Despite China being the main contributor of Foreign Direct Investment (FDI), other countries are opening companies and investing in Hong Kong. For those exploring how to open a company in Hong Kong, it is interesting to note that the British Virgin Islands (BVI) is the second-largest contributor, followed by the United States. BVI, a primary destination for US and China to establish holdings, transits investment through Hong Kong to establish operating companies and invest notably in Hong Kong, China, and the US, avoiding sanctions and facilitating cash flow.
How opening a company in Hong Kong can benefit individuals and all types of investors. Singapore is often compared to Hong Kong and sometimes brings more confidence to investors. Hong Kong has been a financial place for decades and has been trusted by investors for decades before Singapore started to be on the list of places to establish companies.
Why should investors open a company in Hong Kong?
- Hong Kong is a great place to invest and open a company for investors looking to operate and have commercial exchanges with China.
- Hong Kong is probably one of the greatest places in terms of taxation for corporate tax and dividend tax.
Tax Optimization
Hong Kong has some of the best tax treaties with most of the countries in the world. It is a perfect place for companies looking to have their holding in a place with lower taxation.
Hong Kong offers 0% corporate income tax if the income is generated outside of Hong Kong. Compared to Singapore and Dubai, Hong Kong offers the best tax rate for companies operating outside Hong Kong and looking to open a holding company or company operating outside.
Furthermore non-residents in Hong Kong offers 0% dividend tax. In other words with a great setup investors can get their funds transited by Hong Kong for 0% tax.
The tax rate however involves an audit each year to ensure the income has been generated outside the territory. Considering that Dubai is now taxing at 9% the companies. However Hong Kong seems a better solution for companies looking to have an offshore solution without having to pay tax or making a company in the US, risking class action, or in red flag country.
No resident director and no domiciliation needed
Compared to Dubai or Singapore, Hong Kong doesn’t require a resident director. While Singapore requests to pay a resident director for your company, Hong Kong allows foreigners to be directors without applying for a visa.
Unlike Dubai, Hong Kong doesn’t request investors or directors to stay in the country to obtain dividend tax exemptions.
Also Read : How To Register A Holding Company in Indonesia
How to open a company in Hong Kong
The process of opening a company in Hong Kong is secure, fast and easy. The process can be done remotely without having to go to Hong Kong. The timeline is around one week from the time to collect the document and to apply. Hong Kong’s bank however might take more time to confirm the UBO (Ultimate Beneficiary Owner) to ensure compliance. Other online banking are more flexible.
Documents and application
To register the company the shareholder needs to provide a few documents, such as passport copy, utility bill, picture and address.
Once the documents are approved, the UBO must confirm the application by video to certify that the person is the right applicant.
Company name
The applicants need to choose a name and Limited will be added at the end of the company.
There is no strong restriction on the name, so applicants can choose a name with at least two words to ensure availability.
Directors
The company needs to appoint at least one director. This director can be a foreigner and doesn’t have to reside in Hong Kong.
Application and documentation
After the application has been approved, the company will receive the following documentation:
- Share certificate
- Certificate of incorporation
- Business registration certificate
- Article of Association
- Appointment of Directors
Bank account opening in Hong Kong
Once the company is incorporated, the director can open the bank account. The director can go to Hong Kong to open a bank account with a traditional bank or do the process online with an online and fintech bank.
