Taxation of Hong Kong company incorporation

Hong Kong is more or less a tax haven for its businesses, both domestic and offshore. The country has a significant trading economy that facilitates all kinds of national and multinational companies operating in Asia. It has a very liberal tax policy and there are also ways whereby you can earn tax-free profits. Therefore, if you are thinking of Hong Kong company incorporation, now is the time. 

The huge tax advantage and liberal taxation policies not only favors the domestic investors, but it equally benefits non-citizens who are interested in an HK company formation. The law of tax is equal for every kind of investor. Hong Kong companies can be easily incorporated in the People’s Republic of China or anywhere in Asia. They are slowly becoming the financial hub of trading activities in Asia as companies easily enjoy the tax-friendly environment and business-friendly legal systems. 

Following are the taxation policies of Hong Kong companies:

The taxation policies of Hong Kong is generally based on territorial source principle, which translates to companies incorporated in the country paying tax only on income or profits sourced or earned in Hong Kong. 

The three major tax categories are- 

·         Profits Tax

·         Salaries Tax

·         Estate duty

The profits tax is based on the profits earned or sourced by the incorporated HK Company; salaries tax is based on individual’s income; estate duty is based on the area of property owned by the company.

This is plainly the taxation policies of Hong Kong. There are no withholding taxes on dividends or interests, no capital gains, and no sales tax. 

Therefore, if you are thinking about a limitedcompany formation in Hong Kong, go for it. The country has a great support system for its business houses. Take the help of business consultancies if you are new to the country and they will be of great help.

Registering a Ready Made company in Hong Kong

Ready Made companies or more commonly known as Shelf Companies are the best options for investors who want to start their business operation without wasting any time. Investors generally go for companies that are already registered and documented in the Hong Kong Company Registrar list. One only has to change the ownership and provide the rest of the identity details to own the shelf company and start its operations. 

Ready Made companies are also very easy to register. You can easily choose one from the available list of shelf companies in the Ready made HK companieslist in the Company Registry. If you are becoming the new owner of a company, the registration procedure of the company takes place after the transfer of the shares. 

Other factors like changing the name of the company, relocating the company to a new address, appointing a new director to the company, etc., can also be easily arranged. The forms for registering available online and you can also find other details over there. You can also take the help of the local business consultants who can take care of the preparing the Article of Association and the application form. They will be submitted with the Hong Kong company registry and in due course will be processed for final incorporation. 

As mentioned, there are two ways of going for a ready made company in Hong Kong. First, you can choose any shelf company from the ones listed in the Companies House. Second, you can takeover a firm. No matter what option you take, all the registration and ownership transfer processes do not take much time and the entire control of the business will be in your hands very soon. Find a business consultant as you are highly going to need their services in the smooth running of your business.

Regulatory obligations post Hong Kong company registration

Once you are done with the registration and your Hong Kong business is incorporated, there are some other ongoing obligations that you have to take care of on a regular basis. These are very simple and easy necessities that can be easily procured. Since they are required by the law for every limited company formation, every company registered under the Hong Kong company registry is obligated to serve them. 

Following are the regulatory obligations that serve as a guideline for companies registered in Hong Kong:

·         Submitting the Annual Return – Annual Return of your company is required to be filed within  42 days from the date of the anniversary. This needs to be followed every year. 

·         Annual fee of Business Registration Certificate – An annual fee is applicable on the Business Registration Certificate for its renewal within 30 days to the date of the anniversary. This needs to be paid every year thereafter. 

·         Profit tax return – The Hong Kong Inland Revenue Department is in charge of all the tax returns. Your business will receive its first Profit Tax Return after 18 months from the date of incorporation. Post that, the annual exercise of issuing the return in bulk takes place. Upon receiving the receipt of Profit Tax Return, you need to file it within one month from the date of issue. 

·         Employer’s Return – This is the filing of payroll information for the reconciliation of tax returns filed by the employees. This needs to be filed before 30^th April of every year. 

For all other details, go for a companyregistry search. There are various business consultants that you can partner with for the smooth incorporation and running of your business. They can be of great help throughout the business. From resource allocation to register company online, they will be helpful in every major and minor task.

Deregister your Hong Kong Company - Conditions to satisfy

Sometimes when a business is not able to generate the expected profits, it is better to shut it down and start a new venture. One might not be able to taste success in the first attempt and losses will be common. But, the experience gained from that will help in making even a better and stronger come back than the previous time. For those instances when you would like to deregister your Hong Kong based company, here is the process.

A company can be deregistered provided:

1.       It doesn’t have any unpaid debts – The company applying for deregistration should make sure that it is free from all kinds of debts it owes to various money-lending resources. Either the company clears the debts by paying all the dues or can sign consent to give the debts on some future date that is agreed by both the parties. 

2.       Mutual Consent of the shareholders – All the shareholders must think alike in this case. Any shareholder with a second opinion should express her/his opinion regarding the same. The discussions should move further till the shareholder agrees to the decision made by the entire group. 

3.       Halting business operations – The company must stop involving in any business operations for 3 months and then apply for deregistration to the Hong Kong Company Registry. 

4.       NOC  - A notice of No Objection Certificate needs to be obtained from the Commissioner of Inland Revenue. 

You can also de register search online. One has to satisfy all the aforementioned conditions in order to end the existing venture. Once done, they can easily start a new business any time. One can easily go for a Company Registry search and pick out a new name for their upcoming enterprise. This is one best way to turn around your losses and give them the shape of profits. Find a local and reputed business consultant that can help you in the process.

Setting up business in Hong Kong? Some important FAQs

In order to set up company in Hong Kong, one doesn’t have to face all the complexities. Setting up business in Hong Kong is quite different from the rest of the world. The country understands business and provides full support to its domestic and offshore investors who wish to get into its booming market. The policies are not rigid and are ruled out in a way that the whole process becomes very simple. Apart from the common requirements crucial to incorporate a HK Company, there are a few important questions that you need to ask. 

Does the nature of the business in the Business Registration Certificate need to be filled?

The answer is no.Yyou can leave it blank in case you don’t want to specify the nature or type of business you are going to operate. However, if you are specifying the nature or scope of the business, no restriction applies to the other future extensions of the business.

How to know whether the company is registered?

You can check the Company Registry where you will find a list of the number of companies that have incorporated in Hong Kong. For further clarification, you can visit a bank and try to open a bank account under the name of your newly-registered company. If the bank is willing to create an account, it means your company is registered.  It generally requires 16 working days for the name to be included in the list of Company Registry.

Find a business consultant that will help you in your company set up Hong Kong. These consultancies have all the experience and the technical knowhow required for such tasks. They can help you in every step of your business incorporation and make it come alive in the shortest time possible.