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Eight Key Benefits of Opening a Company in Hong Kong

Startupr
09 November, 2018

Strategically located in the heart of Asia, Hong Kong is renowned for being a uniquely global business city and a financial hub for business entities. Many investors and business owners are choosing to set up their business in Hong Kong.

The reason for this is to enter into the international market and enjoy the benefits from tax-friendly jurisdictions with establishing a company. The city is deemed as one of the best cities in the world to establish and operate a company, as it scores high on factors that matter to business owners.

Productive work-place, world-class infrastructure, strategic location, stable economic, an effective legal system, attractive tax regime, political environment, and pro-business environment, and an effective legal system are some of the factors that continue to contribute to its success.

Besides all these essential benefits, Hong Kong is a prestigious business location and offers an ample number of advantages for those who are looking to or already own a company in China.

Here are the top eight benefits for opening a company in Hong Kong.

An International Junction

The first and foremost benefit of opening a company in Hong Kong is to facilitate entry into mainland China. Being located in the heart of Asia, and its proximity to the mainland, makes Hong Kong the perfect connecting point between The West and East.

The trustworthy environment for western investors and robust economic ties with ASEAN countries makes Hong Kong a ground for all the aspiring and successful entrepreneurs from around the world.

To be more precise, the combined understanding of both the Eastern and Western cultural mentality and businesses will prove to be beneficial in a lot of ways than any business owner can expect for their business entity.

World's Freest Economy and Free Trade

Being one of the world's most dynamic economies in the world, Hong Kong is the financial hub for many business entities. Hong Kong's economy is driven by the principles of free markets, free trade, and free enterprises, which is open to all the business people. Over the past two decades, the robust economy of Hong Kong has contributed to the GDP growth at an average annual rate of 5%.

In fact, there is no legal restriction on inward and outward investments, foreign ownership, and foreign exchange controls while setting up a business entity. To strengthen Hong Kong's position as a business-friendly region, factors such as the sizable foreign exchange reserves, strict anti-corruption regime, and robust legal system are playing critical roles.

Moreover, the transportation cost is cheap for imports to Hong Kong from abroad, cheaper than transporting goods straight into Mainland China. Hong Kong goods and products can even be imported into China under zero tariffs, as long as your business entity complies with CEPA rules.

Relatively Hassle-Free Setup

The next benefit of opening up a company in Hong Kong is that it takes less time to open up a company as compared to Chinese enterprises. The transparency, law, and orders are central to Hong Kong's success. The legal system of Hong Kong is separate from Mainland China's, and the English common law prevails.

Government institutions of Hong Kong are more consistent and straightforward regarding the requirements for setting up a business entity. On the other hand, the rules and regulations can change abruptly and unexpectedly in Mainland China, making it essential to have a team on the ground that is tirelessly checking up on your application and actively pushing it forward.

Low and Simple Tax

Hong Kong practices a low-rate and straightforward tax system, and its financial management system is also relatively simple and straightforward. As a matter of fact, taxes are the main concern for any business owner who is willing to launch a company in a given jurisdiction.

Hong Kong has one of the lowest and simple tax jurisdictions in the world, with personal income or salary tax, starting at 2% and reaches up to 17% above HKD 132,000. Hong Kong also operates a territorial tax regime.

In this regard, the corporate tax rate is set at 15% of assessable profits for unincorporated businesses or 16.5% for corporations. There is no withholding tax on dividends and interest, collection of social security benefits, nor any capital gains tax. There is no VAT in the jurisdiction of Hong Kong.

Moreover, with your registered Hong Kong company, you can send funds across the border of China with a 5% transfer fee, as compared to pay 25% income tax on your profits. This process will save a considerable amount of money while transferring between Hong Kong companies and China.

Intellectual Property

While filing for copyrights, trademarks, and patents, Hong Kong takes into consideration the prior use of intellectual property for business owners. The legal jurisdiction of Hong Kong is committed to enforcing stringent regulations for registered designs, patents, copyrights and the protection of Intellectual Property Rights (IPR).

In fact, Hong Kong has set up a special department which is highly reputed for handling IP matters, known as the Intellectual property department of Hong Kong. Besides this, there are other rules and regulations in Hong Kong which makes it an attractive place for business owners to set up a business such as employment, trade and commerce, taxation, and other business-related areas.

China WFOE Setup

A wholly foreign-owned enterprise, (WFOE), is the most popular investment vehicle for mainland China-based business leaders. In this enterprise, foreign parties such as corporate entities or individuals can register a foreign-owned limited liability company in China.

And when you choose you to incorporate your business in Hong Kong, you can easily apply for a Chinese WFOE set up in order to expand your business entity. As a matter of fact, the incorporation documents of Hong Kong are submitted in both languages (English and Chinese), which helps the process of registering a company on the Mainland more comfortably and accessible.

Regulated Jurisdiction

When it comes to the account of legal systems and business cultures, Hong offers a much more Western mindset with an open economy, free trade, general bureaucratic process, and intellectual property registration.

In fact, the consistent bureaucratic procedures, simple documents, and a government which understands English can also provide you with a smoother entrance in the Asian business world, irrespective of your experience in the business world.

Not to mention, if you want to change your business structure in China, it takes about two months for this process. In Hong Kong, this takes about one week by re-allocating shares in compliance with regulations.

Business Structure

There is no denying the fact that setting up a startup in Hong Kong is an easy and straightforward process. Before opening a company, all entrepreneurs are required to choose a business structure as per their needs and requirements.

If you want to enjoy the maximum benefits of setting up a business entity in Hong Kong, then a limited liability company could be your best choice because of the advantages associated with it.

Operating a limited company in Hong Kong will protect you from lawsuits in Hong Kong and Mainland China also. Every member and shareholders of the limited company are only liable for their capital, which they had invested in the company.

The company of Hong Kong is also liable for the registered capital in Mainland China, in case of a lawsuit, your personal capital outside of your business would be protected from any debts occurred in the company.

Conclusion

There are an ample number of benefits for opening up a company in Hong Kong, but at the end of the day, all of these reasons conclude to one simple thing. Setting up a business in Hong Kong, you can expect the best of the best and the highest levels of success.

Choose your business entity as per your requirements, and incorporate a company in Hong Kong. The entire process can be completed in approximately one-to-two weeks, and the city's economy makes fast growth and expansion possible. For more information, hire a professional like Startupr and set up your dream company.


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About the Author


Startupr

Startupr puts you first. This is why our main focus is Startups with global ambitions. We give you the freedom to build your business while we take care of the tedious, administrative tasks, leaving you to concentrate on your dream for your company. As part of our brilliant service, our back end software will automatically send you reminders of important annual filings, and upload your important document to your online account. startupr.hk

 

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