Why is Hong Kong One Of The Best Place To Base Your International Corporation?
31 July, 2018
Why should you invest in Hong Kong? What is it about the place that attracts foreigners to start a business in Hong Kong? Well, why wouldn't anyone want to be a part of the cities that has one of the best economies in the world? With a friendly business environment, tax benefits, infrastructure, ease of opening a company remotely, ease of obtaining investors, and many more benefits, Hong Kong is one such place that ranks at the top.
In this era of globalization, you should know the benefits of different areas in the world. One of the best out of these areas for company formation is "Hong Kong." This is because Hong Kong is a popular jurisdiction for setting up international companies to conduct international trade, investment activities and to assure asset protection. Moreover, it offers a global community, political and economic stability, low tax rates, no foreign exchange controls, and the relatively easy establishment of international corporations.
For example, if you are running a cement mixing company in California, you may find it harder to have an international corporation. However, if you are doing any kind of global commerce (and you should be, especially considering the better economies in emerging markets like Asia), you need a solid base of operations. This is a good reason why you may choose Hong Kong for conducting your business.
And while all international companies charge annual fees, Hong Kong has a few requirements for running a business. However, if you are a dedicated entrepreneur or run an already successful business, a Hong Kong corporation could be the answer for you. Below are a few reasons why:
1. It is One of The Easiest And Most Legitimate Ways To Go Global
You should not give too much credence to the naysayers who fuss about international corporations. As it is commonly said, "haters gonna hate." But, from a banking and regulatory point of view, you may keep running into more issues setting up a business in Caribbean island than you would in a stable, trusted jurisdiction like Hong Kong.
Do you know why the world favour Hong Kong as a business hub? It's because it's a solid financial center with real business activity. They are not just churning out boilerplate corporations to collect a filing free here. Hong Kong has real professionals, real bankers, real lawyers, and other qualified workers. That can prove to be useful, for example, in case you are attempting to raise capital.
And, guess what? China is behind Hong Kong, which is a perfect win-win situation. Also, Forbes ranked the city as the liberal trade area globally - not only for this year but for the past ten consecutive years.
Banking is quite easy here for Hong Kong corporations. However, we recommended to do your research on opening up a bank account, and also to consider opening up an international bank account for your company. Banking aside, having a Hong Kong corporation can be a perfect option for your international company.
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2. Hong Kong Corporations Offer Liberal Write-offs
There are numerous reasons why people choose Hong Kong as their preferred jurisdiction for establishing and expanding their business operations. And, below are the top factors that explain why people prefer Hong Kong above all;
- Proximity to mainland Chinese market.
- Hong Kong offers a highly attractive tax regime.
- Setting up and operating a business in Hong Kong is easy.
There is a low rate for personal and corporate tax, no value added charge, no sales tax or capital gains tax, no withholding tax on dividends and interest or collection of social security benefits.
Regardless of whether you need to pay taxes because of your business activities in Hong Kong, you won't pay high taxes in any case, as Hong Kong tax regulations are lower compared to other countries. Hong Kong authorities are more lenient. Also Americans must maintain their accounting records to US GAAP standards, but having a Hong Kong corporation gives you more flexibility.
3. A Hong Kong Corporation Doesn't Have To Pay Tax for Doing Business Outside Of Hong Kong
Thanks to a territorial system for taxes, you can avoid Hong Kong corporate tax altogether if your company is conducting its trade outside of Hong Kong. In short, the profits are not double taxed. This means that if you are doing business in California via your Hong Kong company, you would not be taxed on the income in California and Hong Kong both, but just in the country the profits are earned. This keeps you from paying the tax twice on the same income in two places.
For example, some of the trading companies will set up a Hong Kong corporation to source goods from Bangladesh and then sell them to markets in the European Union. However, if the Hong Kong company merely facilitates the transaction between two other countries, it's not taxed.
On the contrary, if you do business in Hong Kong, you will have to pay a 16.5% corporate tax. The government of Hong Kong is business-like and labor-saving as compared to most and it also finances government expenses. This allows them to be the lowest-taxed and widely-open jurisdictions in the world. Since taxes are the price, you pay for civilization.
4. Hong Kong is Well-Built, Well-Founded and Well-Made Jurisdiction For Banking And Corporations
We still wonder why people bash on Hong Kong for its ties to China - which obviously has nothing to do with Hong Kong corporations - but are quite willing to form their business on some random island. However, acknowledging that the UK took over the government of Turks and Caicos on a whim, while China has left Hong Kong to manage its own affairs.
So, if you desire a stable base of operations, it's quite hard to do better than Hong Kong. Even if you are the owner of an established, successful business, it's a straightforward process to get a second residence permit and finally permanent residence. And, for that, you must possess a real office and not some post office box to do business in Hong Kong. But you can go for Virtual Offices in Hong Kong, which is a great option.
Moreover, Hong Kong grants you entree to investment capital in the region and a legal business formation that serious investors wouldn't blink twice before offering funding. However, for an international corporation, Hong Kong ticks a lot of boxes if you're prepared to live with a bit of oversight and a few rules from a secure government to get along with.
Are you still not convinced? Visit Startupr now and find our why you should incorporate in Hong Kong? Change your business destination to change your life today!
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