Hong Kong, like most cities in the world, has been hit by the global economic crisis. Fortunately, through increasing collaboration with China, Hong Kong is on a much faster recovery than expected. Despite the ups and downs of the global economy, Hong Kong’s political stability, free market principles, desirable tax and business incentives keep the city’s reputation as Asia’s most popular city for international business, strong. Therefore, it is not surprising that Hong Kong offshore companies are extremely popular amongst entrepreneurs. A Hong Kong offshore company, if incorporated properly, has the potential to be one of the most tax-efficient and private companies in the world. Following are key advantages of Hong Kong as an offshore jurisdiction.
1. Hong Kong as the best location for regional operations in Asia
Incorporating an offshore company in Hong Kong is one of the easiest and most efficient places to do so in Asia, and internationally. This is due to Hong Kong’s open economy, which depends on free business, free trade and free markets. Hong Kong is an investor-friendly business city due to the few restrictions on investment. Additionally, Hong Kong boasts no restrictions on foreign exchange controls and corporate ownership, which has consequently maintained Hong Kong’s position as the world’s freest economy, according to Heritage Foundation’s Index of Economic Freedom, for over a decade. Thus entrepreneurs who have a Hong Kong offshore company achieve great business freedom.
2. Low business costs
Hong Kong is ranked 2nd in the Milken Institute’s Opacity Index, behind Finland. The index measures five key factors related to corruption, efficiency and policy effectiveness. High index ranking indicates lower risk and cost of doing business. The cost of starting a business in Hong Kong is 1.8% of income per capita. Additionally, Hong Kong has a fully convertible Hong Kong dollar that is separate from the Yuan. Entrepreneurs can therefore start an offshore company in Hong Kong with very little cost.
3. Low taxes
Hong Kong has a simple tax system and, according to the Forbes Tax Misery Index 2009, the third lowest tax misery in the world. The maximum corporate tax is 16.5% and the maximum income tax is 15%. Furthermore, there are no sales tax, withholding tax, capital gains tax, tax on dividends and individual estate tax. Fortunately, an offshore company can be tax exempt from even the lowest taxes, as corporation tax is only charged on profits derived within the territory of Hong Kong.
Despite the low taxes, Hong Kong is not given any tax haven stigma associated with other jurisdictions, and is not listed on OECD black or grey lists. Choosing a respectable jurisdiction is important as it helps to avoid any tax haven stigma sometimes associated with activities such as money laundering, tax evasion and fraud.
4. Productive and skilled work force
English and Chinese are the official languages in Hong Kong. However, the official language in the workplace is English, including contracts written, assessed and implemented. This further conveys Hong Kong as an international business hub.
Along with language versatility in the workforce, work ethic, efficiency and can-do attitude are the standard themes among businesspeople in Hong Kong. Additionally, liberal immigration policies appeal to international professionals and investors to maintain Hong Kong’s competitive edge. Stress free and efficient assistance in opening an offshore company is consequently assured.
5. Client confidentiality
To assist confidentiality, an offshore company owner is able to elect nominee directors and a company secretary. Professional consulting companies that assist entrepreneurs in offshore company formation are usually able to provide nominee services.
Offshore company set up in Hong Kong is fast, simple and inexpensive, due to Hong Kong’s free economy, low business costs and corporate tax, efficient workforce and strict privacy laws. The most popular reason for incorporating a Hong Kong offshore company however, is Hong Kong’s tax on a ‘Territorial Basis’ scheme. All these advantages of a Hong Kong offshore company propel Hong Kong to be one of the leading business jurisdictions in the world.
- Healy Consultants : Healy Consultants is a leading corporate services firm that assists entrepreneurs and investors with the processes required to set up a company.