Setup an Hong Kong Offshore Company

Overview of a Hong Kong Offshore Company 

Honk Kong is one of the most popular formation jurisdictions due to the city being an international center of information exchange, finance and trade. It is the third largest financial center in the world and the largest in South East Asia. Since the inception of Hong Kong’s offshore sector, it has had over a million companies incorporate, thanks in part by its regulatory environment and competitive tax system.

After 150 years as a British territory, Hong Kong's 99-year lease with England expired on July 1, 1997, and it became a Special Administrative Region (SAR) of mainland China, situated on the South Eastern tip of the country.

To qualify as an 'offshore company' exempt from tax on foreign-sourced profits, a Hong Kong company must not conduct any trade or business activities within Hong Kong itself, and its income must be derived entirely from sources outside of Hong Kong.

The Hong Kong company formation is a private corporation limited by shares. This is the most popular form of incorporation in Hong Kong. This type of company is an appropriate vehicle for a business that desires to limit its liability, seek solely private funding, and produce financial returns for its shareholders.

Currently, Hong Kong is the absolute best option out there for a multi-currency corporate account (16 different currencies), with internet banking at one of the largest banks in the world, in one of the world’s premier and largest offshore banking jurisdictions.

Only Hong Kong Private Limited Companies are eligible. Hong Kong offshore companies benefit from the jurisdiction not being on the list of worldwide 'tax havens', thereby avoiding potential complications from authorities. Offshore companies also benefit from a politically stable environment, a free port, free flow of capital and a freely convertible HK dollar, in a jurisdiction being ranked the freest economy in world for the 20^th consecutive year.

Since the British handover in 1997, Hong Kong has become the gateway into China and with the development of the Closer Economic Partnership Arrangement (CEPA) economic and trade relations will continue to tighten. The new CEPA arrangement offers preferential access to China’s markets, adding another reason why international businesses choose Hong Kong as a their base of operations.

For more information on the Advantages of Hong Kong as an Offshore Financial Center, click here.

Table of Contents:

• Overview of a Hong Kong Offshore Company 
• Advantages of a Hong Kong Company Formation
• Top Uses
• Key Corporate Features
• Registration Packages
• Requirements for Incorporation
• Taxation 
• Corporate Details

Advantages

There are a number of advantages in forming an offshore company in Hong Kong, including but no limited to:

• Hong Kong is major trading entity in its own right and is one of the largest importer and exporter centers in the world.
• Hong Kong incorporates more companies per annum than any other jurisdiction (about 50,000 each year).
• The vast majority of Hong Kong companies are conducting real trade business in the region, and do not serve as asset protection companies or vehicles, making HK more credible than other tax havens.
• Hong Kong is a well-known and respected jurisdiction that is not blacklisted anywhere.
• Forming a Hong Kong company through our special service allows you to obtain an account in Hong Kong with one of the largest financial institutions in the world without the usual requirement of reference letters of any type.
• A Hong Kong company is an essential element of doing almost any type of business in Mainland China.
• Hong Kong is a PayPal-approved jurisdiction and one of very few no-tax jurisdictions where it is possible to have an unrestricted PayPal account. (The only other two jurisdictions where this is possible are Cyprus and Gibraltar).
• World-class multi-currency banking is available with some of the largest international banks in the world.
• Good banking secrecy. The company can be anonymous if you use our nominee director/shareholder services or set up a foundation to own all the shares in the company.
• English is the main business and banking language.

As an offshore company in Hong Kong, you must maintain certain company records at your registered Hong Kong office for at least 10 years, including records of former members, meeting minutes, and decisions made by single-member companies.

Additionally, a local registered address is required for sending and receiving official correspondence. Maintaining these records and a physical presence can be an administrative burden.

Top Uses

There are many uses for a Honk Kong Offshore Company. One can be set up and used for any legal purpose and for any legal activity, including but not limited to:

• International trading
• Asset protection
• Yacht registration
• Tax avoidance
• Protection and ownership of intellectual property
• Estate planning
• Confidentiality
• Share ownership in other companies
• Financial management
• Investment holding
• Leasing of other assets
• Ownership of intellectual property
• Internet business

However, a Hong Kong-based Offshore Company cannot undertake any business in the banking or insurance sectors unless the relevant licenses are obtained.

For more>> How to Start a Business in HK as an Expat

Key Corporate Features

Registration Packages

Includes:

1. Government Registration Fee (First year)
2. Registered Office Address (First year)
3. Registered Agent Services (First year)
4. Company Secretarial Maintenance
5. Certificate of Incorporation
6. Memo & Articles of Association
7. Appointment of 1st Directors
8. Consent Actions of the BOD
9. Share Certificates
10. Register of Directors
11. Register of Officers
12. Register of Shareholders
13. FREE Phone and/or email consultations

Requirements for Incorporation

1. A clear photocopy of the passport of each director and shareholder of the proposed company. If the shareholder/director is another corporation, please provide us its certificate of incorporation instead;
2. A clear photocopy of the recent residential address with proof of each director and shareholder of the proposed company. If the shareholder/director is another corporation, please provide us any document showing its registered address instead;
3. The authorized share capital and par value per share respectively. If not otherwise provided by the client, we will apply for our standard authorized share capital. That is HK$10,000 divided into 10,000 shares of HK$1 each;
4. The issued and paid up share capital. If not otherwise provided by the client, we will apply for the minimum issued and paid up capital;
5. The shareholding amongst each shareholder if there is more than one shareholder;
6. The name and address of any third party of 18 years old or above who will witness the shareholders’ signatures in the Memorandum and Articles of Association (M&A). Please be advised that the third party witness is also needed to sign in the M&A;
7. The business scope of the proposed company;
8. Three proposed company names in order of priority. The proposed company name can be of English or Chinese only or both.
9. A notice to the Business Registration Office declaring the intent to establish a company in Hong Kong, including the proposed company name and address.
10. Consent to act as director forms from all proposed directors, confirming their agreement to take on directorship responsibilities.
11. A local physical street address in Hong Kong is required to be registered with the Companies Registry as the company's official address. P.O. Boxes are not permitted. This is where all official correspondence will be sent, and any address changes must be promptly reported to remain compliant.
12. Appointing a company secretary, who can be a local individual or corporate resident, is mandatory. The company secretary files required documents with the Companies Registry to ensure compliance on the company's behalf. A professional qualification is not required for this role.

There are no residency requirements for company directors or shareholders of a Hong Kong offshore company. The directors and shareholders can be of any nationality and reside anywhere in the world.".

The sole director or shareholder cannot serve as the company secretary.

Hong Kong Company Incorporation Process

The incorporation and registration of a Hong Kong company involves two main steps:

1. Obtaining approval for the company name by filing an application with the Companies Registry.
2. Submitting the following incorporation documents to the Companies Registry:

• Incorporation application form
• Company's Articles of Association
• Passports/IDs of shareholders and directors
• Proof of residential addresses
• Registration documents of parent company (if a corporate shareholder)

Hong Kong company incorporation typically takes 3-7 working days

Post-incorporation steps:

• File statutory documents with Companies Registry within 14 days (director/secretary appointments, registered address, etc.)
• Open a corporate bank account for company finances.
• Register with the Inland Revenue Department within 1 month to obtain a Business Registration Certificate.
• Obtain any required business licenses before operations.

A quicker alternative is acquiring a pre-existing shelf company to avoid the full incorporation process.

Annual Compliance Requirements

After incorporation, key ongoing requirements include:

• Renewing the Business Registration Certificate annually or every 3 years before expiry
• Maintaining company records like meeting minutes at the registered office for 10 years
• Filing an annual return with the Companies Registry within 42 days of the anniversary
• Submitting an annual profit tax return and any supplementary forms to the Inland Revenue Department

Taxation 

A Hong Kong based Offshore Company benefits from many tax breaks including:

• No tax on capital gains
• No tax on earned interest on income
• No tax on dividend income
• No withholding tax

Hong Kong tax regulations allow foreigners to register "paper companies" – businesses without employees in Hong Kong – which can be legally exempt from corporate income tax. These entities require only a $1 paid-up capital.

If a Hong Kong company’s trading or business activities are based outside Hong Kong, no income taxation will be levied in Hong Kong. Hong Kong companies with Hong Kong-sourced income currently pay a rate of taxation on profits of 16.5% for profits exceeding HK$2 million (one of the world's lowest corporate income tax rate). Panama has a similar territorial taxation system.

Offshore companies in Hong Kong are completely exempt from taxes on income earned outside the country. 

To benefit from tax exemption on foreign-sourced income and profits, an offshore company in Hong Kong must file an Offshore Tax Claim (OTC) with the Inland Revenue Department, thereby achieving 'offshore status'.

Corporate Details

Type of Company

Private company limited by shares

Restrictions on Trading

A HK based offshore business cannot undertake any business in the banking, insurance or financial sectors unless the relevant licenses are obtained

Powers of Company

A Hong Kong limited liability company has all the powers of a natural person

Language of Legislation and Corporate Documents

Both Chinese and English are used in business and either one of the two languages can be used.

Official Language

The official languages are English and Chinese, with English being used in the commercial and political sectors.

Registered Office

A company must maintain a registered office in Hong Kong

Shelf Companies Available

Yes, shelf companies are commonly used

Time to Incorporate

A new, tailor-made company can be formed in 6-7 working days; whereas a ready-made company can be completed within (1) one business day

Name Restrictions

A name that:

• Is similar to or identical to an existing company

• Is deemed contrary to the public interest

• Implies government patronage

Names Requiring Consent or License

Building society, Chamber of Commerce, chartered, co-operative, mass transit, municipal, savings, tourist association, trust, trustee, underground railway, bank, insurance, assurance, reinsurance, department.

Disclosure of Beneficiary Ownership to Authorities

The particulars of the shareholder(s) are available to the general public. Using a nominee service or a foundation to hold the share(s) can preserve anonymity.

Compliance Authorized and Issued Share Capital

The standard authorized share capital is HKD10,000. The minimum issued capital is one share of HKD1 each.

Classes of Shares Permitted

Ordinary shares, preference shares, redeemable shares and shares with or without voting rights.

Bearer Shares

A company incorporated in Hong Kong is not allowed to issue bearer shares. However, utilizing nominee services, setting up an offshore IBC or foundation to hold the share(s) can achieve privacy.

Financial Statement Requirements

Hong Kong companies are required to prepare full audited accounts under the company laws. Also, a copy of the audited financial statements is to be furnished with Inland Revenue Department together with Profits Tax Return. The audited financial statements are not available to the public or to the foreign authorities except those of a listed company.

This audit requirement applies to all Hong Kong companies, regardless of size, unless the company does not conduct business within Hong Kong.

Director(s)

A minimum number of one (1) director is required and full details of these must be filed with the Companies Registry and are available for public inspection. The director(s) can be of any nationality and be resident anywhere. Corporate nominee directors are permitted.

Company Secretary

Every private Hong Kong limited company must appoint a company secretary, who may be an individual or a corporate entity, but the company secretary must reside in Hong Kong; if a corporate entity acts as company secretary, it must have a place of establishment in Hong Kong.

Shareholder(s)

A minimum number of (1) one shareholder is required whose details are filed on the Companies Registry and are available for public inspection. Corporate shareholders are permitted and anonymity can be achieved by the use of nominee shareholders or offshore IBC holding company or foundation. The shareholder(s) can be of any nationality and be resident anywhere in the world.

Exchange Control

None

Type of Law

English Common Law

Principal Corporate Legislation

Companies Ordinance (Cap 32)

Annual Maintenance Fees

Annual maintenance fee is estimated is at US $1,200, which covers annual filing fee, annual company secretary fee, annual business registration fee and annual registered office fee.

In addition to the above there is the statutory audit fee, which for most situations will be US$700. An exact quote can be provided if operations are extensive, complex or if there are local operations to consider.

Restrictions

Once a bank account is pre-approved, our client must physically be present to sign the documents at the bank in Hong Kong.

Double Taxation Avoidance Agreements

Hong Kong has Double Taxation Avoidance Agreements (DTC’s) with: Austria, Belgium, Brunei Darussalam, Canada, China, Czech Republic, France, Guernsey, Hungary, Indonesia, Ireland, Italy, Japan, Jersey, Kuwait, Liechtenstein, Luxembourg, Malaysia, Malta, Mexico, Netherlands, New Zealand, Portugal, Qatar, Spain, Switzerland, Thailand, United Kingdom, and Vietnam.

Frequently Asked Questions

Is a Certificate of Registration the same as a Business Registration Certificate?

No, these are different documents in Hong Kong.

A Business Registration Certificate (BRC) is mandatory from the Inland Revenue Department to validate your business's legitimacy and get a tax ID.

A Certificate of Registration refers to the certificate received when registering a company with the Companies Registry.

Do you need a corporate bank account when registering an offshore company in Hong Kong?

A corporate bank account is not required for Hong Kong company registration itself. However, opening one later on can be more challenging for an offshore company, so professional assistance may be advisable.

Do you need a company secretary when registering an offshore company in Hong Kong?

Yes, appointing a company secretary residing in Hong Kong is a legal requirement when incorporating an offshore company in Hong Kong, whether registering a new company or acquiring a shelf company.

Hong Kong Company Formation Procedure with Offshore Protection

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