HONG KONG COMPANY
Hong Kong is located in the South China Sea 100 miles south east of Guanzhou (formerly known as Canton). As of the 1 July 1997 under the Sino-British Agreement of December 1984 Hong Kong became a Special Administrative Region (HKSAR) of the People's Republic of China. The Basic Law, which is the Constitution of the HKSAR, is intended to maintain the HKSAR and the PRC as separate governmental, legal and economic systems. This is known as the "One Country, two Systems" concept. Hong Kong is governed by a Chief Executive and an Executive Council. Although there is a legislature, the administration is executive led and generally pro-business. Hong Kong is ranked the freest economy in the world.
Legal System and Taxation
The legal system of Hong Kong is based on English Common Law supplemented by locally enacted Ordinances. Hong Kong is guaranteed a high degree of autonomy from 1997. It is generally allowed to enact and enforce its own laws. The Hong Kong Companies Ordinance has many similarities to the British Companies Acts. There are an excellent range of professional services available as Hong Kong serves as the major business centre for the whole of the Far East. This is unlikely to change in the foreseeable future.
There is no tax on capital gains. Interest income and dividend income is also tax free. There are no withholding taxes. The local currency is the Hong Kong Dollar which is freely interchangeable but has a pegged exchange rate against the US Dollar. There are no exchange controls.
One of the major advantages of utilising a Hong Kong company is that there is no immediate suggestion that the company is a tax avoidance vehicle as Hong Kong is major trading entity in its own right. Hong Kong is one of the world's largest importer and also one of the world's largest exporter. The vast majority of the 50,000 Hong Kong companies incorporated annually are local trading companies doing real business in the region.
FEATURES OF HONG KONG COMPANY
A company incorporated in Hong Kong has the following characteristics:
The rate of taxation is 17.5% on Hong Kong source income only. In practice this means that, with careful structuring, as long as a Hong Kong company is not actually doing business in Hong Kong it would normally be possible to arrange the affairs of the company so that no tax would be payable. Detailed advice on this aspect is available on request. Please click here for a detailed description of different categories of taxes in Hong Kong.
There are two types of share capital, one is authorised share capital and another is issued share capital. There is no limitation on the amounts of both types of share capitals. For most of the small private company, the authorised share capital is usually set at HK$10,000 divided into 10,000 shares of HK$1 each and the issued share capital is usually set at HK$1 divided into
1 shares of HK$1 each.
A minimum number of one shareholder is required whose detail is filed on the public register. Corporate shareholder is permitted and anonymity can be achieved by the use of nominee shareholders. The shareholders can be of any nationality and be resident anywhere in the world and meetings can take place anywhere.
A minimum of one director is required and full details of these must be filed with the Companies Registry. The director can be of any nationality and be resident anywhere. Corporations incorporated anywhere can act as director. There is no requirement for board meetings to be held within Hong Kong and directors may be resident anywhere in the world.
A company must appoint a Company Secretary who can either be a person or a corporation. If the secretary is a person, he or she must be a Hong Kong resident. If the secretary is a corporation, the corporation must has a registered office or a place of business in Hong Kong. We will provide a company secretary at a cost of USD200 per year, if required.
A company must maintain a registered address in Hong Kong where the correspondence from Hong Kong Government can be served. We will provide the registered office at a cost of USD200 per year, if required.
Hong Kong companies are required to prepare audited accounts under the company laws. Also, a copy of the audited financial statements is to be furnished with Inland Revenue Department together with Profits Tax Return. The audited financial statements are not available to the public or to the foreign authorities except those of a listed company.
All companies must also prepare and file an annual return which gives details of the current directors and of the shareholders who have held shares in the company at any time during the year.
Incorporation of a Hong Kong company takes around 2 weeks but ready-made companies are available for immediate purchase.
Restrictions on Name and Activity
Names which suggest any connection to the Government are generally prohibited and certain words which suggest specialist activity can only be used when the appropriate licences have been obtained e.g. bank, insurance company and other specialist financial enterprises.
Though the particulars of the shareholders and directors are made public after registration, secrecy can be achieved by utilising nominee sharehoders and nominee directors services provided by professional firms, such as us.
REGISTRATION AND MAINTENANCE FEES
Our registration fee for a comapny with a share capital of HKD10,000 is USD1,388. The fee covers statutory filing fee, first year registered company secretary fee and first year registered office fee.
Annual Maintenance fee
Annual maintenance fee is estimated to be USD1,300 which covers annual filing fee, annual company secretary fee and annual registered office fee, audit fee and taxation service fee.
Special priced packages starting from US$1,388, please check out for details.
Detailed break down of formation costs for Hong Kong company
Documents required and detailed registration procedures.
Frequently Asked Questions with Answers