How to open and operate an offshore company in Hong Kong | Article – HSBC VisionGo
Find out how to register an offshore company in Hong Kong to benefit from its zero free & transparent business & legal ecosystem.
Hong Kong is well-established as a haven for offshore companies (these are companies that operate outside the national boundaries of the countries where they are registered or where their stakeholders live) due to its generous tax laws which make profits made outside of Hong Kong absolutely tax-free.
Anyone, including foreigners, can set up and own an offshore company in Hong Kong. In fact, the process is so easy that you don’t even have to be physically present in Hong Kong to get registered. However, you do need to apply via a third-party agency, have a registered physical office address, and a company secretary based in Hong Kong.
(We, at Osome, provide an end-to-end service and help register your company in Hong Kong, do get in touch to know more).
For an entrepreneur considering an off shore company in Hong Kong, the first consideration is the business benefits of registering as an offshore business. Here are 3 main advantages:
- Easy setup process in Hong Kong – Hong Kong is completely devoid of red-tape. The setup and incorporation process is extremely easy and fast – for both citizens as well as foreigners. In fact, foreigners can own 100% of their company and do not need any special paperwork/authorisations to launch a company here.
- Tax exemption on foreign-sourced income – All profits accrued on activities outside Hong Kong are 100% tax-free. This means businesses will pay zero tax on any income that comes from offshore companies.
- Benefitsof an easyregistration system – In Hong Kong, you can start a company with just HKD1as paid-up capital and wrap up the whole registration procedure online – from application to receiving incorporation certificate in under a week.
An offshore company registration in Hong Kong is ideal for businesses which:
- Want to access to China and the rest of East Asia, and Southeast Asia
Around two-thirds of all the FDI into China comes via Hong Kong. In 2018 Hong Kong exported $25.3 billion to China, which was Hong Kong’s #1 destination and accounted for 20% of all of its exports. In the last 10 years, almost 80% of the IPOs outside Mainland China have been issued in Hong Kong. Opening an offshore company is a great way to get an easy entry into Chinese and other Asian economies.
2. Want to expand and attract investors
Many investors prefer to put their money via an offshore company and to register as one in a well-regulated and welcoming place like Hong Kong is a definitely plus for investment purposes
3. Useful for growing businesses that want lighter tax burdens
Many businesses around the world find bureaucratic, taxation or legal barriers while expanding to global markets. Setting up an offshore company in Hong Kong gives them a legal and hassle-free way to grow. This is equally true for freelancers (such as online entrepreneurs) elsewhere who might want to transition into small registered businesses and find Hong Kong’s comparatively low corporate taxes and stable and reputable government a good fit for a small start-up.
(note: offshore companies registered in Hong Kong are NOT allowed to trade here. Do keep this in mind, while pursuing growth opportunities within Hong Kong. An off shore company might be a good way to do business, but if your long term plan is to enter the local economy, then it would not suit.)
So, what is the process of setting up an offshore company in Hong Kong?
- The first step is to finalise and register your business name with the Companies Registry.
- With an approved business name, you can now apply for company incorporation. Foreigners need to undertake this process with a licensed agency. The application and submission of documents are done online. You will be asked for the following paperwork –
- Copy of your passport
- Current proof of residence
- Personal bank account statement
- Hong Kong Incorporation application form;
- Company’s Articles of Association
- ID proof of Hong Kong resident shareholders or directors
- Parent company registration documents
The above-described process can be completed within a week, depending on the availability of documents and will lead to the incorporation of the company. After registration businesses must also:
- Open a business bank account (most banks require the business owner to be present physically during the process).
- Register with the Inland Revenue Department
- Apply for relevant licenses depending on your business activity
- File income tax returns
As a foreigner, it is mandatory to use the services of a licensed agency to register in Hong Kong. So, before you start down this path, it is important to understand the costs involved in registering and maintaining a company in Hong Kong.
If you plan to hire an agency to facilitate your business dealings or financial and legal compliance requirements, then the yearly cost can come up to HKD5000. This includes services such as business incorporation and registration renewals, corporate secretary and registered business address.
If you are contemplating setting up an offshore company in Hong Kong, then do give us a call. Osome has helped thousands of businesses kickstart their ventures smoothly by handling their paperwork, compliance and accounting needs. We can do the same for you!