Registration of companies in Hong Kong from a direct registrar from 1190€
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Key Benefits of Registering a Company in Hong Kong
Income tax (subject to a number of conditions)
Capital gains tax
The requirement to pay the authorized capital
English law system
The largest financial center in Asia and the world
High reputation in the world
Ease of reporting
The cost of registering a company in Hong Kong
KEY BENEFITS OF USING A COMPANY IN HONG KONG
Based on information on conducting international business through a legal entity registered in Hong Kong
Summary of Hong Kong
Hong Kong (Hong Kong) is a special administrative region of the People's Republic of China.
For over 150 years, Hong Kong has been under British control. In 1997, Hong Kong was transferred under the sovereignty of China and became officially called the Special Administrative Region (UAR) of the Hong Kong People's Republic of China.
Hong Kong is located on the coast of the South China Sea, consists of the island of Xiangang, Julong Peninsula, and several small islands.
Hong Kong has wide autonomy from China, almost complete independence in the administrative, legislative and judicial systems (with the exception of defense and foreign policy issues). Hong Kong's special status will be maintained until at least 2047, subject to the principle: "one country - two systems."
Hong Kong's legal system is based on English common law.
The monetary unit is the Hong Kong dollar (HK dollar).
Types of Companies in Hong Kong
A company in Hong Kong can be created in one of the following legal forms:
Requirement for company and company executives in Hong Kong
Hong Kong Company Registry
Information about directors and members is included in the Hong Kong Companies Register. However, it should be noted that it is not possible for an ordinary person to get into the Hong Kong registry. The registry is closed from unauthorized users. To obtain information on a particular company, it is necessary to go through certain stages of authorization. The registry is closed and protected from open indexing by the Internet.
Information about the beneficiaries is not contained in the register, but must be stored at the place of registration of the company or elsewhere in Hong Kong. As a rule, the register is kept at the location of the registration agent. The register is not open online and can only be opened for verification by law enforcement officials and other authorized government agencies in Hong Kong upon request.
Hong Kong Territorial Taxation Principle
In Hong Kong, the territorial principle of taxation of profits earned as a result of trading, professional or other business activities in Hong Kong applies. This tax is taxable only on profits generated or earned in Hong Kong. This means that a legal entity that is registered in Hong Kong but makes a profit outside of it is not a payer of income tax.
The following criteria must be met for tax exemption:
A company operating outside Hong Kong and wishing to obtain tax exemption must independently file an “Offshore tax exemption claim” with the Hong Kong tax authorities and provide the tax authorities with documentary evidence of the absence of activity in Hong Kong and the lawful conduct of business in another country.
Hong Kong income tax rate
Income earned from sources in Hong Kong is subject to a two-tier income tax.
Profit tax at a rate of 16.5% does not apply to the entire amount of profit received, but only to that part of it that exceeds 2 000 000 HKD.
The use of a two-tier system is limited for companies whose activities enjoy additional support in Hong Kong and which, as a result, are entitled to lower income tax rates for other reasons:
In addition, it is impossible to apply a reduced income tax rate for related companies, only one company from a group of companies can use a reduced rate. The following persons are recognized as related to each other:
Control by the same controlling person by holding more than 50% of the shares, interests or voting rights.
Hong Kong Accounting and Auditing
All companies in Hong Kong are required to maintain financial statements and audit reports.
Companies are given the opportunity to choose the reporting period - until December 31 or until March 31.
Hong Kong provides for the following types of reporting:
It is recommended to store the primary documents of the company's business activities, as they may be required by the auditor.
Preliminary tax opinion on your business with the Hong Kong Tax Authority
In order to ensure the clarity of the territorial taxation principle, the Inland Revenue Department may provide preliminary decisions regarding the source of income applicable to income tax. The service involves the payment of a fee.
Before obtaining preliminary orders, complete information must be provided.
Prerequisites for Hong Kong Income Tax Obligation
According to Inland Revenue Ordinance, a person is subject to income tax in the following cases:
The first two conditions are quite clear. The third condition requires further clarification.
For many years, the issue of the source of profit has been considered in judicial practice. According to authoritative court decisions, the following principles are highlighted.
The issue of localization of profits in fact is very difficult in practice. There is no general rule. Whether or not the profit is actually generated or made in Hong Kong depends on the nature of the profit and the transaction as a result of which the profit was made.
The actions of the taxpayer related to the receipt of the considered profit, as well as where these actions were performed, are checked.
Gross Transaction Profit
The difference between the profit generated or received in Hong Kong and the offshore profit is determined according to the gross profit arising from individual transactions. When determining the source of profit, only those processes of economic activity are taken into account, as a result of which the direct formation of gross profit occurs. Activities related to general management are generally not considered.
Place of decision
The place where investment / business decisions are made daily is just one of the factors that must be considered when determining the source of profit. As a rule, it is not a decisive factor.
Presence of business abroad
A business can have a representative office abroad and make a profit outside Hong Kong. However, the absence of such representative offices does not in itself mean that all business profits in Hong Kong are invariably generated or received in the country. However, in most cases, when the main activity of the business is concentrated in Hong Kong and there is no presence of the business abroad, the profits derived from this business are likely to be taxed in accordance with the Hong Kong Income Tax.
Consideration of the application of the territorial taxation principle for manufacturing companies in Hong Kong
Place of production: in the case of a manufacturing enterprise, the source of profit is the place where the goods are produced. Profits from the sale of goods made in Hong Kong are fully taxed.
If the goods were partially produced in Hong Kong and partially outside, part of the profits attributable to goods produced outside Hong Kong is not considered to be received in Hong Kong.
A common feature of Hong Kong manufacturers is the conclusion of an assembly or processing agreement with a factory operating in mainland China. According to this agreement, the Hong Kong manufacturer provides raw materials, technical development, management, manufacturing skills, design, skilled labor, training, control, etc. The plant, in turn, provides factory premises, land and labor for the processing, production or assembly of goods.
Strictly speaking, a plant located in mainland China is a separate subcontractor that should be distinguished from a Hong Kong manufacturer, so there should be no question regarding the proportionate distribution of the latter's profit.
Inland Revenue Department takes a practical approach, allowing for a commensurate distribution of profits from the sale of goods in the proportion of 50/50: only 50% of the profits are estimated as received in Hong Kong. Thus, the role of the Hong Kong manufacturer in the production activities of the plant located on the mainland is recognized.
Production by an independent subcontractor operating in the territory of mainland China: if production, according to the agreement, is transferred to an independent subcontractor operating in the territory of mainland China, its activity is paid on an ongoing basis and is carried out with minimal involvement of a Hong Kong company in the production process, production in mainland territory not considered a Hong Kong business. Thus, the profits of a manufacturing subcontractor are not taxable in Hong Kong. However, profits made by a Hong Kong-based company from the sale of goods are fully taxed in Hong Kong.
Consideration of the application of the territorial principle of taxation in relation to trading companies
Sales contract: the factor determining the source of profit from trade in goods, as a rule, is the place where the sales contract enters into force, which includes both legal execution of the contract and negotiations, conclusion of the contract and fulfillment of obligations under it.
Aggregate of facts: it would be correct to evaluate a totality of facts. In other words, all relevant facts should be considered, and not just the purchase and sale of goods.
How were sales requested?
Weight of facts:
Consideration of the application of the territorial principle of taxation in relation to companies engaged in the activities of a commercial agent
Place of service: the source of income is the place where the commission agent provides services.
If this activity is carried out in Hong Kong, Hong Kong is considered the source of income.
Factors such as the place of activity of principals, their identification by the commission agent, as well as the places where random events take place before or after receiving the commission, as a rule, are not significant in determining the source of the commission.
In the event that a commission is received by a person carrying out business activities in Hong Kong, but activities resulting in a commission are carried out completely outside Hong Kong, the commission is not taxed in Hong Kong.
Consideration of the application of the territorial principle of taxation in relation to companies with other activities