hong Kong

According to the World Bank Ease of Doing Business Index, Hong Kong is ranked among the top cities in the world as the easiest places to do start and do business. The process of setting up a company in Hong Kong is simple and straightforward.

There are no unnecessary bureaucracy and red tapes that may make you chase the company formation for weeks upon weeks. Additionally, Hong Kong is one of the few countries that have very favorable foreign-ownership policies, where it is possible to have 100% foreign-owned entities.

Political and Economic Stability

There is a reason why the politics of a country has a direct impact on the economic prosperity of that country. Investors will never be free putting up investments in regions where they could end up losing everything due to political upheavals. Though Hong Kong a Special Administrative Region of China, it has its own economic, judicial and political system.

Hong Kong strongly follows the rule of law. In fact, it ranks as the second-best bureaucracy in Asia. All these work together to create a robust environment for investors to bring in their money and never worry about losing it due to bad politics.

Favorable Tax Regime

The favorable tax regime is one of the strongest allures for offshore company formation in Hong Kong. Hong Kong has the lowest tax rates in the world, with the corporate tax rate currently at 16.5%. Unlike other countries, Hong Kong doesn’t impose other taxes such as withholding tax on dividends, estate duty tax, VAT, and capital gains tax.

Additionally, the tax is only applicable to income sourced in Hong Kong. This means that foreign-sourced income is free from taxes in Hong Kong. Furthermore, there are no foreign exchange controls, making it very attractive for offshore company formation. This is because such companies can easily channel their income to Hong Kong without worrying about tax liabilities.

Good Image

Hong Kong has received criticism for being an offshore tax haven. However, this is not true simply because it has a very low tax jurisdiction. It is not that investors and corporations are using Hong Kong to hide their money, but it is just that the tax rates are very favorable with offshore company setups. It will please you to know that besides the allegations, Hong Kong has always followed the international standards on tax exchange and information.

Consequently, offshore companies in Hong Kong are not perceived by the negative connotations that similar companies in popular tax havens usually attract.

Options for Offshore Company Formation in Hong Kong

There are two main options for investors interested in offshore incorporation HK limited companies. The first option is to register a brand new company from the start. Meanwhile, the second option is to purchase a Hong Kong shelf company.

There are merits and demerits for either option. However, the majority of investors tend to go for new offshore company formation as this gives them the flexibility to nominate the name of real directors, register preferred address, and have their preferred unique name for the company.

Requirements for Offshore Company Formation in Hong Kong

Here is a look at some of the requirements you will have to fulfill:

The company name – you will have to propose a name for the offshore company, and the name has to be approved by the Hong Kong Companies Registry before the incorporation is done.

Directors – a minimum of one director, with no set maximum is necessary. The directors can be companies or natural persons, and they can either be residents or non-residents of Hong Kong. There are no restrictions, whatsoever, to the nationality of the directors.

Shareholders – for offshore company formation in Hong Kong, there has to be at least one and a maximum of 50 shareholders. Just like with the directors, the shareholders can be companies or natural persons. They can either be residents or non-residents of Hong Kong. There are no restrictions on the nationality of the shareholders, and a 100% local or foreign shareholding is acceptable. It is also possible for the sole director to act as a shareholder.

Company Secretary – it is mandatory by law to appoint a company secretary who can either be a local individual or a corporate resident. No professional qualifications are necessary for this appointment. Further, the sole director or shareholder can also double up as the company secretary.

Share capital and taxation – for offshore company formation in Hong Kong, share capital of any amount must be into the company’s corporate bank account. On taxation, only income derived within Hong Kong will be subjected to a corporate tax at the rate of 16.5%. Profits from overseas or foreign-sourced will free from the Hong Kong corporate tax.

Offshore Company Incorporation Process in Hong Kong

The process of incorporating an offshore company in Hong Kong involves two main steps, and they are as follows-:

Name Approval

Name approval is done by filing and submitting an application with the Hong Kong Companies Registry

Submission of incorporation documents

After the offshore company name is approved, the following documents will have to be submitted at the Companies Registry-:

Incorporation Application Form
Offshore company’s Articles
A copy of Identity card for resident directors and shareholders
A copy of company registration documents in the case of corporate shareholders
Copy of passport, bank reference letter, overseas residential address proof in the case of non-resident directors or shareholders.

The application and incorporation of an offshore company in Hong Kong usually take between four and seven working days. Once the process is complete, you will have to comply with the following set of formalities. You can finally be ready to start running the newly formed offshore company.

Open a corporate bank account

There are several banks you can consider for offshore company formation in Hong Kong. With most of the banks, however, your physical presence will be necessary at the time of opening the account.

File Documents with the Hong Kong Companies Registry

You will have to submit the following documents to the Hong Kong Companies Registry within 14 days of the incorporation-:

Registered address notification
Appointment notification of directors and secretary
Consent to act as a director
Any other document that the Companies Registry will ask for

Registration with the Inland Revenue Department

After one month of the offshore company formation, you have to register with the Inland Revenue Department. This department is in charge of procuring a Business Registration Certificate.

Application for Business License

If you have intentions of carrying out business activities in Hong Kong, and if carrying out such activities will require a business license, then you will have to apply for an appropriate permit before you commence operations.

Use a Professional Service Firm

It’s possible that as an investor, you can go about the process of offshore company formation in Hong Kong alone. But to be frank, it will be a lot of hassle. The most convenient route is to hire the services of a corporate company formation firm to help you out. Such a firm will not just help you with getting all the necessary documents and information. It will also help you obtain company name approval as well as file all the incorporation documents with the Hong Kong Companies Registry. This includes registering the company with the Hong Kong Inland Revenue Department.

In addition to these, the service firm can also help with opening the corporate bank account, securing the necessary licenses and permits and if need be. They will assist with procuring the relocation visa and ensure that the company complies with all the necessary rules and regulations in every way.