The Special Administrative Region (SAR) of China, or Hong Kong, is situated at the head of the Pearl River Delta.

Since 1997, more than 20 years ago, Hong Kong has continued to advance due to its wealth and vitality. Foreign investors are drawn to Hong Kong as they have discovered additional prospects thanks to its excellent standard of life and the advantages of setting up a company there.

Nearly all open-minded jurisdictions make it easy for foreigners to form businesses and promote their investments. Hong Kong has the advantage of allowing foreign business owners to hold full ownership of the companies they register there.

They are free to own their corporations in either a majority or sole ownership since there is no cap on holding percentage. With the structure of a Private Limited Company, people can easily combine with up to 50 others.

To establish a corporation in Hong Kong, at least one individual is required who can serve as both a director and a shareholder. Directors are not need to be residents. Notably, Hong Kong allows a reasonable share capital that can be as low as 1 HKD.

Tax Structure of a Hong Kong LLC

Due to a variety of factors, many investors are looking for Hong Kong’s “tax haven”. One important issue is that Hong Kong’s low-tax environment is advantageous to investors.

Hong Kong implements a two-tiered corporate profit tax rate:

For assessable profits under 2 million HKD, 8.25 percent
16.5% for the portion that was exceeded

This policy is seen as being business-friendly because it has one of Asia’s most competitive rates for corporate taxes, whereas those in some other nations might range from 17 to 30 percent.

Additionally, the Inland Revenue Department (IRD) offers a tax exemption to corporations with headquarters in Hong Kong for profits made outside of the territory. Offshore Claim is the name of this validation, which is given in the form of a letter with a five-year activeness.

Hong Kong retains the following three basic tax types:

  • Corporate profits are subject to taxes ranging from 8.25 to 16.5%. Outside profits are not subject to tax.
  • Salary taxes range from 2% to 17% of taxable income.
  • 15% of the property’s net assessable value is taxed as property.

Taxes not applicable in Hong Kong:

  • tax on capital gains
  • Tax on dividends
  • Tax on lodging accommodations (HAT)
  • Sales tax, Goods & Services Tax, or Value-Added Tax
  • Witholding tax

Economy and concept of Free-Trade

Early in 2019, Heritage Foundation acknowledged Hong Kong’s advantage as the freest economy in the world. Due to the freedom of trade and money along with the honesty and transparency of its governments, Hong Kong Special Administrative Region (SAR) has maintained its top spot for more than 20 years.

Almost every lawful business, including trading, E-commerce, manufacturing, consulting services, and even owning financial assets, is acceptable in Hong Kong. Businesses based in Hong Kong are not subject to any limitations while opening bank accounts.

Additionally, there is no payable tax for items that are imported into Hong Kong with the exception of alcohol, tobacco, hydrocarbon oil, motor vehicles, and methyl alcohol.

Hong Kong, which is regarded as a free port, exempts tax and excise duty on all exports. Some commodities must be licensed before they may be shipped to or from Hong Kong, although the licensing procedure is simple.

Therefore, it is clear that currency exchange and money transfers are permitted for all types. For these reasons, the majority of people rank Hong Kong as the third-easiest country in the world to conduct business in the World Bank’s 2020 assessment.

Hong Kong Access to China

Hong Kong, which is located on China’s southeast coast, intrigues investors with its highly advantageous location.

Cities in China can be reached by people in a single day. Based on the Closer Economic Partnership Agreement (CEPA) between the Mainland and Hong Kong, Hong Kong plays a vital role as a preferred gateway to China markets.

Hong Kong promotes economic expansion not only to Mainland China but also to other Asian nations. Since 2017, Hong Kong Special Administrative Region (HKSAR) and ASEAN have been parties to a Free Trade Agreement (FTA). This is a crucial tool for fostering their relationships in the areas of business trading, investments, intellectual property, dispute resolution, and economic and technical cooperations.

Transport systems and connectivity

Not only is Hong Kong one of the biggest business hubs, but it is also the geographic center of Asia. It just takes 5/8 hours to fly anywhere in this region thanks to an efficient and connected transportation system.

In terms of the busiest airports worldwide in 2022, Hong Kong International Airport is still among the top ten. With railroads, trams, ferries, double-decker buses, and minibuses, the transportation system is one of the most effective.

Furthermore, this nation has excellent telecommunications and a shipping hub. Victoria Harbor has one of the best natural environments for handling diverse types of vessels, making it one of the busiest ports.

The hotspot and broadband speed in Hong Kong is one of the greatest in the world, in April 2020, Hong Kong will be one of the first countries to roll out 5G technology.

In Hong Kong, there is a sizable pool of highly skilled, adaptable, and enthusiastic workers. Interesting fact is taht English is the second official language in Hong Kong after Chinese, its citizens can easily adjust to doing business internationally.

Languages like French, Japanese, Filipino and others are also brought to Hong Kong by immigrants from the West and other Asian nations.

For the past 20 years, foreigners and businesspeople alike are drawn to Hong Kong because of its advantages.

Many public transit options are excellent but affordable and dependable. Hong Kong has a reputation for being a pleasant place to live with effective public, banking, and leisure services.

Additionally, the variety of cuisines and consumer products offers people a wide range of choices for their daily life. Furthermore, Hong Kong’s top-ranked global education system is unquestionably a factor in why foreigners prefer to settle there.

In Short…

In conclusion, Hong Kong has developed into one of the most significant global financial centers. The nation is renowned for its blend of simple incorporation, affordable taxes, open-minded and approachable marketplaces.

Last but not least, Hong Kong’s renowned standing has been bolstered by the workforce’s productivity and first-rate infrastructure. Investors choose Hong Kong as their preferred location for business incorporation and expansion due to the advantages of Hong Kong company creation.

USEFUL LINKS
LLC Creation and Limits – Hong Kong’s Business Registry Website
Company Formation – AB Advisor