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A Hong Kong Offshore Company differs from a Hong Kong Corporation in that the offshore company pays no taxes while the corporation pays a corporate tax rate of 16.5%. The tax exemption is based upon no income being earned within Hong Kong.
Hong Kong also offers easier access to the mainland Chinese market than other Asian countries like Singapore.
The Hong Kong Offshore Company can be totally owned by foreigners.
The Hong Kong Companies Ordinance of 1984 governs he formation, activities, and dissolution of offshore companies.
Hong Kong is situated on the South Eastern tip of mainland China. After 150 years being a British Territory, on the 1st of July, 1997 the 99 year lease with England expired. Hong Kong then became a Special Administrative Region (SAR) of mainland China.
The official languages are Chinese and English. Hong Kong’s population is estimated at 7.1 million.
Mainland China has maintained Hong Kong as an influential international business and financial center. In 2011, Hong Kong was globally ranked as 9th for per capita GDP which was over $353 billion USD. In spite of being controlled by the People’s Republic of China, the government allows Hong Kong to maintain its free trade and free economical systems.
Small businesses are encouraged resulting in over 98% of all businesses in Hong Kong being classified as Small to Medium size Enterprises (SME).
A Hong Kong Offshore Company can enjoy the following benefits:
• Complete Foreign Ownership: Offshore companies were created especially for foreigners.
• No Taxes: As long as all income is derived outside of Hong Kong, there are no taxes. Note: U.S. citizens and everyone subject to global taxes must report all income to their governments.
• Fast Registration: A simple offshore company can be registered in one business day.
• Limited Liability: Only the total share capital contributions are exposed for shareholders.
• One Shareholder: Only a minimum of one shareholder is required.
• One Director: Just one director is required who can be the sole shareholder.
• Low Share Capital: Only $1 HK share capital is required for formation.
• Privacy: Nominee shareholders are available for privacy.
• English: As a former British Territory for 150 years, English is its second official language.
• Access to China: A Hong Kong company has easier access to mainland China business than any other Asian company.
Hong Kong Offshore Company Name
The company name must not resemble or be the same as any other Hong Kong company.
The registered agent will investigate company names which are available and reserve one prior to filing the necessary documents for incorporation and government registration.
Uses for a Hong Kong Offshore Company
Here are some uses which many foreigners utilize:
• Holding company;
• Import and Export between other countries;
• Internet business;
• International business; and
• Investing in stocks, commodities, forex, and international securities.
A simple offshore company may be registered in one business day online by the registered agent with the Hong Kong Company Registrar.
More complex offshore companies requires the Incorporation Form (NNC1 Form) and the Articles of Association which the shareholder and director signs. Once they are filed, approval can take just a few working days.
The company’s shareholders will have limited liability protection up to their share capital contributions.
Registered Agent and Office
Offshore companies must appoint a local registered agent and may use the agent’s office address and the official registered office for accepting official notices and service of process.
The registered agent will do all the necessary filings and registration to get the offshore company incorporated and registered,
The minimum requirement is only one shareholder to form an offshore company. Foreigners can own 100% of the shares in an offshore company.
The maximum of shareholders is 50.
An offshore company cannot own shares in other Hong Kong companies.
There is no minimum requirement for the number of directors. Therefore, only one director needs to be appointed to form an offshore company who can be the sole shareholder.
Directors do not have to be residents, they can be residing in and citizens of any country. Directors can be natural persons or corporate bodies.
A company secretary must be appointed who is a Hong Kong resident.
Offshore companies are prohibited from hiring local staff. The reason is that offshore companies are expected to conduct all management and business outside of Hong Kong.
Minimum Paid Up Share Capital
The minimum paid up share capital is $1 HK. The minimum number of shares is one to form an offshore company.
The recommended paid up share capital is $1,000 USD or its equivalent in any foreign currency.
Offshore companies do not pay a corporate tax as long as all their income is derived outside of Hong Kong. An offshore company is not allowed to do business with locals.
On the other hand, an onshore non-resident corporation pays a corporate tax rate of 16.5% on its profits.
In addition, there are no VAT, sales tax, or dividends taxes in Hong Kong. Note: U.S. citizens and residents in all countries taxing worldwide income must report all income to their taxation authorities.
Audits and Accounts
Every Hong Kong company must provide annual audited financial statements to the government. This requirement applies to every company whether big or small.
Accounting records and books must be maintained reflecting the accurate solvency of the company. These records will remain private and are not required to be filed with the government.
Annual General Meetings
Annual general meetings are required for both the shareholders and the directors. Meetings may be held anywhere in the world.
The government requires all registered companies to disclose the identity of their shareholders and directors which are available to the public who can access the Companies Registrar records. However, nominee shareholders and directors are available to provide privacy.
Time to Form
It is estimated that it will take between 1 to 5 business days to complete the registration process. A simple company only takes one business day online to incorporate and be registered. More complex offshore companies requires an incorporation form and the Articles of Association to be signed by the shareholder and the director and may take up to 5 business days to be approved after filing.
Shelf companies are available to purchase for faster incorporation.
A Hong Kong Offshore Company enjoys the following benefits: Complete foreign ownership, limited liability, no taxes, one shareholder, one director who can be the sole shareholder, shareholder privacy, low share capital, fast registration, English is its second official language, and easier access to mainland China business.