Hong Kong is one of the best-established financial hubs, business centers, and trading ports in the world. The city is one of the financial capitals of the Far East and the entire planet.

Its unique status as the freest economy in the planet for 25 years and its One Country, Two Systems relationship with China has allowed Hong Kong to become the perfect entryway for doing business in China. It is also an ideal base to start operating in the Far East, which has many of the largest markets and top financial centers around the globe.

Even better, Hong Kong gives you fantastic tax optimization opportunities and an easy process to open a business.

Furthermore, the city offers one of the largest stock markets in the Far East, and a reliable banking and financial industries, with a well-established currency (Hong Kong Dollar). The HKD is the 9th-most traded currency on the entire planet.

What does "One Country, Two Systems" mean? Simple. Hong Kong is semi-autonomous, it has a distinct political and legal system, but China rules over Hong Kong. That has brought the best of both worlds for companies established in Hong Kong: a free-market economy with a robust legal framework and judiciary, but with direct access to the second-largest market on the planet: China.

Hong Kong is the only place in all mainland China that allows free capital flow, making it the largest source of FDI in China. Thus, about half of outward investments in China flow through Hong Kong.

This, and all the economic benefits and strengths the city offers, is what makes Hong Kong so vital for the global economy.

The best way to expand your business to the Far East and to start operating in the Chinese market is by establishing your business in Hong Kong. It's the perfect crossroads and will give you the best tax optimization possibilities with cutting-edge financial and technological infrastructure.

If you want to go global, you need to look at Hong Kong. Many American businesses have a deep interest in the Chinese and the Far East market but don't know where to start. Hong Kong is one of the best possibilities.

And we can help you with that. Our experts in Hong Kong can help you start your business in the city.

But before that, let's walk you through the benefits of operating a business in Hong Kong. 

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Why Hong Kong? Eight reasons to expand your business to Hong Kong

The gateway to China and the Far East

Hong Kong is the best entryway to China and the Far East. It's the only part of mainland China that allows free capital flow. Its tax benefits make it ideal for establishing a trading company that sells goods from Far East economies to the West.

The HKD is the 9th most traded currency on the planet. Hong Kong is one of the major commercial crossroads on the planet. Operating a business in Hong Kong is taking your investments to the next step.

Solid, highly liquid banking system

Hong Kong has a reliable banking system where banks balance compliance with global tax regulations and the protection of their clients' information. You can handle all major operations of your HK account easily with its fantastic online banking. Moreover, all corporate bank accounts in Hong Kong are multi-currency, which is terrific for you if you're operating a global business.

Banks in Hong Kong are highly liquid, which offers an extra layer of protection for you. Your money will be safe there.

Moreover, the easiest way to open a corporate account in Hong Kong is to have a corporate structure in the city. So, even if you're not all that interested in actually operating a business in this jurisdiction, it's wise to register a Hong Kong company to open a corporate bank account.

In general, you must be physically present in Hong Kong to open your corporate bank account. Still, for VIP clients, we can offer remote opening if your initial deposit is at least $500k and the minimum balance is kept at the same amount.

Want to know more about our banking services in Hong Kong? Check our article right here! 

Low, territorial taxation with plenty of double tax treaties

Hong Kong has a first-level tax system. The income tax rate goes from 2 % to 17 %. The corporate tax rate is 8.25 % for income below HK$2m and 16.5 % from there. There are no capital gains tax, no VAT, and no taxes on dividends and interests.

Its system is territorial, which means only your Hong Kong-sourced income is taxable. That's right, zero tax on worldwide income. Moreover, Hong Kong boasts a robust network of more than 40 double taxation treaties, which will help your tax planning.

Business flexibility

Setting up a limited company in Hong Kong limits your liability when operating a business and helps you establish a separate corporate body to do business. The tax regime in HK, joined by the flexibility of an LC, makes it perfect for establishing holding companies, companies for tax planning purposes, or middle-way trading companies.

Inexpensive, simple process

Starting such a corporate structure is a simple and straightforward process. Furthermore, the government approved a fee waiver until March 31^st, 2021. That means you can save that money on the process. Thus, you don't have to pay any government fees to register your business until that date. Furthermore, the general costs of maintaining a corporate structure in Hong Kong pale in comparison with those of similar markets.

Fantastic bookkeeping services and support

Hong Kong laws indicate all companies must prepare accounts and annual audits and must ensure the information is prepared to comply with the authority's standards. This means the city has a robust market of corporate service providers specialized in accounting, auditing, and bookkeeping. Our experts in Hong Kong are first-level providers of these services that will ensure top-notch regulatory compliance for you.

Ease to do business

Hong Kong was the freest economy on the planet for an astounding 25 years in a row. The city is a free port where you can trade goods with total freedom, registering a business is simple, taxes are low, and you enjoy the utmost business freedom. It's an ideal environment for doing business and establishing your base to enter the Chinese market and the whole Far East.

Not blacklisted

One of the issues of many jurisdictions that offer terrific tax, asset protection, and banking benefits for investors is that they're blacklisted. That means their home countries usually levy additional taxes or keep an eye on funds that come from those jurisdictions.

That's not the case with Hong Kong. As a top international business center, the city has established solid relationships with most major global powers. It ensures high levels of regulatory compliance, which has kept it out of most blacklists. 

The Hong Kong Port is one of the freest ports on the planet

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Corporate structures in Hong Kong

Incorporating a business in Hong Kong is remarkably straightforward for non-residents. Our experts can help you with all steps from all legal processes, opening a bank account, and all secretarial and accounting activities that must be conducted in Hong Kong.

All this makes Hong Kong an ideal place for establishing a global trading business, or a tax planning and asset management structure.

As most business hubs, Hong Kong offers plenty of business structures for investors and businesspeople.

The structure chosen by around 90 % of the companies in Hong Kong is the private company limited by shares, also known as limited company (LC). It is both an incorporated body and a limited liability entity.

This means the company is a separate legal person from the owners and shareholders. All liabilities over losses and debts are limited to the extent of the investment of the owners.

This structure, sometimes also known as limited liability company (LLC) in other jurisdictions, was born in the US a few years ago and is a top-level structure and widely used because it incorporates the best of both worlds: corporations and partnerships. On the one hand, it is a separate legal entity than its shareholders, as a corporation. On the other, like a partnership, the liability is limited to the contribution of the shareholders.

Why do investors and businesspeople in Hong Kong widely use it? For four main reasons:

• It is a reputable business structure that, when incorporated in Hong Kong, offers trust to governments and financial institutions around the world.

• It is a separate legal entity from its shareholders to protect personal assets from business risks and extended liabilities.

• The company must consist only of at least one director and shareholder, and one person can take both positions. There are no residency restrictions, but at least one director has to be a natural person.

• You don't need to be physically present in HK to form an LC.

• The structure allows 50 shareholders, whether they are individuals or corporations of any country. This means the company can issue custom-made shares to distribute rights and gains successfully.  

• It only pays taxes on Hong Kong-sourced income.

There's also a practical reason why so many foreigners use the LC. Sole proprietorships and partnerships must be registered by Hong Kong residents. That prevents non-residents and foreign companies from using it.

Still, the LC is an incredibly flexible business structure that enhances asset protection and tax planning without requiring significant physical presence in the city.

This system of territorial taxation and its free-trade policies have helped it become a global trading center. As more companies take Hong Kong as its base, its financial industry also develops to offer first-level services to businesses in the city. 

Let's just mention one example. If you set up a company to buy goods from companies across Asian markets that can offer low production costs to sell them in another market, your company is just an agency that serves as a middle-way for transactions to settle payments and ship the products. Thus, the profits from the trades it makes occur outside of Hong Kong, which makes that income tax-free in Hong Kong.

Even if your income is taxed in Hong Kong, that's beneficial. The Hong Kong corporate tax rate is a flat $8.25% on your first HK$2m and 16.5% from there, which is significantly lower than most OECD countries. That means that if you absorb the majority of your profits in Hong Kong, you'll get ideal tax planning and optimization.

Thus, the most used structure is the LC. Still, there are different types of limited companies:

• Private company limited by shares.

• Private company limited by guarantee without share capital.

• Public company limited by shares.

• Non-Hong Kong Company.

We've already explained the first, which is probably the most advantageous for your business. Still, our Hong Kong experts review all clients on a case-per-case basis. Thus, some of the other available corporate structures may be beneficial for you. We'll explain them briefly here:

• The private company limited by guarantee is a corporate solution for non-profit activities, which means it's mostly limited for charity and religious, social, and educational institutions.

• The public company is basically the same as the private company limited by shares but allows more shareholders. That also means it's subject to stiffer regulations. In most countries, a public company is a company that is listed on the stock exchange. That's not the case in Hong Kong. A public company may or may not be listed in the HKSE.

• Lastly, the Non-HK company is a company incorporated outside of HK with a determinate business presence in the city, which means it's not a separate legal entity.

Now, let's talk about the main requirements of a Hong Kong limited company:

Foreigners can register an HK company for a wide array of purposes such as offshore tax planning, holding, trading, asset protection, and much more. However, for smooth incorporation, they should consider the following: 

• Hiring a registration agency is a good practice as it can act as the local secretary and provide an official address for the company (we can help you with that)

• Preparing accounts and annual audits of accounts is obligatory, and companies must ensure that the information is aptly-prepared according to the authority's standards. That means hiring the lowest bidder isn't a good choice as the company will be held accountable for mistakes and malpractices.

• All non-English, non-Chinese documents must be translated.

• Foreigners can operate their HK offshore company from abroad.

  
  

Hong Kong is known for its majestic skyscrapers

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What documents do you need to open your HK company?

• Proposed company name

• Registered office address

• Description of business activities

• The following information of shareholders and directors:

• Passport and proof of address (for non-residents)

• HK ID and local proof of address (For residents)

• Copy of registration documents (for corporate bodies)

• Share capital registered by each member

• Number of shares taken by each member

• Articles of association

Generally, you'd have to pay a $250 business registration fee. However, the HK government established a fee waiver from April 1st, 2020, to March 31st, 2021. Likewise, the annual return fee has also been waived for the next two years.

Starting your business in Hong Kong

According to the Doing Business ranking, Hong Kong is one of the easiest countries to do business on the planet. It's ranked in the 3rd position of the general ranking and the 5th in the starting a business sub-ranking.

If you're physically present in Hong Kong, the process usually takes only a couple of days. It only has two steps:

• Choose a company name and get a certificate of incorporation and business registration (remember that the registration fee has been waived until March 31st, 2021)

• Get Employee's Compensation Insurance and Mandatory Provident Fund (MPF) with a private provider.

Who are we, and what can we do for you?

Along with NTL Trust, in Mundo, we have two decades of finding corporate and banking solutions for high net worth individuals and investors all around the world.

In all this time, we've built an unparalleled network of experts and partners around the globe.

Our partners in Hong Kong are multi-award winner business consultants with over ten years of experience in corporate and banking services for foreigners.

We can help you establish whichever company structure you desire in Hong Kong. However, our partners usually recommend and are specialized in forming limited companies.

As we told you, the process of registering a Hong Kong company while physically present in the country is surprisingly simple. But that's if, and only if, you actually travel to Hong Kong. Even in that case, you'll need a registered address and must handle your accounting, which means it's still reasonable to get a helping hand.

That's where we come in. With our partners in Hong Kong, we can set up your company and open a corporate bank account for you in about a month.

Our partners' remote company formation package includes the following products for an unmatched price:

• Government fees

• Company secretary

• SCR

• Operational address

• Remote opening of HK multi-currency corporate bank account for VIP clients that can open an account with a minimum balance of $500k

Likewise, they offer secretarial, tax planning accounting, and basically every corporate service you can imagine. You just ask, and we can find a tailor-made solution for you with our partners in Hong Kong!

Hong Kong is one of the most important financial centers on the planet. It's the perfect entryway for China and the Far East. Establishing your business in this cosmopolitan city can lead you to improved tax planning and fantastic banking opportunities.

Do you want to start your business in Hong Kong remotely? Enquire now and get the best corporate solution for you with Mundo!