Published on June 6, 2019
1. Guide to MY FIRST Hong Kong Limited Company Created by AsiaBC | Updated on June 2019
2. What is “Hong Kong Company”? You’re very likely thinking of Private Company Limited by Shares in Hong Kong. 2
3. Private Limited Company is really common! of H.K. companies is such type. 3 By April 2019, there are totally 1,378,363 Hong Kong companies that has remained registered on the Companies Register, 1,363,277 companies are registered as Private Company Limited by Shares. Reference: https://www.cr.gov.hk/en/statistics/statistics_01_b.htm 99%
4. Why H.K. Company?
5. Anyone can create the H.K. company! No restriction on Nationality and Residency of Directors and Shareholders. Everyone can set up and own a Hong Kong company anywhere and anytime!5 1.
6. Company can create the H.K. company! Corporates in any jurisdictions can be the directors and shareholders! 6 Remark: At least one director of the company must be a natural person.
7. Separated Legal Body It’s a separate legal entity from the owners by the Hong Kong laws. 7 2.
8. H.K. Company Company Secretary Director Shareholder Relationship between Statutory Members and the H.K. Company In the view of of a H.K. company: ● The Director and Company Secretary are my employee ● Shareholder is my owner and controller ● I pay salaries to my Director and Company Secretary ● I pay dividend to my Shareholder8 Own & Control Ensure Compliance Manage Dividend Salaries Salaries
9. Your company is a separate person! Your H.K. company can engage in business contracts on its own name. E.g. Employment Contract9
10. You can control the risk level! As a shareholder, your liability of your H.K. company is limited to the capital you have invested in. 10
11. Good for Tax Saving! Tax system is simple, tax rate is low. It’s a safe and low-cost entity for tax saving! 11 3.
12. Tax on Hong Kong Direct Incomes only! Only direct incomes generated in Hong Kong are taxed! 12
13. Namely, Incomes as Profits and Salaries... Income from a business is subjected to Profits Tax. Income from labour is subjected to Salaries Tax. Hong Kong offers generous Allowance Salaries Tax payers and Deductions to Profits Tax.13
14. You are the BOSS! Being a director of your own H.K. company: ● You receive salaries from the company ● The salaries expenses are tax deductible by your company. You can enjoy both of the H.K. tax benefits to corporations and individuals! 14
15. Profits Tax rate is really low. 2-tier fixed tax rate on Profits Tax 15 8.25% 16.5% First HK$ 2M Annual Profits Remaining... Reference: https://www.gov.hk/en/residents/taxes/taxfiling/taxrates/profitsrates.htm
16. 17 % 14 % 2 % 6 % 10 % Salaries Tax rate is even lower! Option 1 : Multi-tier fixed tax rate on Salaries Tax16 0%First HK$ 132,000 Remaining... Next HK$ 50,000 Next HK$ 50,000 Next HK$ 50,000 Next HK$ 50,000 Reference: https://www.gov.hk/en/residents/taxes/salaries/allowances/allowances/7years.htm
17. 15 % Salaries Tax rate is flexible, too. Option 2 : Standard tax rate on Salaries Tax17 All incomes Reference: https://www.gov.hk/en/residents/taxes/taxfiling/taxrates/salariesrates.htm
18. Why “Limited Company” in Hong Kong? Perfect balance of privacy protection and worldwide recognition. 18 4.
19. Privacy Protection The register of ultimate beneficiary is kept private in the hand of your company. 19
20. Worldwide Recognition Hong Kong is NOT on tax haven blacklist. E.g. The banks accept H.K. companies to open accounts. 20
21. Setup of My H.K. Company
22. How to open my Hong Kong company? Who are the members? Director, Shareholder & Company Secretary 22
23. 1. Eligibility of Director & Shareholder Either Natural Persons and Corporations can be. Residency, nationality and place of incorporation are NOT restricted. 23 At least one director must be a natural person. The same person/corporation can take duo-position i.e. be the director and shareholder at the same time.
24. 2. Eligibility of Company Secretary Either Hong Kong residents and Hong Kong companies can be. 24 But you can hire your register agent to take this position.
25. 3. Register Office Address Each H.K company must provide and maintain a local office address. 25 But you can hire your register agent and share their provided address.
26. 4. Share Capital It’s your proposed value of your H.K. company, it means you do NOT have to inject any money to the company. You can consider the company shares is a mean to distribute the ownership of the company among the shareholders.26
27. 4. Share Capital Remember, you do NOT need to subscribe every shares to be the sole owner. 27 In practice, a shareholder can subscribe merely ONE share to be the sole owner. The unsubscribed shares are kept in the hand of your company. Although your company can assign any currency to you newly issued share capital, HKD and USD are the most common option.
28. 5. Significant Controller Register (SCR) SCR is a private document which contains the most updated contact information of the beneficial owner(s) of the company. 28 By the laws, Hong Kong follows the “self-maintenance”and“25% rule”: ● a natural person who can exercise 25% or above controlling power and/or benefit from the company is regarded as a Significant Controller. ● The company should trace up in the beneficial ownership matter by query to its members to determine and keep track of its Significant Controller(s). ● The SCR is not a public document, only the H.K. law enforcement officers have right to access to. If you hire a register agent, you will follow the questionnaire as the guide.
29. 6. Designated Representative (DR) It’s the local contact point of your H.K. company for the H.K. law enforcement units to access your SCR. 29 The DR must be your local company member, or either a local professional layer, professional accountant, or a Trust and Company Service Provider (TCSP). Most likely, your register agent is a TCSP who can take up this position.
30. Required Documents
31. You need to prepare... Director / Shareholder ◆Copies of Passport Proposed Company Name ◆English / Chinese only Extra Details: ◆Proposed Distribution of Shares ◆Contact Info of Controllers behind the shareholders and directors 31
32. It’s done! 100% remote H.K. company incorporation by AsiaBC! ◆ All locality matters are covered: ◆ Register Office Address, Company Secretary, Designated Representative ◆ All paperwork is done: ◆ We file all form, guide you to distribute the shares, and assist you to create the Significant Controllers Register. 32 Credit: Google slide template by SlidesCarnival