The advantages of starting a business in Hong Kong

Considered to be one of the most free, competitive and stable economies in the world, Hong Kong is an extremely dynamic city and is the ideal platform to serve mainland China and Asia. You won’t find a better place to manage and develop your business with Asia.

Conducive to business, Hong Kong offers many advantages to entrepreneurs who wish to establish their business in the region. To this must also be added an unparalleled administration, a proven legal system (that of the common law) and public services (health, housing, education) which have continued to improve over the last two decades.

AT THE ECONOMIC LEVEL :

Setting up a business in Hong Kong is much easier, faster and cheaper than anywhere else in the world.

Hong Kong’s geographic and strategic location attracts entrepreneurs from all over the world. It allows companies to take advantage of the many opportunities offered in China and the rest of the Asian continent. With its strict laws and regulations, Hong Kong has a very good trading relationship with the rest of the world.

Hong Kong was ranked 5th out of 63 economies in the World Competitiveness Yearbook 2020 by the International Institute for Management Development (IMD). This ranking is the translation of the constant progress made by Hong Kong in order to create an environment conducive to business.

A hub in central Asia.

Hong Kong is perfectly located, just 4 hours from major Asian markets. This proximity explains why so many companies have decided to locate there. There are no less than 9000 foreign companies in HK.

From the island, no less than 100 airlines fly to nearly 190 locations.

As Hong Kong is not recognized as a tax haven, companies based on the island are not seen as offshore companies which give them more credibility to do business with companies around the world.

AT TAX LEVEL

If you are looking for one of the best tax systems in the world, Hong Kong is the place to be to set up your business.

There, there are only 3 direct taxes and a deduction and relief system significantly reduces taxable amounts.

The three taxes are:

• Income tax: 8.5% for the first 2 million dollars of profits and capped at 16.5% for profits over 2 million dollars
  • Note, all the so-called normal expenses of a company (representation costs, benefits in kind granted to staff, consultant costs, etc.) as well as the depreciation of fixed assets are deducted from the profit which considerably reduces the amount of the profit that will be taxed.
• Payroll tax at the standard rate of 15%
• The land income tax of 15%

Hong Kong does not have the following taxes:

• No value added tax/VAT
• No withholding tax
• No tax on the transfer of capital gains
• No tax on dividends
• No inheritance tax

AT BANKING LEVEL

Hong Kong has long been regarded as the region’s main financial center. Transparency and reliability are the rule on the island; the actors implement and respect the best practices and global standards.

Banks and financial institutions offer many services in Renminbi since Hong Kong houses the largest offshore financial center in the world in Chinese currency: Renminbi.

Hong Kong has also set up various programs (Stock Connect and Bond Connect) which give investors the possibility of direct access to mainland China while guaranteeing the city its status as an international financial center.

In addition, the banking network in Hong Kong is excellent with the presence of major international banks like HSBC. All of them offer Internet banking solutions and multi-currency bank accounts for companies. It is also possible to open a bank account remotely without having to physically go to the banks.

AT LEGAL LEVEL

In terms of the creation and operation of companies, Hong Kong offers great flexibility since local law is based on the English legal system known as “common law”.

Although it is not difficult to set up a company in Hong Kong, we strongly recommend that you approach a professional service provider. Our firm has been a specialist in setting up a company in Hong Kong since 1998.

This legal facility is one of the many advantages of opening a business in Hong Kong, and there is absolutely no need to live in Hong Kong to grow your business.

Another positive point, in Hong Kong, a shareholder and director can be the same person, and can be a natural or legal person.

However, only a company secretary can register your company in Hong Kong. Merritt Asia can act as company secretary on behalf of your company.

From 1 to 50 shareholders, your company will be qualified as a “private limited company”. Already, it will be considered a “public company” allowing it to be listed on the stock exchange.

If you still have any doubts about starting your business in Hong Kong, we invite you to contact our team of experts at support@merritt.group.