FORMING A COMPANY IN HONG KONG

Incorporation time: 2 days

Shelf companies: Yes

Accounting: Yes

Secretary: Yes

Nominee Shareholder: Yes

Nominee director: Yes

History of Hong Kong

Hong Kong is located in southern China and is one of the two Special Administrative Regions of the People’s Republic of China, the other being Macau. It has seven million inhabitants and is a former British colony which was returned to China in 1997. Hong Kong retains its own legal system, separate from the rest of China. China has stated that Hong Kong will retain its autonomous status until at least 2047.

Hong Kong as an Offshore Centre

As the primary financial centre in Asia, and the third largest in the world, Hong Kong offers its offshore companies 0% tax, confidentiality and the ability to open multi-currency accounts. From a legal perspective, there is a single piece of legislation which regulates all types of businesses. All Hong Kong companies must have their headquarters in the country and the most popular offshore vehicle is the Private Company, which offers limited liability.

Hong Kong is a respected and popular destination for all types of business and international trade. It is also a popular choice for import/export businesses. Although, the minimum share capital for Hong Kong companies is 1 HKD, though it is more normal to form with at least 10,000 HKD.

Although Hong Kong has a corporate tax rate of 17.5%, companies only pay tax on income from activity in Hong Kong. This means that offshore companies, having their activity outside Hong Kong, do not pay any tax.

Hong Kong Summary

Hong Kong is an attractive jurisdiction from any point of view, its key benefits include: the ease of doing business, the impossibility of investigation by local tax authorities, a strong tradition of banking secrecy, world-class economic stability and an excellent international reputation. Hong Kong offers an ideal base for service companies and international trade activities.

Types of Hong Kong Companies

The incorporation of a company in Hong Kong involves three simple steps and takes six days. There are no restrictions on who may form a company in Hong Kong and 100% foreign ownership is permitted.

Detailed Review of Hong Kong’s Economy

Hong Kong experienced difficulties during the 2008 financial crisis and entered a recession. However, the economy has recovered very well and since 2010 the region has grown to rival that of European countries with 2.2% growth estimated for 2014. Hong Kong derives its wealth from its diverse business types including: textiles, home appliances, electronics, IT, telecommunications and financial services. The financial services sector is most crucial since 90% of the country’s GDP comes from the tertiary sector, which employs 85% of Hong Kong’s workers. Tourism is also a growing industry which is becoming increasingly important to the economy.

Hong Kong is very dependent on its neighbours because the region has no natural resources and has a minimal agricultural sector, forcing it to rely almost entirely on importation. At present, there are 900 000 companies registered in Hong Kong, which is a favoured location for trade with China and Asia in general.

Hong Kong has a capitalist economic model which is especially committed to free trade since international trade is vital for its growth. The region is one of the top 15 global exporters and its main trading partners are China, Japan and South East Asia. In recent years, Hong Kong’s imports have tended to rise faster than exports, threatening the balance of trade in the region.

Hong Kong’s Economic Strengths

• Hong Kong offers a route to trade with China, the leading global producer.
• Hong Kong has a highly qualified and professional corporate services infrastructure.
• Hong Kong’s economy is strong and resilient.
• The banking system is stable and efficient.
• Hong Kong makes establishment for foreign company simple and has a high degree of information transparency.
• The country has a high level of political transparency and a stable system of government providing various tax benefits.
• Hong Kong has a qualified and affordable workforce.
  

Hong Kong’s Economic Weaknesses

• Doubts persist about the future management of Hong Kong if the country becomes more fully integrated with China.
• The territory is heavily dependent upon its financial sector.

Trade and Market Information

Hong Kong is a member of the World Trade Organization and APEC (Asia-Pacific Economic Cooperation). The country has also signed a Free Trade Agreement with New Zealand. Hong Kong also has free port status and its customs system is separate from that of China. Honk Kong’s status as a free port means that there are no customs duties except for:

• Tobacco: tax calculated on volume.
• Alcohol over 30%: taxed at 100% of the custom’s value.
• Beer: taxed at 30% of the custom’s value.
• Petroleum products: tax calculated on volume and value.

All merchandise must be inspected and must receive customs approval even if no duty is payable. The importer must also complete the Customs and Excise Department form within 14 days of importation.

Export permits are also needed for:

• Certain chemicals prescribed by law.
• Pharmaceuticals.
• Live animals.
• Certain textiles.
• Plants.
• Frozen rice, meat and poultry.
• Radio equipment.
• Alcoholic drinks.
• Tobacco.
• Vehicles.
• Petroleum products.

Retail accounts for US $31 billion in Hong Kong and it is divided into several segments. There are many small family businesses, supermarkets (Sincere, Wing, Jusco) that sell mass-market products and major shops that focus on high-quality products (Lane Crawford, Seibu, Sogo). A few discount shops sell perishable products. There are two types of consumers in Hong Kong: locals (6.5 million) and tourists who have a particular taste for luxury items.

Transport in Hong Kong plays a very important role in the economy. The country is home to the world’s largest airport and the world’s third-largest container port, making it one of the most important logistics hubs in Asia. Around 250 million tons of products pass through Hong Kong every year and the city is one of the best gateways to the Chinese market. Hong Kong ship owners control 6% of the global maritime fleet.

Hong Kong industry represents 9% of the country’s GDP, with textiles and electrical products being the dominant sectors. The field of electronics is in decline, but the country’s interest in the high-tech sector is seeing growth.

Employment Law in Hong Kong

In Hong Kong the working week lasts between 40 and 48 hours and there is no minimum wage. However, the average gross monthly salary is 11,000 HK$ (about $1,400). Employers pay no social contributions, employment contracts are regulated by the law and collective agreements. The two types of contracts are permanent or fixed-term. Hong Kong has no legal retirement age, although, on average, it is 62.