Hong Kong

Hong Kong Managed Companies

Synopsis

Technically part of the People's Republic of China since the United Kingdom ceded sovereignty on the 1st of July 1997 having administrated the territory since 1841. Under the 1984 Treaty signed between the UK and China it was agreed that save for foreign policy and defence, Hong Kong could continue to maintain its separate capitalistic economy and legal system for 50 years. Despite worries to the contrary, Hong Kong has continued to prosper and has become an ideal business base for those conducting business in the Far East primarily due to its stability, reputation and territorial tax system. However, it should be noted that Hong Kong does not in most cases benefit from China's tax treaty network which re-emphasises the need for proper management and control to be carried out for trading companies. The territory occupies 1,042 square kilometres and has a population of 6,980,412 (2007)

Star Ratings

Corporate registration efficiency

5

Cost

4

Confidentiality

4

Local Banking facilities

5

Legal system

5

Political stability

4

Reputation

4

Location

hong-kong

Tax Planning Credentials

The Territorial Tax System & The 4% Corporate Tax Rate*

The key benefit of Hong Kong for those conducting business outside of the territory is that it employs a territorial tax system which in effect means that only profits generated from within the territory are subject to the local corporate tax rate of 16%. Hong Kong operates a well-run tax system and that by convention the authorities expect to see taxes paid on around 25% of declared profits or, in other words, if based on the standard 16% corporate tax rate, a mere 4% annual corporate tax if a business is really conducted outside of Hong Kong! It should be emphasised that not to pay such taxes can expose a trading company both to considerable fines and negate the protection that is afforded from 3rd party countries — i.e. normally the country of the beneficial owners fiscal residence - by being able to show that there is a real trading company being operated from Hong Kong, carrying on real business and paying local taxes. Unlike many Far-Eastern countries Hong Kong employs and enforces international accountancy standards, which are very similar to those in the United Kingdom. In addition, our British and Irish clients will also be very familiar with local company law and legal documents as they bare a close correlation with those - such as the Memorandum & Articles of Association — employed back in Britain and Ireland. In other words, Hong Kong is an ideal base for those conducting business in the Far East who don't want too alien an environment.

Domestic Corporate Tax Only 16% Hong Kong Based Companies

Where business needs to be carried out in Hong Kong itself then it still provides a very attractive location since the corporate taxes are only 16%

Personal Tax

In Hong Kong this is known as the Salaries Tax and as its name implies it only applies to employment income and not dividend or capital gains receipts. The rates of taxes start at only 2% on employment income but cannot go beyond 16% and that is before tax credits are taken into account. All in all, Hong Kong is a very favourable personal tax location.

Benefits

  • Pro-business environment with corporate taxes varying from 4% to 16% depending on a company's territorial base.
  • Highly respectable and credible jurisdiction.
  • Highly educated population with English being the language of commerce
  • Highly developed corporate and general law based on UK law
  • Excellent communications
  • HK has a territorial tax system
  • Corporate taxes can be as low as 4% for a trading company
  • Personal taxes only apply to employment income
  • Personal tax rates vary from 2% to a max. of 16%
  • No taxation on dividends or capital gains
  • Legal system based on that of the United Kingdom
  • Accountancy standards are to international standard
  • Ideally located as a base for investment into China
  • Company registration procedures are very efficient and take no more than 2-3 weeks
  • English is the language of commerce
  • Stable economic environment.

Double Taxation Treaty Network

Until 2001 Hong Kong didn't have any double taxation avoidance (DTA's) or double taxation treaties (DTT's). Today it has DTA's with Belgium, Luxembourg, China, Thailand and Vietnam and DTT's awaiting ratification with the UK, Ireland, the Netherlands, Luxembourg, France, Liechtenstein and Austria.

Administration & Accountancy Services

Managed Hong Kong Company Services

The key service offered by the SCF Group is that of a fully managed Hong Kong company where-by we register your Company, act as the legal and accountancy daily administrators, liaise on your behalf with the Revenue Commissioners, the Company Registration Office, maintain the registered office, company minutes and in fact everything necessary to provide you with a fully functional registered Hong Kong company — In effect we can provide a bespoke sen/ice to satisfy all your local needs!

Fully Managed Hong Kong Company Service

  • The appointment of a qualified accountant to act as Company Secretary
  • The opening up of a bank account for your company with access provisions agreed by SCF, the bank and of course the beneficial owners
  • A Full Management Agreement setting out the rights and obligations of all parties
  • The provision of an Hong Kong registered office address for service of process and official mail
  • The maintenance of all requisite company minutes, ongoing companies registration office submissions, annual returns and AGM preparation
  • The annual submission of the Revenue Commissioners Assessment of Tax Form
  • The maintenance of the company's accounts supported by a quarterly ready for the submission to the Tax Authorities including the corporate tax calculation. Accountancy will be maintained in either SAGE or Quick Books format
  • The appointment, if required or appropriate, of auditors
  • Advice on general Hong Kong tax mitigation and the company's maintenance by a dedicated company accountant

Set-Up & Annual Maintenance Fees

Please see the separate Hong Kong Quotation Leaflet

The Trading Office Package (Optional)

This includes SCF actually providing the day-to-day trading, telephone answering, website management (if required), order reconciliation, invoice issuing and trading office facilities for your Hong Kong company operation which can be made bespoke to your exact needs all at a fraction of the cost of setting up and maintaining you own office in Hong Kong For more details please contact an SCF Consultant.