Louise Frion from SJ Grand, presents the hows and the whys of setting up a company or branch in Hong Kong.
How to set up a company in HK?
A branch of a foreign corporation must register in the Registrar of Companies. Since the 03/03, the New Companies Ordinance enables companies to make only one registration throughout the Companies Registry (CR) and the Inland Revenue Department (IRD).
They must provide:
- One certificate of incorporation from the CR
- One business registration certificate from the IRD
Two types of offices can be settled: branch offices and representative offices.
In HK, most companies are limited companies:
HK’s government promotes capital expenditures towards specific areas:
- Plant and machinery
- R&D
- Technical education
- Purchasing patents rights, rights to know how, copyrights, registered designs or trademarks.
- Building refurbishments
Regulation:
Accounting, filing and auditing requirements:
BUSINESS TAXATION:
HK has a territorial taxation system which is simple and provides low rates. Therefore, even if foreign income is paid in HK, it won’t be taxable. Profits are taxed at a rate of 16,5% of the HK source of profits.The following assets aren’t taxed as well: capital gains on transfer assets, dividends paid out or after tax profits. Any corporations have the resident status if incorporated or managed in HK. All companies, public or public, distributed or undistributed are treated the same way, therefore local subsidiaries and branches of foreign companied are taxed at the same rate. Moreover, there is no direct payroll, value added or capital gained taxes.
Therefore the relief in taxation is double:
– Article contributed by Louise Frion of SJ Grand
