4 Major Benefits of Opening an Online Business in Hong Kong
30 May, 2019
Are you interested in getting started with international e-commerce business in Hong Kong? But feeling overwhelmed and simultaneously wondering about the merits of starting an online business as compared to a traditional one?
Before mentioning the best benefits of setting an e-commerce business in Hong Kong, let us ask you a straightforward question, 'what do you mean by online business?' The name of this business has it all in its name.
This kind of business activity happens over the internet. It basically includes buying and selling online or providing an online service. In order to operate this business, you don't have to deal with the paperwork, maintenance issues, and moreover, can start this business at home as well.
The benefits which we have mentioned above are just the layouts of the merits that come along while setting up an online business in Hong Kong.
Do you want a more transparent picture?
Therefore, keep on reading to have a clear picture of it.
But before moving ahead, we would like to apprise you with the important information so that you would have a better idea. Several people advocate that online business owners are not confined in the walls of the requirements and rules that every other company has to adhere to.
Setting up an online business doesn't mean that it will act as a shield against any of the regulations that a brick and mortar business usually face. You are still required to get all the business permits, pay taxes, and adhere to the other requirements as well.
But as we know that every lock has a key, therefore by just having it registered with a jurisdiction that would support the growth and establishment of internet companies, you can significantly increase the susceptibility of your e-commerce business.
And when we talk about a suitable and reliable jurisdiction for a company, then we guess, there is no other better place than Hong Kong. Because here you can quickly start your e-commerce business. In fact, Hong Kong is known to be a global business hub because of its highly-advanced information and technology infrastructure, easy business formation & registration, very efficient banking system, and incredibly favorable tax regime.
Major Benefits of Opening an Online Business in Hong Kong
Are you ready to get a clear picture of the benefits of opening an online business in Hong Kong? Great! Let's dive deeper into the article-
#1 Advanced Information and Technology Infrastructure
The first and foremost benefit of opening an online business is getting an excellent opportunity in order to access a reliable and profound technology. As a matter of fact, in order to run an online business effectively, reliable servers, data centers, and other pieces of internet infrastructure act as an important asset. And in Hong Kong, you will find each and every tool in order to establish and grow your online business without any problem.
Here are some tools which are available in HK.
For scaling an online business, every business owner requires to recruit a team who is skilled in IT sectors such as engineers, designers, and web developers. But the best part about setting up a business in Hong Kong is that this place is packed with multiple and numerous professionals, therefore, you can quickly build your team over there.
No doubt, internet readiness is essential for a business. But think if your internet infrastructure is powered by electricity, and there is a frequent power cut, then do you think you can work very well. Obviously not!
So, in Hong Kong, you don't have to think about this factor. Hong Kong has reliable power supply providers, and unplanned outages typically last for less than 3 minutes.
Without access to the internet, you can't build an online business. Henceforth, the more business owners have access to the higher speed of the internet; the more reliable results will be there.
And as results of Fastmetrics Business Internet Services, Hong Kong is ranked on the 19th position as the fastest internet speed on the planet (26.45 Mbps on average). The fastest internet connectivity guarantees that your e-commerce website is quickly accessible to internet users. In fact, in HK, there are a plethora of companies that offer secure data storage services and web hosting.
Free Flow of Information
The next factor in which Hong Kong has again done a great job is the free flow of information. As a matter of fact, without any freedom of information, no online business can thrive in the competition. For example,- Google, the most renowned company, was forced out of China.
Do you know the reason for this act?
Well, the accused was that it was affecting the country's content censorship laws. Nevertheless, in Hong Kong, there are no specific requirements with the operations of online businesses, in fact, the laws support the free flow of information.
Last but not least, the factor which plays an important role is data privacy. Even though online businesses are required to protect their customer's information; sometimes it becomes difficult to shield the information when you register your business in weak data protection laws. Hong Kong enforces stringent privacy laws. It means that no government authorities or unauthorized individuals access the data centers of any business.
#2 Easy Business Formation & Low-Cost Registration
The very first problem that comes across while setting up the business in any jurisdiction of the country is how to register and incorporate there without any problem. In fact, because of this fear, several people confined themselves not to register their business in overseas countries. But trust me, Hong Kong is just way beyond from all these complexities. Forming a company in Hong Kong is such a straightforward process and economical as well.
Once you have made your mind to launch a business in Hong Kong, you need to select the company name. But the name of the company should be unique so that it could not lead to any legal problems. As soon as you are done with the selection of your business name, you need to submit an online application to the Companies Registry.
Although the applications take less than a day to be reviewed, once your application is checked, then the Companies Registry will issue a certificate of incorporation for your business.
Moreover, whether you want to hire employees on a part-time or full-time basis, you need to obtain compensation insurance from a private insurance company. To form a Hong Kong company, it takes only HKD 2,000 (about 300 USD). But still, it will be better to use the services of specialist companies that specialize in opening offshore corporations.
#3 Favorable Tax & Stable Jurisdiction
Tax rates always play a massive role in driving investors or business owners into opening offshore companies. So it is sure that you will be looking for a low-rate tax jurisdiction.
In this case, Hong Kong triumphs on being one of the lowest tax jurisdictions in the world. In Hong Kong, business owners don't have to pay corporate taxes on the offshore business as long as their profits are sourced from outside the country.
After reading this, you must be thinking, do you need to pay taxes for your online businesses whose sales activities are conducted over the internet?
Well, as per the rules of IRD ( Inland Revenue Department), if you are selling products to Hong Kong residents, then you will need to pay the taxes on your profits. Also if your trade is carried out in Hong Kong by telephone, or any other electronic means, then the contract will be considered as having been effected in Hong Kong.
Besides this, the country also has zero-
When you want to conduct your e-commerce company, you don't need to worry about withholding taxes. In Hong Kong, while operating your internet business, you won't be required to withhold any taxes on payment of share dividends to investors.
Inheritance Tax/ Estate Duty
If you somehow reach a situation where you pass on your company to others, then you don't need to worry about inheritance or estate duty taxes. The total assets of your Hong Kong company won't be subject to estate tax. Every piece of the company will be transferred to your appointed successors.
Capital Gains Tax
When you are selling some part of your company's property (non-inventory assets), then your profits (gains) would not be subject to capital gains tax in Hong Kong.
Nevertheless, the low tax environment of Hong Kong is also a suitable and transparent jurisdiction for your online business. The Hong Kong IRD ensures that the proper taxes are paid with its development and way of enforcing its tax administration processes. What's more, this stable business environment gives certainty to set up your company with the confidence that the current tax-regime won't change abruptly in the future.
#4 Efficient Banking System
Now turn comes for the most pertinent part of setting up an e-commerce business in Hong Kong - efficient banking system. When it comes to international trade, banking system plays a crucial role. In fact, this is the main reason why several entrepreneurs have to face the failure stage because they don't have good access to the banking system.
As the article of Credit Suisse, Hong Kong is considered as the home to 71 of the world's 100 biggest international banks, including HSBC, DSB Bank, Standard Chartered, and Citibank.
Therefore, by incorporating the online business here, you got the credentials to access a wide range of banking services and products, from the merchant and multi-currency accounts to international money transfers.
Moreover, you can put your faith in these financial institutions to securely hold your money. But one thing that you need to keep in your mind that your company should be registered correctly in order to open a Hong Kong business bank account without any problems.
Well, these are some of the perks that you need to know before registering your business in the freest economy of the world. Whether you want to form an offshore company for tax-reduction purposes, or looking for a stable jurisdiction place, Hong Kong will provide an enabling environment for your business operating.
What's more, setting up a company in Hong Kong can also help you in enhancing your chances of getting approved for a Hong Kong visa or entry permit.
Ready to register your online business in Hong Kong?
If so, then Startupr will help you. We can assist you in preparing, and rectifying all the documents for your online business without any hassle.
« Go Back to Blogs