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Hong Kong
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To most, it seems that Hong Kong’s history began in 1842 when China ceded Hong Kong to the British Empire following the First Opium War.
Great Britain kept Hong Kong after the end of World War II, despite letting go of many other colonies, such as India. By the 1990s, Hong Kong was one of the fastest-growing economies in the world.
In 1997, the British rule of Hong Kong came to a peaceful end, and it became a Special Administrative Region under Chinese rule.
To this day, Hong Kong remains a prosperous region with a superb international reputation. It is one of the Four “Asian Tigers” with Singapore, Taiwan, and South Korea.
Hong Kong is a highly reputable low-tax jurisdiction. Hong Kong is unparalleled for nonresidents, since Singapore requires that companies have a resident director, whereas a Hong Kong company can be owned, managed, and operated entirely from abroad.
Hong Kong Incorporation and Tax Facts:
- Hong Kong permits corporate directors and shareholders, which for long meant that Hong Kong companies were formed with anonymous (no public records) offshore companies, so that the offshore company could appear to be a Hong Kong company and enjoy the reputation advantages thereof. However, as of the first of January 2014, Hong Kong now requires companies to have at least one natural person as director, who will appear on public records. Nominee directors are still a very rare occurrence in Hong Kong.
- Hong Kong still remains a very attractive jurisdiction for companies to form in, since it applies territorial taxation, where only income sourced from within Hong Kong is subject to the 16.5% corporate tax rate.
- There is no sales tax (VAT) in Hong Kong.
- By far, the most common legal form in Hong Kong is a limited company, usually private limited. It is very easy to form, maintain, and operate private limited companies in Hong Kong. Bookkeeping is required, but there are many accountants and accounting firms which can do it for you.
- The cost of forming a Hong Kong company is around HKD 10,000 to 20,000 (about USD $1,300-$2,600). Annual renewal and the cost of outsourced bookkeeping will vary.
- As of 2012, LLP (limited liability partnership) are available.
- Personal taxation in Hong Kong is generally low.
- Income tax is charged on a sliding scale from 2% to 17%, although a total tax exemption can be had if the income is determined to not be sourced from within Hong Kong. This is a decision made on a case-by-case basis.
- There is no capital gains tax, inheritance tax, wealth tax, or sales tax.
