Forming an Offshore Company in Hong Kong for Entrepreneurs

Although Hong Kong does not have any specific law that governs offshore company formation, it is one of the most popular jurisdictions for setting up an offshore company owing to its low tax regime, absence of foreign exchange controls, political and economic stability, ease of offshore company setup, etc. Setting up an offshore company in Hong Kong is the perfect vehicle for conducting offshore banking activities, international trade, investment activities, and for asset protection.

This guide sets out the advantages of Hong Kong incorporation, the options for registering an offshore company in Hong Kong, Hong Kong Offshore Company formation requirements and Hong Kong incorporation procedure and timeline.

Hong Kong Offshore Company – Incorporation Benefits

The most common reasons behind setting up an offshore company in Hong Kong are:

  • Ease of offshore company setup: Hong Kong is ranked as one of the easiest places to do business in the world. Setting up a Hong Kong company is simple and easy, devoid of unnecessary bureaucracy or red-tape. Moreover, Hong Kong adopts a favorable foreign ownership policy by entitling the shares of a company to be 100% foreign-owned. There are no special authorizations that are required from government authorities prior to Hong Kong company setup.
  • Tax benefits: Hong Kong taxes are among the lowest in the world. The tax system is simple and favors offshore company setup. Hong Kong’s corporate income tax rate is 16.5%. There is no capitals gains tax, no VAT/GST, no estate duty, and no withholding tax on dividends or interest. Furthermore, foreign sourced income is exempt from tax in Hong Kong and there are no foreign exchange controls in Hong Kong. Thus, a Hong Kong offshore company that derives income from abroad is free from tax liabilities in Hong Kong. This is one the biggest advantages of Hong Kong Incorporation.
  • Political stability: There exists a direct relationship between political stability and the investment climate. Despite Hong Kong being a Special Administrative Region of China, it retains its political, economic and judicial systems. The rule of law takes precedence in Hong Kong and it has emerged as the second best bureaucracy in Asia, according to a recent survey conducted by the Political and Economic Risk Consultancy (PERC).
  • Trusted Image: Hong Kong is often criticized as being an offshore tax haven. In reality, it is not a tax haven but simply a low tax jurisdiction. This view has also been endorsed by the OECD. Hong Kong is also one of the jurisdictions that has committed itself to the international standard on tax information and exchange. As a result, an offshore company in Hong Kong is not viewed negatively or with suspicion.

Hong Kong Offshore Company – Incorporation Options

There are two options available for Hong Kong Offshore Company setup:

  • Registering a new Hong Kong company, or
  • Purchasing a Hong Kong shelf company.

Registering a New Hong Kong Company

If you want to incorporate a Hong Kong company with a specific name, you can opt for Hong Kong Incorporation of a private limited liability company. Hong Kong Company Registration is simple and easy and can usually be completed within one week’s time. For more information, please visit our Hong Kong Company Formation Guide.

Hong Kong Offshore Company – Incorporation Facts

  • Company Name: The proposed name of your Hong Kong offshore company must be approved by the Hong Kong Companies Registry, prior to Hong Kong Incorporation.
  • Directors:
    • Minimum one director required.
    • Unlimited maximum number of directors.
    • Directors can be natural persons or companies.
    • Directors can be Hong Kong residents or non-residents.
    • Directors can be of any nationality.
    • Nominee directors allowed.
  • Shareholders:
    • Minimum one shareholder required.
    • Maximum of 50 shareholders allowed.
    • Shareholders can be natural persons or companies.
    • Shareholders can be Hong Kong residents or non-residents.
    • Shareholders can be of any nationality.
    • Nominee shareholders allowed.
    • 100% local or foreign shareholding allowed.
    • Sole director can act as shareholder.
  • Company Secretary:
    • Appointing a company secretary is mandatory by law.
    • Company secretary can be a local individual or corporate resident.
    • A professional qualification is not required.
    • Sole director/shareholder cannot be the company secretary.
  • Registered Address: A local physical address that is not a PO Box is required as the registered address of the Hong Kong company.
  • Share Capital:
    • Share capital of any amount must be injected into the company’s bank account.
    • No bearer shares allowed
  • Taxation:
    • Only income “derived from or arising in” Hong Kong is subject to a corporate tax rate of 16.5%. Overseas income or foreign-sourced income is exempt from Hong Kong tax. For details refer to Hong Kong Corporate Income Tax Guide.
  • On-going Compliance:
    •  The company must adhere to the ongoing compliance requirements for Hong Kong companies including annual audit of company accounts; intimating the Companies Registry of any changes to the company or its members; filing annual returns with the Companies Registry; filing tax returns with the Inland Revenue Department; holding timely AGMs; maintaining company records, accounting records and other business documents; renewing business registration certificate; etc. For details refer to Annual Compliance and Filing Requirements for Hong Kong Companies.

Hong Kong Offshore Company – Incorporation Process

The Hong Kong incorporation process involves two distinct steps:

  • Hong Kong company name approval that can be accomplished by filing an application with the Companies Registry and
  • Submission of the following incorporation documents to the Companies Registry:
    • Hong Kong Incorporation application form;
    • Hong Kong offshore company’s Articles;
    • Copy of passport, overseas residential address proof, bank reference letter for non-resident shareholders or directors;
    • Copy of Hong Kong identity card for Hong Kong resident shareholders or directors; and
    • Copy of parent company registration documents for corporate shareholders.

It normally takes 4-7 working days to process the application and incorporate a Hong Kong offshore company. For details refer to Hong Kong Company Setup Guide.

After the Hong Kong offshore company is incorporated the following formalities must be complied with:

  • File documents with the Companies Registry: Within 14 days of Hong Kong incorporation the following documents must be submitted to the Companies Registry: Appointment notification of directors and secretary; consent to act as director; registered address notification; other documents requested by the Companies Registry.
  • Open a corporate bank account: Hong Kong offers several choices of banks with whom you can open a corporate bank account. Most banks require you to be physically present at the time of opening the account. For details refer to Guide to Opening a Corporate Bank Account in Hong Kong.
  • Register with Inland Revenue Department: Within one month of Hong Kong Incorporation, the Hong Kong offshore company must register with the Inland Revenue Department and obtain a Business Registration Certificate.
  • Apply for Business Licenses (if required): If you plan to conduct business operations in Hong Kong and if your business activity requires a business license, you must obtain the same, prior to commencing business operations. Please refer to our Business Licenses Guide to find out what types of business activities require a business license in Hong Kong.

Final Thoughts

The most popular route to incorporating an offshore company in Hong Kong is by hiring a professional services firm. The firm will collect the necessary documents and information from you and proceed to obtain company name approval for your Hong Kong offshore company. The firm will then file the incorporation documents with the Companies Registry and also register the offshore Hong Kong company with the Inland Revenue Department. You will receive a company incorporation kit that includes a company seal, rubber stamp, share certificates, company profile, certificate of incorporation, etc. upon successful registration of the Hong Kong offshore company. The firm can also assist you with opening the bank account, obtaining business licenses, procuring a relocation visa and handling ongoing company administration and compliance. Alternatively, you can also contact a service provider for purchasing a Hong Kong shelf company.

Ready to Incorporate?

If you are interested in setting up a Hong Kong company, Hawksford can help. Request a quote now to take the next step in your business.

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