Extended tax deadlines
With consideration of COVID-19 impact on business operation in Hong Kong, the Hong Kong Inland Revenue Department (“IRD”) announced on 4 April 2020 that deadlines for the following tax matters [...]
Hong Kong
Introduction
Hong Kong is one of the major financial centres in Asia that is traditionally used as an economic gateway to the Chinese market. Hong Kong was a British colony until 1997. It then became a special administrative region of China, due to the expiry of the Convention between Great Britain and China Respecting an Extension of Hong Kong Territory, which was signed back in 1898. Whilst thorough changes in capitalist regime of Hong Kong were predicted, despite the actual change of the political status of Hong Kong, mainland China observes the principle known as “one country, two systems”, and today Hong Kong continues to be a paragon of capitalism as well as a popular jurisdiction for registration of tax-free companies. Hong Kong is very useful for those with business partners from the Far East countries.
Features and Advantages
- Hong Kong is a major trading entity and therefore the incorporation of a Hong Kong company is likely to be perceived as ‘legitimate’ and therefore less likely to be seen as a tax avoidance/minimization vehicle.
- English is an official language and is the main business language. All reporting information and documentation can be produced in English.
- The Hong Kong tax system is simple and straight-forward.
- There are no restrictions on the use of foreigners as Shareholders or Directors at a Hong Kong company.
- Corporate Director and Secretary are allowed.
- The incorporation of a Hong Kong company is simple and quick.
- Low cost of incorporation and maintenance.
- No minimum requirements for share capital.
- Only one Director and Shareholder is required to form a limited liability company.
- Due to the system of territorial taxation foreign source trade profit is not subject to Hong Kong income tax.
- There is no capital gains tax in Hong Kong.
- There is no withholding tax on interest, dividends and royalty.
- Foreign dividends are not subject to Hong Kong income tax.
- Tax credits for foreign tax paid are available in Hong Kong, however it is a subject to some conditions.
- There is no net worth tax in Hong Kong.
- Hong Kong has an excellent banking system and communications infrastructure.
Summary
General Information
Total area – 1,104 sq km
Population – 7,000,000
Political status – administrative district of China.
Official language – Chinese, English.
Official currency – Hong Kong Dollar (HKD)
Time zone – GMT +8
Company Type
Private Company Limited by Shares
Directors/Officers
Hong Kong companies require a minimum of 1 Director. At least one director must be a natural person; other directors may be corporate bodies. No restrictions regarding residence country of directors.
Information of directors will be published on the Hong Kong Companies Registry.
Shareholders
Hong Kong companies require a minimum of 1 shareholder, who may be a natural person or a corporate body from any legal jurisdiction.
Information of shareholders will be published on the Hong Kong Companies Registry.
Secretary
Hong Kong companies require a minimum of 1 Secretary, who may be a natural person or a corporate body and must be a resident of Hong Kong.
Information of secretaries will be published on the Hong Kong Companies Registry.
Authorised Share Capital
Hong Kong company has not authorised capital and its shares have no par value.
Minimum issued share is 1 share.
Company Names
The name of a Hong Kong company must be stated in English, adoption of Chinese name is optional. Company name must end with the word “Limited”.
Company names containing restricted words such as “Bank”, “Insurance”, “Assurance”, “Savings”, “Trust” etc. will not be permitted unless an appropriate national operating licence has been obtained by the company.
Beneficial Ownership Information
Information with regard to ultimate beneficial ownership must be disclosed to the Registered Agent of the company and is held by the agent on a confidential basis.
Filing of Annual Return
An Annual Return must be submitted every 12 months after the date of registration.
Filing of Financial Statements
A Financial Statement must be submitted every year.
Corporate Taxation
Income sourced outside of Hong Kong is not a subject to corporation tax in Hong Kong.
Tax Treaties
Hong Kong companies that do not carry on commercial operations in Hong Kong, are not regarded as resident for tax purposes in Hong Kong, and therefore are not entitled to take advantages of Double Tax treaties concluded by Hong Kong with other countries.
Time Frame for Incorporation
2 working days