Why Hong Kong is not an offshore jurisdiction

Some people still think of Hong Kong as an offshore jurisdiction. Well, it used to be one while it was under the British rule but since 1997, the city is officially part of China. But even though it is not an offshore jurisdiction any longer, Hong Kong offers some advantages to foreign entrepreneurs that cannot be found in high-tax onshore countries. We have coined the term ‘midshore’ to refer to jurisdictions such as Hong Kong.

Characteristics that make Hong Kong a midshore jurisdiction

Even though Hong Kong is a Chinese city today, it can be thought of as a special economic zone that boasts some advantages that mainland China does not. The economy of the city is growing at an amazing pace and it ranks first in the international ratings for economic freedom. Below please find the main characteristics that allow qualifying Hong Kong as a midshore zone.

• Territorial taxation system. This characteristic makes the city especially attractive for foreign investors. Hong Kong-registered companies are not taxed in Hong Kong on the business operations that they carry out abroad, outside the territory of Hong Kong. The corporate tax on business operations conducted within the city is comparatively low. Businesses are taxed at two rates depending on the amount of income that they make: 8.25% or 16.5%.
• Publicly available company owners’ information. Anyone can find out who the stockholders of a company are by searching the online database that the Hong Kong Company Register has. A fee is to be paid though.
• Register of beneficial company owners. The Register is not available to the public but the local Company Register does have this information. Regulating, controlling, and law enforcement bodies can gain access to the information in accordance with the legislation of Hong Kong.
• Financial records. All companies must keep accounting records, have audits, file annual tax returns, and other financial reports.
• Tax-related agreements. Hong Kong has signed more than forty agreements on avoidance of double taxation with other national states.
• Exchange of fiscal information. Fiscal information about the owners of Hong Kong-based companies is exchanged with the countries that have made double taxation avoidance agreements with the jurisdiction. This means that the Hong Kong tax authorities report the financial transactions made by foreign nationals to the tax authorities of their home countries. Banks in the city assess every prospective client wishing to open a corporate account. The client has to come up to the standards and he or she cannot be a citizen of a sanctioned country.
• Black lists of non-cooperating countries. Most national states do not have Hong Kong on such lists.

As you can see, Hong Kong cannot be referred to as an offshore jurisdiction as ‘classic’ offshores protect their resident companies’ fiscal information with much more rigor. At the same time, the territorial taxation system (that is applied in rather few countries of the world) makes Hong Kong attractive to foreign investors who set up companies there to work in all business areas.

How to register a company in Hong Kong

The first thing that you have to do is find a registered agent in Hong Kong who would set up a company for you there. The agent will help you determine the corporate structure, apply for a license if necessary, open a bank account, and so on. Involving an agent in the process of company registration in Hong Kong is required by law. Offshore Pro Group has partners in Hong Kong and we can register a company for you in this jurisdiction. You will not have to travel to Hong Kong as everything can be done remotely.

Please note that if the type of business activities that the company is involved in requires a license, the company cannot start business operations until the license is obtained. No local bank will open a corporate account for a company that does not hold a license while it should.

What you will have to do is fill out the forms and the questionnaires and supply personal documents of prospective company owners. We will be happy to provide the following services to you:

• Check the prospective company name with the Company Register for availability;
• Help you complete the forms and submit the required document package to the authorities in Hong Kong for company registration;
• Pay the company registration state duty;
• Find a company Secretary and a registered legal address for your company in Hong Kong (both of these are required by law);
• Make company seals.

If you wish, we can also provide the following additional services to you:

• Have copies of corporate documents apostilled and delivered to you;
• Have the originals of the corporate documents delivered with a courier;
• Assist in setting up a corporate bank account.

When the time comes to file the tax return, we will gladly assist you in the following matters:  

• Prepare financial records for auditing and filing the tax return by involving professional accountants who will analyze the documents that you will have submitted;
• Have the company documents audited and tax reports files by involving professional auditors.

If you apply for our company registration services, we will set up a company in Hong Kong for you remotely. You will receive the Certificate of Incorporation, Memorandum and Articles of Association, Company By-laws, Director Appointment Letter, Minutes of the first Shareholders’ Meeting, Share Certificates, and company seal. The cost of the service starts at US$ 1,890 but the ultimate price will have to be calculated in each individual case. The price of company registration in Hong Kong includes the company registration fee, the company Secretary services, the auditor’s services, the registered legal address – all for one year. It also includes the costs of the registered agent services in Hong Kong.

Please contact us by email, live chat, or telephone if you are interested in this proposal. Please also ask us any questions related to the matter without any hesitation. We always reply quickly!