According to the Davos Economic Forum, the Heritage Foundation (USA), and even the Nobel Laureate Milton Friedman, Hong Kong has “the freest economy in the world”, thanks to a tacit alliance between a non-interventionist government and a population of former hard-working and trade-savvy refugees. In addition, there is an unparalleled administration, a tried and tested legal system (the common law) and public services (health, housing, education) that have steadily improved over the past two decades.

The set up of a company in Hong Kong can meet several objectives that we present on this site. Do not hesitate to contact us for the legal and fiscal validation of your company.

General presentation of Hong Kong

Hong Kong is an internationally recognized financial center. It is a territory located in the South-East of China which joined the People’s Republic of China on July 1, 1997. It is a Special Administrative Zone within the People’s Republic of China with its own laws and its own judicial organization.

“Hong Kong is home to the largest port and largest airport in the world for tonnage movements; Hong Kong is the largest financial center in Asia, after Tokyo, and the fifth largest financial center in the world. Hong Kong is Asia’s largest regional hub with more than 6,272 international companies, of which 3,798 have headquarters or regional offices. Hong Kong offers a huge range of opportunities and is an excellent base for doing business in Asia. “Source: Canadian Department of Foreign Affairs.

There is no specifically offshore legislation in Hong Kong. All companies are created under the same legislation, whether they have a local or offshore activity. Thus Hong Kong applies a territorial taxation: if a Hong Kong-based company does NOT do any business in Hong Kong and has NO income from Hong Kong, then the company will not be subject to any tax (neither on its profits nor dividends paid to its shareholders).

The principle of territorial taxation applied in Hong Kong is summarized in the following definition of the Inland Revenue Department of Hong Kong: “Hong Kong adopts a territorial basis for taxing profits derived from a trade, occupation, or business carried on in Hong Kong.

“In simple terms this means that a person who carries on a business in Hong Kong but derives profits from another place is not required to pay tax in Hong Kong on those profits.”[Site source]

The advantages of Hong Kong

The advantages of a Hong Kong-based company are:

• These companies are not perceived as offshore companies because Hong Kong is not considered a tax haven. It is therefore a credible entity to have commercial relations with European, American companies …
• The political and economic environment is stable, with China enjoying many benefits from Hong Kong (“gateway” for investments in China) and therefore has no interest in changing the legal and fiscal characteristics of this territory. Moreover, this jurisdiction is not under European or American influence.
• Local law is based on the English legal system known as common law (with flexibility of creation and operation of companies).
• The banking network is excellent with the presence of large, reliable international banks offering Internet Banking and multi-currency accounts for companies.
• A company based in HK can do business around the world and there is no restriction on the directors and shareholders of a company.

The disadvantages of Hong Kong

The disadvantages of a company based in Hong Kong are:

• Mandatory requirement to keep annual accounting and auditing.
• At least 1 director of the company must be a natural person (resident or not of Hong Kong).
• Current issues opening a bank account in Hong Kong: banks require proof of activities (invoices, contracts, etc. in connection with Asia); refusal to open an account if nominee service and/ or if the Associates are residents of certain countries (Africa, Maghreb, etc.) and/or if the company will have links with Vietnam, Thailand, etc.
• Obligation to be in-country to open a bank account for your company in Hong Kong. Regarding travel, it is possible to find flights (direct flight) + hotel nights from 650 EUR. It is also an opportunity to visit this territory full of surprises, to go shopping (competitive prices compared to the People’s Republic of China nearby) and to continue your trip to the rest of Asia and Oceania!