Hong Kong company formation review

People who want to incorporate in Hong Kong for avoiding paying taxes are wrong. Hong Kong is not an offshore jurisdiction. The HK tax authorities require the real beneficiary of a company to provide answers to a list of questions for benefiting from the corporate tax exemption. If the person is unable to answer one of the questions, the company will have to pay the 15.6% corporate tax.

Click here if you would like to see an example of running costs of a Hong kong company

Benefits of incorporating a company in Hong Kong:

  • 15.6% is a low corporate tax rate
  • Hong Kong is allowed by all the major payment gateways so that you can be paid if you own a Hong Kong company.
  • For EU residents, it can be useful to have a company that does not work under EU rules.
  • The HK dollar is very stable against the US dollar.
  • The HSBC bank is obviously a strength of Hong Kong.
  • Law, forms, reports, authority websites are in English.

Disadvantages of incorporating a company in Hong Kong:

  • Accounts have to be audited after one year from the first HK dollar of turnover which implies substantial additional costs.
  • It is far away from the USA and Europe
  • Tight policies in many domains. It is strongly advised to study the HK law before anything.
  • The convictions by Justice courts in Hong Kong are usually tougher than in the western world. (example)
  • Liquidation duration: 9 months

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