COMPANY FORMATION
a business starts with formation
Why people are setting up companies for their business?
A company is a separate legal entity. It is like a person in the way that it can own assets, incur liabilities and sign contracts. Where shareholders are owners of a company, directors undertake the management of the company's affairs.
The debt and assets of a company is separate from the shareholders. Therefore, liability rests with the company, rather than the shareholders, directors or company officers. The setting of limited liability also protects the personal assets of a shareholder from claims made against the company.
Hong Kong Companies
the advantages
Hong Kong is a well established energetic financial hub in Asia. The Companies Ordinance provides the legal framework for the operation of companies in Hong Kong. It ensures the infrastructure of Hong Kong’s company law to best serve the needs of Hong Kong as an international commercial and financial centre. The banking system is efficient and convenient and there is little restriction on fund transfers or currency transactions.
The tax system in Hong Kong is simple. Company enjoy a low rate and there are certain tax advantages:
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Low tax rate 16.5% (Second tier tax rate 8.25% of the first HK$2M profit for some companies)
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Offshore profit is not taxable
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Capital gain is not taxable
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No value added tax
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Stamp duty saving in transferring property by means of transferring shares
With its close relationship with Mainland China, Hong Kong companies also enjoy certain tax benefits in investing in Mainland China.
The procedure of setting up a Hong Kong company is straight forward and the cost is low. A tailor made company takes only around 10 days*. For acquiring a ready-made company (which is also called a shelf company), only 2 days is needed.
*working days, upon provision of all required documents.
Offshore Companies
the advantages
Offshore companies enjoy the benefits of limited disclosure on the identity of their owners and directors, and full exemption of offshore income. For most of offshore jurisdictions, there is no requirement on tax filing and auditing, for offshore business.
Below are the most popular jurisdictions:
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British Virgin Islands (BVI)
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Cayman Islands
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Samoa
While there is an increasing requirement on Economic Substance, offshore companies are still popular for their easy and flexible company structure, especially for companies holding business.
The establishment of Economic Substance Law protects the reputation of offshore jurisdictions, by governing certain relevant activities performed by the companies incorporated in offshore jurisdicitions.
The procedure of setting up an offshore company is straight forward and the cost is low. A tailor made company takes only around 10 days*. For acquiring a ready-made company (which is also called a shelf company), only 2 days is needed.
*working days, upon provision of all required documents.