Hong Kong has been the destination of many companies all over the world and for god reasons. Although not officially a part of China, the city enjoys independence, economic and political stability, as well as modern infrastructure. It is the ideal gateway for companies which would like to access the buzzing Chinese economy and the rest of the Asian region.

Starting a business in Hong Kong is not a difficult feat. Tax planning in Hong Kong is relatively straightforward compared with other jurisdictions because it has simple tax laws.

Using a Limited Company to Start a Business in Hong Kong

There are many advantages and limited liabilities to using limited companies when starting a business in the city of Hong Kong. When you look at limited companies from a legal perspective, it is a separate legal entity and it has the capacity to institute proceedings.  The directors and other shareholders of the company will not be liable for the company’s debts.

Conditions of establishing a legal company

A limited company can be established by one or more persons. Any of the people who established the company can be a shareholder, a secretary and also a director. There are no restriction son secretaries who are individual persons as long as they are a resident of the city. There are also no restrictions the nationality and residency of the director and shareholder.  There is no limit to the capital of limited companies as long as it is not less than a single Hong Kong dollar.

Starting a Business Quickly in Hong Kong

There are plenty of ready-made companies in Hong Kong which have not commenced business yet. These companies also do not have debts or liabilities. These companies are called shelf companies and they are the best choice for people who would like to start a business immediately.

Shelf companies are registered in the Companies Registry and already have the Certificate of Incorporation. The amount of money an investor as to shell out for a shelf company is just about the same for fresh companies.

Taxation in Hong Kong

Only profits or income arising in Hong Kong are taxable and this is why investors like starting a business in Hong Kong compared to other places. There is no tax on capital gains and the current corporate profits tax rate is only 17.5%.

On the other hand, salaries tax is imposed on income arising in Hong Kong from any employment.  Tax is deducted on a sliding scale which ranges from 2%-20%.

Starting a business in Hong Kong is easy and quick. This is one of the reasons why investors flock to the city because it offers a lot of advantages.

There is a variety of reasons why some private companies decide to go public and some of the reasons why they do so is they want to gain access to more capitals; become highly visible in the market and enhance the status of their company. However, it is important to take note that not all private companies can go public. Only companies which are well established and are key players in their industry are allowed to go public.

Company owners should understand that there are many implications to listing your company as it will obviously have a very big impact.  What should you ask before deciding on IPO in HK?

  • What is the reason for going public?
  • Is the company ready to accept potential losses?
  • Is the company ready for the obligations of going public?
  • What comes with the listing exercise?

Advantages of Public Companies

There are many advantages to be had with going public and this is why several companies choose IPO in HK.  Companies which are publicly listed have the ability to raise capitals by offering transferable shares to the public.  Publicly listed companies can have over 50 shareholders and can trade shares on the Stock Exchange after being approved by the Hong Kong Stock Exchange.

 Going Public

Listing your company publicly entails changes and responsibilities so it is something which must not be thought of lightly. Some of the benefits which can be had for going public are:

  • Liquidity – Public company stockholders have the ability to sell their shares.  This also gives them an exit strategy, as well as portfolio diversity.
  • Prestige – if a company has public offerings, this means that they are stable. If your company is listed publicly on Hong Kong, it will get prestige.  This is something which can be indispensable when searching for new clients and employees, as well as marketing products and services to the masses.
  • Ease of raising capital – it can be difficult to raise capital for private companies. Publicly listed companies can raise a substantial amount of capital by inviting the general public to subscribe for shares. This will result to an increase in the company’s market share too.

Hong Kong Listing Procedure

After deciding to take your company public, there is a set of procedure which must be followed to complete the process. In a nutshell there is a process called due diligence which must be undertaken. This is the analysis and valuation phase of the company and this is performed by no less than a professional accounting firm. After due diligence, the public is then given the opportunity to purchase shares of the company.

Setting up an offshore company in Hong Kong is by far, one of the most rewarding steps any investor can ever make. When you’re in a foreign city that exercises open trade relations with other mainstream cities and imposes minimal taxes, chances are you will end up with high return on your investment.

However, putting up your own offshore company in Hong Kong is not done overnight. There are several steps you have to take and important things to seriously consider. One of which is aqcuiring a highly effective and efficient company secretary Hong Kong.

When it comes to looking for a company secretary, compromise is and should be out of the question. You need a first-rate secretary, so anybody less than that should not qualify. After all, it’s your business success that is at primarily at stake here. So unless you’re ready to lose major business deals to a lousy company secretary, you have to make sure that you only get the best company secretary Hong Kong.

So how do you find the best secretary Hong Kong? To help you get started, here are a few useful tips you might want to consider:

  1. Find a company secretary based on your business requirements. This should be unarguably the most important factor that you need to consider. You have to find and get a secretary who understands the nature of your business along with all its demands. This way, you will be at ease knowing that you have a secretary with whom you can entrust your important business matters.
  2. Refer to credible recruitment agencies. If you don’t have the luxury of time to personally find a reliable company secretary Hong Kong, then don’t worry. There are a lot of recruitment agencies out there that can help you out with what you need. All you have to do is contact the most credible recruitment agency you can find, tell them what you need, and let them handle the rest of the work for you.
  3. Simply get a company that offers secretarial services. This is always a great option if you can’t seem to find the right company secretary. With the help of a company that offers secretarial services, you can be rest assured of a smooth and highly organized business flow. However, before you deal with a particular company, be sure that you take all necessary precautions.

Finding the best company secretary Hong Kong can prove to be a little hard, especially if you’re a meticulous employer. But then again, it’s the only thing you can do to make sure that your company doesn’t fall into the hands of a lousy secretary.

hong kongHong Kong is undeniably a very progressive country with astounding economic development and progress. Because of this, a lot of businesses are being established in this country. There are businesses in different fields such as trade, manufacturing, merchandising, banking, entertainment and media, transportation, communication and a whole lot more.
Hong Kong had facilitated on the internalization of business as it is a country which is highly international. For instance, Hong Kong banks are highly international as it good on handling foreign currencies. For this reason, there is easy banking for businesses established in Hong Kong. Furthermore, Hong Kong’s economy is ideal on setting up a business and one can be ensured of a safe and secure banking in this country.
Hong Kong had also been referred as the Asia’s Business Capital. It had a strategic position as it is near from the Mainland China. Despite of its proximity to the Mainland China, it has a high degree of autonomy from it. Hong Kong has good transportation and it has the best transport links to different parts of the globe. The language of business in Hong Kong is English and this facilitated on a better internalization of business in Hong Kong.
Another reason why there are a lot of international businesses in Hong Kong is that one’s transactions accomplished outside Hong Kong are tax free. For instance, overseas earnings are exempted from profit tax. There are also no sales and withholding tax in Hong Kong. And this can be considered as a key advantage for those who want to set up a business in Hong Kong.
Furthermore, setting up a business in Hong Kong is also cheaper, faster and easier compare to other countries. Unlike others which have residence requirements for company’s shareholders and directors, there is no such kind of requirements on Hong Kong. A variety of company structure is also present and one can easily choose among them depending on one’s needs and preferences. From the different company structures, the most commonly used is the Limited Company. Establishing a business with this kind of business structure is less complicated and easier.
For the reasons stated above, Hong Kong is definitely a gate way for those who want to set up a business outside there own country. Through its good economy and strategic location, financial investments like setting up a business can be a very wise decision.

A successful business is a business which has more profit than losses; however, this is not established immediately after formation of the business, it requires consistency and patience; it also entails making research and being up-to-date with various ways that will ensure that you gain more customers. Here are factors that incorporate a business growth:-

Hiring the best administration team

When hiring it is important to ensure that competent, qualified and experience staff are hired, a team that shares your dream of establishing the growth of a business, a team that goes out of their way to ensure that a company products have a readily available market.

Have the right marketing strategy

It is important for a business based in HongKong to spread it wings internationally, this is through establishment of a web that prospective customers can access to when they are searching online the products they require, this not only makes a company popular but it converts prospective customers into an everyday  customer. With increase in sales volume the end result will be the profound growth of a business.

Tax Compliant

It is vital to ensure that the taxes are submitted to the government on time, this might be done by the company accountant who should be familiar of the taxable amounts by the HongKong government.

Often review of financial statements

A business needs to have its financial reviewed in a timely manner to analyze if the business is growing or falling, the latter helps a company come up with various strategies they can adapt to ensure that they make profit hence business growth.

Good accounting records

Since an accounting department is the major determinant of all other departments in a company, it is vital to have a qualified team that will help to ensure that all these records are well maintained for future reference, this includes:

 Proper book keeping, ledgers, payable accounts, receivable accounts, cashbooks completion and preparing vouchers.

 Preparation of management reports in a timely manner, this can be done in a monthly, quarterly or annual basis and submitting to Hongkong authorities.

 They help to negotiate taxes with the relevant tax authorities In HongKong.

 The should be able to prepare payroll and also submit payroll returns to ensure that the business is not spending more on salaries than it can manage.

All these factors will boost your business growth hence it is vital to follow them to the later.

For a business to attain its goal in the market, it is vital to be familiar to various strategies they can adopt to ensure that their company goals are attained as planned. For the smooth growth of a business in HongKong it is important to ensure that the right marketing strategy has been adopted, below are two basic ways that a company can market their products.

Online marketing

Online marketing is the “in-thing” when it comes to marketing. With the advance in technology it is also vital for a company to embrace the change to be able to experience growth, this can be achieved by ensuring that they first begin by getting a well detailed website by hiring the best web developing company. A detailed website should have all the products a company deals in, company’s financial position, company profile, detailed contact information such as email address, Telephone number, Facsimile and physical address, this eases the work of  a prospective customers if they had to begin searching for your business contact details. After establishing a website it is vital to have team that will quote to all the prospective clients as and when the requests for quotes are received, this helps portray the efficiency of a company. You will be amazed of the increase in sales volume bound to be experienced after going online, this will also make your company popular and increase the chances of getting number one (1) Google rating. The best way to capture customers is to occasionally offer discounts and coupons to the loyal customers.

Offline Marketing

Offline marketing is whereby a business employs sales and marketing executives to make the public aware of their presence, this can be done by offering of products brochures, offering prospective clients discounts on the products they want to purchase. The sales and marketing team should be hired at a standard pay and given commission as and when they bring in customers, this will help to motivate them hence they will work more to ensure that they bring in as much customers since they are aware they is a commission in store for them.

Both online and offline marketing gives a company ideas how they can improve their products in order to get more orders.

      Growth is inevitable in business, this is why it is vital for a business to exhaust all means possible to ensure that growth has been established irrespective if the challenges that a company encounters along the route of success.

Since the implementation of the “Hong Kong-Guangdong Cooperation Framework Agreement”, Hong Kong and Mainland China blend with each other in the economic, cultural and other aspects, economic and trade exchanges increase frequent. However, there are huge differences in the tax system between two places.

Kinds of taxes

Hong Kong is one of the world’s most liberal trade treaty ports, pursuing a “low tax rates to encourage business” policy, generally levied direct taxes only profits tax and salaries tax. Taxes of Mainland China are relatively more including value-added tax, consumption tax, business tax, customs duties, corporate income tax, personal income tax, real estate tax, deed tax, stamp duty, resources tax, etc.

Differences in tax rates

Besides the less types of tax, Hong Kong is still one of the world’s lowest tax areas. At present, Profits Tax rate of Limited Company in Hong Kong is 16.5%, profits tax rate of a sole proprietorship or partnership is 15%; there are two kinds of salaries tax rates in Hong Kong, extra progressive rate applicable to 2% -17%, net income proportional tax rate applicable to 15%, taxpayers can choose a lighter tax burden according to their own circumstances.

The tax rate of Mainland China also has a certain appeal to global investors, details are as follows:

Value added tax: general tax payers basic rate is 17%, lower rate is 13%;

Small-scale tax payers’ rate is 3%

Business tax: services, real estate sales, the transfer of intangible assets rate is 5%;

Transportation, construction, post and telecommunication industry, culture and sports industry rate is 3%;

The entertainment industry rate is 5% – 20%

Consumption tax: proportional rate is 3% – 45%;

Quota rate is 0.1 yuan to 250 yuan

Enterprise income tax: general enterprise rate is 25%;

The key support of the high and new technology enterprise rate is 15%

Housing property tax: in accordance with the residual value of the property calculation of pay, the tax rate shall be 1.2%;

In accordance with the real estate rental income calculation of pay, the tax rate shall be 12%;

To personal rent used to live in housing, rental income according to calculate and pay, the tax rate shall be 4%

Land value increment tax: land value increment tax practice 4 level progressive rate, the tax rate shall be 30% – 60%

Stamp duty: according to the contract value shall be tax payment receipt or nature, proportional rate or by a quota tax payable shall be computed, the tax rate shall be 0.005% – 0.1%

Tariff: according to provisions of customs taxes

Individual income tax: the rate is 3% – 45%, among them the Chinese residents individual income tax expense deduction standard for 3500 yuan, foreign nationals individual income tax expense deduction standard for 4800 yuan

Preferential tax

At present, the Chinese government encourages High-tech, clean energy, service industries and the development of key industries, the agricultural enterprise, software enterprise, culture propaganda enterprise, welfare enterprises, small micro enterprise and so on all have different degrees of preferential tax. In China, for instance, in order to support software industry development, the income tax rate of the considered high technology and new technology enterprise of foreign investment enterprises is 15%, the spending of rational research development still can enjoy 50% of the tax preference before income tax deduction.

Compared with the mainland China, Hong Kong provides less tax incentives, but in order to further attract investment, in recent 2 years Hong Kong also increases the tax preference strength to in technology innovation, finance, environmental protection. In addition, Hong Kong and many other countries/regions signed the avoidance of double taxation agreement. Hong Kong has been signed 26 agreements of comprehensive avoidance double taxation.

At present, the mainland China changed business tax to VAT tax, the reform has spread around to Beijing, Guangdong, Anhui and other provinces and cities. In the future, mainland China will make more efforts in structural tax cuts, and Hong Kong will be in the current basis, further consolidate the status of a free port reduce investors tax burden. As a professional consulting company, Conpak CPA Limited have many years for Hong Kong and the mainland tax treatment experience. If you need to know more about Hong Kong and the mainland tax information, please contact us at any time.