How to Set up an Offshore Company in Hong Kong

Hong Kong is undoubtedly a powerhouse of free economics based investment, not just in Asia, but around the world. If you then add Hong Kong’s proximity to Mainland China, combined with its Western friendly business practices under English Common Law, you have a very enticing prospect indeed for foreign investment.

Hong Kong is also famed for its relative ease in which you can incorporate an offshore company — however one can always benefit from some insight as to how to navigate what little red tape there might. Let’s take a deeper look into the advantages of setting up an offshore company in Hong Kong, as well as a step by step process of how to do so. 

Why You Should Open an Offshore Company in Hong Kong

Above we touched on why Hong Kong is on the top of the list for expanding businesses looking to expand overseas, but let’s be deliberate in the details. There is more than one reason of course, that Hong Kong is the third largest foreign direct investment recipient in the world.

Attractive Corporate Tax Rates

• Foreign corporate tax rates are the same as local corporate tax rates — 8.25%-16.5%.
• A multitude of available deductions can bring that rate down even further.
• No capital gains tax.
• No withholding tax on dividends or interest.
• Progressive salary tax at 2% to 17%.
• No sales/VAT/GST tax.

Location, Location, Location

• Prime geographical location next to the Chinese Mainland, as well as a central position in Asia as a whole. 
• Hong Kong Airport is ranked amongst the world’s best, operating 24/7 to major cities on all continents.

Robust and Familiar Legal System

• While a Special Administration Region of China, Hong Kong has an independent legal system based on English Common Law. 
• Cases can be heard in English.
• This well established and trusted system creates a fair and familiar legal system for Western businesses to operate in. 

World Leading Arbitration

• Established its International Arbitration Centre in 1985.
• Has a large expert team of accountants, lawyers, bankers, engineers, and insurance experts to assist in arbitration.  
• Provides world leading arbitration for matters in finance, commerce, shipping, and construction.

Safety

• Hong Kong’s 37,000 strong police force ensures low crime rates.

Strong Anti-Corruption and Intellectual Property Protection Measures

• Hong Kong shines in Asia thanks to its robust systems to protect against corruption and intellectual property theft.
• The Independent Commission against Corruption has been around since 1974.

World Leading Infrastructure

• State of the art electricity network where blackouts are essentially unheard of.
• Fully digitised communication systems with a wide and free market of telecommunications vendors.
• The only modern deepwater port between Singapore and Shanghai.
• Travel by high speed rail.

The Lifestyle Factor

• A true cosmopolitan lifestyle, juxtaposed with a lush countryside.
• 40% of Hong Kong is made of protected wildlife areas. 
• A perfect blend of Eastern and Western ideals where any global citizen can feel welcome. 

Related Read: 9 Benefits of Doing Your Business in Hong Kong

What Are the Requirements for Setting up an Offshore Company in Hong Kong?

The requirements for setting up an offshore company in Hong Kong are very straightforward when compared to its global counterparts. 

1. Company Name Requirements

Your chosen company name of your Hong Kong offshore company must be original, and not conflict with other company names or intellectual property. It is then approved by the Hong Kong Companies Registry. 

2. Directors Requirements

• At least one director required.
• An unlimited maximum number of directors.
• Directors can be persons/individuals or companies
• Directors can either be Hong Kong residents or non-residents, of any nationality.
• Nominee directors are allowed in Hong Kong.

3. Shareholders

• At least one shareholder required.
• Maximum of 50 shareholders allowed.
• Shareholders can be individuals or companies.
• Directors can either be Hong Kong residents or non-residents, of any nationality.
• Nominee shareholders are allowed in Hong Kong.
• 100% local or foreign (or anything in between) shareholding is allowed.
• A sole director can act as shareholder.

4. Company Secretary

• Appointing a company secretary is mandatory.
• A Company secretary can be either a local individual or corporate resident.
• A Company secretary is required to have a TCSP License. 
• A sole director/shareholder cannot also be the company secretary.

5. Registered Address

• A local commercial address is required as the registered address of the Hong Kong company. The address cannot be a PO Box. 

6. Share Capital

• Share capital (of any amount) must be put into the company’s bank account.
• No bearer shares are allowed in Hong Kong offshore companies. 

7. Taxation

• Only income that is “derived from or arising in” Hong Kong is subject to the corporate tax rate of 8.25%-16.5%. 
• Overseas income or foreign-sourced income is treated as exempt from Hong Kong tax. 

8. On-going Compliance

•  The company must observe ongoing compliance requirements for companies in Hong Kong. This includes:
  • An annual audit of company accounts.
  • Notifying the Companies Registry of any changes to the company or members.
  • Company filing of annual returns with the Companies Registry.
  • Company filing of tax returns with the Inland Revenue Department.
  • The holding of regular AGMs.
  • Renewal of business registration certificate.

What Are the Steps for Setting up an Offshore Company in Hong Kong?

• Choose the type of company structure best suited to your needs. You can read more about the different Hong Kong business entities here. 
• You can either choose to register a brand new company, or purchase a ready to go Hong Kong shelf company. 
• Choose your company name. 
• Open a Hong Kong based bank account.
• Draw up your new company’s documents, e.g. Articles of Association and Resolution practices, etc.
• File to have your new company registered with the Companies Registry. 
• If all documentation given to the Companies Registry is in order, your Business Certificate should be issued in under a week.
• Register your new company with Hong Kong’s Inland Revenue Department for tax purposes. 
• Acquire any relevant licences and permits, e.g. law, dentistry, accounting, etc. 

Conclusion — What’s Next for Setting up Your Business in Hong Kong?

There is no doubt of Hong Kong’s allure for the world’s leading corporates — a large reason for that is the ease of set up, and the transparency their system provides.

As with all things of this magnitude however, it pays to have an expert on your side to guide you through the process. Your business is important, and it deserves to be in good hands. 

If you’d like help in setting up an offshore company in Hong Kong, HKCR has an expert team of qualified accountants, bankers and insurance brokers to help you ensure your successful expansion into Hong Kong. 

If you have any questions about how your business can successfully expand into Hong Kong, please do contact us — it’s both our job and pleasure to assist.