Business Registration Hong Kong. Benefits of Business Registration in Hong Kong
Worldwide Incorporation Services specializes in business registration in Hong Kong, establishment of branches of foreign companies and opening bank accounts.
Hong Kong – General Information
Location: Eastern Asia, bordering the South China Sea and China.
Area: total: 1,108 sq k, land: 1,073 sq k , water: 35 sq km.
Natural resources: Outstanding deepwater harbor, feldspar.
Population: 7,191,503 (July 2017 est.).
Time Zone: UTC+8.
Languages: Cantonese (official) 88.9%, English (official) 4.3%, Mandarin (official) 1.9%, other Chinese dialects 3.1%, other 1.9% (2016 est.).
Dependency status:: Special administrative region of the People’s Republic of China.
Government type: Presidential limited democracy; a special administrative region of the People’s Republic of China.
Legal system: Mixed legal system of common law based on the English model and Chinese customary law (in matters of family and land tenure).
International organization participation: ADB, APEC, BIS, FATF, ICC (national committees), IHO, IMF, IMO (associate), Interpol (subbureau), IOC, ISO (correspondent), ITUC (NGOs), UNWTO (associate), UPU, WCO, WMO, WTO.
Economy: Hong Kong has a free market economy, highly dependent on international trade and finance – the value of goods and services trade, including the sizable share of reexports, is about four times GDP. Hong Kong has no tariffs on imported goods, and it levies excise duties on only four commodities, whether imported or produced locally: hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol. There are no quotas or dumping laws.
Hong Kong’s open economy has left it exposed to the global economic situation. Its continued reliance on foreign trade and investment makes it vulnerable to renewed global financial market volatility or a slowdown in the global economy.
The mainland has long been Hong Kong’s largest trading partner, accounting for about half of Hong Kong’s total trade by value.
Hong Kong’s economic integration with the mainland continues to be most evident in the banking and finance sector. Initiatives like the Hong Kong-Shanghai Stock Connect, the Hong Kong- Shenzhen Stock Connect the Mutual Recognition of Funds, and the Bond Connect scheme are all important steps towards opening up the Mainland’s capital markets and have reinforced Hong Kong’s role as China’s leading offshore RMB market.
Currency: Hong Kong dollar (HKD).
Business Registration Hong Kong – Overview
Hong Kong has become a business hub thanks to all the local and foreign investments it attracts. It has also become one of the most popular offshore jurisdictions favored by multinational companies interested in registering offshore affiliate companies. The increased business activities have not only improved the economy of Hong Kong exponentially but have also established it as a trade destination for budding entrepreneurs. Some benefits of doing business in Hong Kong include:
1) Hong Kong is strategically located
Hong Kong is at the heart of China which is not only the gateway to Mainland China but also the largest and fastest growing economy in the world. This places a business at a central location that is near both potential suppliers and prospective customers. This cuts down any transportation costs especially if a business operation is within Asia given that travel from Hong Kong to Asian cities such as Beijing and Shanghai is fast and affordable.
2) Simplicity in business registration
Unlike in many other trade jurisdictions where businesses are strictly regulated, a business registration in Hong Kong is quite a straight forward procedure. Additionally, Hong Kong does not restrict foreign investors from setting up companies within its boundaries as it has no stifling regulations imposed on foreign companies. It is also easy to operate a business in Hong Kong because of the technologically advanced transport networks that make it easy to network especially when a business has multinational operations. There are very few bureaucracies involved when business registration Hong Kong as compared to other countries around the world. The system of business registration Hong Kong is focused on ensuring a business is up and running as soon as possible.
3) An efficient and business-friendly taxation system
Business Registration Hong Kong and Taxation Benefits
Hong Kong has arguably one of the most efficient and investment friendly taxation systems in the world. In fact Hong Kong’s tax policies have been emulated by most Asian economies. To grasp how impressive the Hong Kong taxation system is, it is invaluable to mention that The Economist’ praised Hong Kong’s taxation system and accredited it for the financial prosperity that Hong Kong enjoys. Hong Kong has attracted globally renowned multinational companies to its shores thanks to its business friendly taxation system.
Some impressive aspects of Hong Kong’s taxation systems include:
I. Maximum corporate tax is 16.5 percent of all profits
This means that the government is not allowed to go over 16.5% no matter the amount of profit that a business corporation makes. It actually gives a business the ability to pre-plan for expansion. Lower taxes translates to more disposable income for a business hence increased profitability.
II. Maximum tax for salaries is 15%
Businesses spend a significant percentage of money in the payment of salaries. In jurisdictions where salary taxation is high, the businesses have to spend more on wages. A business based in Hong Kong will spend lower on wages therefore have more income to channel to other important aspects of the business such as expansion and quality control. This aspect makes investors to proceed with business registration in Hong Kong. It attracts many businesses and also many skilled professionals and manual laborers to Hong Kong.
III. Offshore companies are exempted from taxation
Hong Kong recognizes the importance of foreign investments and as a result does not charge any taxes on offshore companies except a small reasonable fee for a trade license. This has established Hong Kong as one of the most popular off shore jurisdictions globally. Any company would be tempted to register in a tax free zone’ where it can operate without the expense of paying large sums of money to the government as tax. The fact that there are no tax expenses on offshore companies has attracted many globally renowned companies to Hong Kong.
IV. Hong Kong is among the few countries in the world without a VAT or sales tax
Most countries in the world charge high amounts of VAT taxes on the products sold within their jurisdictions. This increases the price of products significantly making discouraging the growth of businesses particularly the manufacturing industry. What Hong Kong offers is business registration free of VAT or sales tax where a business can produce and sell products cheaply. This is especially attractive for businesses that deal in imports and exports.
Hong Kong has developed a taxation system that is not only straight forward but also favors the operation of all kinds of businesses ranging from manufacturing, farming, internet-based businesses and export-import businesses.
4) Hong Kong has a free market economy that fosters free trade
Hong Kong business principles are guided by the regulations of free trade and free markets which avoid stifling and over controlling the operations of businesses. This is good news for any entrepreneur interested in business registration in Hong Kong as there are restrictions whatsoever on inward or outward investments . Furthermore the Hong Kong government does not control the foreign exchange. Hong Kong has excellent trade relations with China that enable the movement of goods in and out of mainland China without any tariff charges. These trade relations with China also ensure that Hong Kong traders and entrepreneurs receive preferential treatment when making business transactions with China. Free trade reduces the restrictions that a business encounters both in the production process and when interacting with other businesses that are outside its jurisdiction.
5) Hong Kong has a business-friendly legal environment
Most governments have complex legal requirements guiding businesses especially those owned by foreign entities. This makes it hard for businesses to run flawlessly as their activities are constantly interrupted by the long arm of the law. Hong Kong has a feasible and reasonable business environment that enables all businesses whether local or foreign to thrive and survive. Some of the business-centric features of the Hong Kong legal environment include; a separate legal system from the stifling regulations of mainland China. Hong Kong actually adopts the common English law that is business-friendly. Another crucial aspect of the Hong Kong legal environment that makes business registration in Hong Kong attractive is protection of intellectual property through protection of trademarks, patents, copyrights and registered designs. This fosters creativity and innovation which further ensures that a business is constantly growing and earning more profits.
6) Hong Kong has stable reasonable governance
Hong Kong has a relatively stable political environment governed by leaders who are pro-business and allow the free sharing of information. The Hong Kong government is solely focused on the economic growth and development as suggested by its actions. Additionally there are strict government regulations to prevent corruption. Hong Kong government has a fully functional anti-corruption unit called Independent Commission Against Corruption (ICAC) which investigates corruptions claims and brings corrupt entities to book. A stable government eliminates the fear that a business has of incurring losses due to unfortunate events such as politically instigated violence which can lead to property destruction and stoppage in production.
7) Adequate supply of skilled workforce
Hong Kong has a vast population of both foreign and local professionals who trained in quality learning institutions and are knowledgeable on the Asian and international business culture. Such individuals come in handy for a business registration in Hong Kong. Additionally a large section of the well trained and experienced professionals in Hong Kong is fluent in English, Cantonese and Mandarin . Availability of a large work force also reduces the wage demand of employees as there is competition for the available jobs. This is ultimately good for a business as it will be able to acquire the most qualified professionals at an affordable wage rate.
8) Hong Kong is equipped with State-of-the-art infrastructure
For a business to thrive and operate smoothly it requires a location with adequate infrastructure such as an efficient transport system, internet powered communication, adequate energy supply and adequate office space. Hong Kong has all this infrastructural requirements. The commercial buildings in Hong Kong are impeccable and the road network is impressive. The sophisticated infrastructure in Hong Kong creates an environment where a business can operate without any stoppages in production that can amount to losses. When it pertains to Infrastructure, Hong Kong can compete with any major city in the world and this makes it stand out as a feasible business centre. The Hong Kong port is uses state-of-the-art advanced technology in all its operations making product handling efficient.
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