This, along with the fact it has been ranked the world's freest economy by the Washington DC-based think-tank The Heritage Foundation for 23 consecutive years, makes incorporation in Hong Kong attractive for international traders.
By statute Hong Kong companies must have a minimum of one director and one shareholder, but there is no statutory requirement the shareholders or directors are Hong Kong residents. Company incorporation requires a registered office in Hong Kong and a Hong Kong resident individual or Hong Kong corporation to act as secretary.
Hong Kong companies are ideal vehicles for international trading or consulting activities. Where no profit is derived from HK they can operate tax free subject to approval by the Inland Revenue. The same is true for companies holding real estate which is located outside Hong Kong. There is no capital gains tax and dividends received or distributed by a Hong Kong company are also tax free. The standard rate of tax applicable to Hong Kong sourced income is very competitive at 16.5 per cent; there is no VAT and no withholding tax.
Hong Kong companies are popularly used as a holding company of a Wholly Foreign Owned Enterprise (WFOE) for trading in China. Many young international entrepreneurs will set up a Hong Kong Company and apply for an investment visa to stay in Hong Kong. There is no minimum capital investment and the personal tax rate is as low as 15 per cent.
To read more about Hong Kong companies please click here.