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Hong Kong Company: How to trade internationally with 0% tax

ICD Fiduciaries
22 September, 2016

When deciding to incorporate your company in a tax-friendly jurisdiction, one of the biggest challenges you will face is finding the right place to go. Several of the countries that first come to mind will offer little or no benefit in relocating your business there. When you look more carefully you will find you have minimal knowledge about them apart from what you will read on the internet sites. Also, some of the jurisdictions may seem too "exotic" for your business partners.

Today we will take a look at Hong Kong that is Asia's 6th most livable city. It has a growing multinational population and has well-developed infrastructure for business, banking, tourism and accommodation

Hong Kong Company as a Strategic Gateway

Hong Kong has long been recognized the gateway to China and it has worn this tag proudly. Not surprisingly, it is one of the largest investors into China, and the most commonly used spot for foreign companies to base their international trading operations – whether it be obtaining products from China to sell into foreign markets, establishing joint ventures with Chinese or local Hong Kong companies, or incorporating Wholly Foreign Owned Enterprises in China to sell services and products locally – in one of the world's biggest and fastest growing economies.

International trade is Hong Kong's most important economic activity. Its government policy towards trade reflects Hong Kong's status as a center of free trade. This approach contains minimum restrictions and allows the market forces to control exports and imports.

Hong Kong boasts the world's second best infrastructure in the form of a natural deep sea harbor, well-developed rail and road systems and a busy cargo airport. As such, Hong Kong is often the first choice for product distribution within Asia

The major trading partners of Hong Kong are China, the United States, Japan, the United Kingdom, and Taiwan.

Hong Kong has been handling a significant portion of the Chinese mainland's expanding external trade. In 2014, about 12% of the Chinese mainland's exports (US$278 billion) and 13% of imports (US$251 billion) were handled via Hong Kong and 60% of Hong Kong's total re-exports were originated from the Chinese mainland.

Offshore Business in Hong Kong

Hong Kong is serious about attracting business from around the world, particularly the development of small and medium enterprises. For any firm wishing to start a business in Asia,

the principal location to register the company and the easiest place from which to manage is Hong Kong. Its well-developed financial network is an international leader, with a mature system for e-registration and incorporation.

Setting up an offshore company in Hong Kong is an excellent way to house a company's global corporate profits while optimizing taxes. If there is no trade conducted within Hong Kong, companies will be legally tax exempt.

HKcorporate tax is only charged on profits collected from a trade, business or profession carried on in Hong Kong. Therefore, this means that a company which runs a business in Hong Kong, but derives revenue from another country, is not required to pay tax in Hong Kong on those profits. Hong Kong sourced income is subject to a rate of taxation of 16.5 per cent. There is no taxation in Hong Kong on dividends, capital gains and interest received.

About the Author

ICD Fiduciaries

ICD Fiduciaries is a consulting firm founded in 2006 in the UK and specializes in creating offshore companies and the opening of offshore bank accounts. www.icd-fiduciaries.com


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