Hong kong company

Hong Kong offshore corporations, Incorporate tax exempt company in Hong Kong

Hong Kong is a former British Dependent Territory which became a Special Administrative Region (SAR) of the People's Republic of China from July 1st 1997.

Hong Kong's corporate law is based on British common law. Local businesses are regulated and Hong Kong regards itself as a low tax centre rather than a tax haven. Only profits derived in Hong Kong are assessed for tax and genuine offshore transactions are not subject to Hong Kong tax. The Inland Revenue Department (IRD) is extremely diligent in determining what qualifies as onshore or offshore profits.

Key facts of Hong Kong offshore corporations:

  • Local secretary is required.
  • Local registered office which must be a physical address is required.
  • Each company must have at least one director and corporate directors are possible providing that at least one director is physical person.
  • The company should have at least one shareholder.
  • Details of the company's directors, shareholders and secretary must be filed with the Companies Registry and are on public record.
  • All companies must obtain a Business Registration Certificate from the IRD and are required to file a set of audited accounts with the IRD annually.

Profits Tax of Hong Kong companies is 16.5% on its assessable profits. There is no VAT, and no tax on dividend or interest income in Hong Kong. Hong Kong company is not subject to Hong Kong taxes if its operations are not carried out in Hong Kong. In determining whether a Hong Kong company's operations are carried out in Hong Kong, all the company's operations (starting from customers' enquiries about product prices, place of orders from the customer, place of a purchase order to completion of sale and purchase) will be considered to find out which processes are carried out in and outside Hong Kong. The location of bank accounts is insignificant for this matter. For example, a Hong Kong trading company with a bank account in Hong Kong will not be subject to Hong Kong taxes if:

  • it has no real office in Hong Kong
  • it has an overseas office in which the company's directors and staff are working
  • it has no staff in Hong Kong, its staff and directors rarely come to Hong Kong
  • it negotiates and concludes contracts with suppliers and customers outside Hong Kong
  • it has no Hong Kong suppliers and customers
  • shipment does not go through HONG KONG and arrangement of shipment is not done in Hong Kong
  • physical inspection of goods is not carried out in Hong Kong.

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