Hong Kong, administrative region of China, consisting of a mainland portion located on the nation’s southeastern coast and about 235 islands. Hong Kong is bordered on the north by Guangdong Province and on the east, west, and south by the South China Sea. Hong Kong was a British dependency from the 1840s until July 1, 1997, when it passed to Chinese sovereignty as the Hong Kong Special Administrative Region (SAR).

The British control of Hong Kong began in 1842, when China was forced to cede Hong Kong Island to Britain after the First Opium War. In 1984 Britain and China signed the Sino-British Joint Declaration, which stipulated that Hong Kong return to Chinese rule in 1997 as the Hong Kong Special Administrative Region (SAR) of China. The Joint Declaration and a Chinese law called the Basic Law, which followed in 1990, offer for the SAR to operate with a high degree of economic autonomy for 50 years beyond 1997.

The advantages of a company in Hong Kong:

• Best fame and image among Offshore and international companies.
• No tax if you sell apart from Hong Kong (rule of Offshore Company).
• English speaking country and documents of the company in English and in Chinese.
• Professionalism for both public and private organizations.

Our Hong Kong Company Formation package includes:

Incorporation:

• Search and reservation of the company’s name.
• Certificate of Incorporation (CI).
• Certificate of registration/registration forms of Hong Kong.
• Kit of society (including 24 copies of M&A, 2 tampons, 1 seal, 20 share certificates, 1 statutory book).
• Preparation and submission of the legal status of the company.
• Conventional copies notarized by our notary.
• Minutes of the first board meeting.
• Registered office (registered agent) fees for the 1st year.

Note: The capital by defect is USD10,000

Options with the creation of the company in HK:

• Apostil
  • Normal in 30 days = 150€
  • Express in 7 days = 300 €
• Business address in Hong Kong & 4 mail forwarding/year = 499 €.
• Readymade company = 150€.

Annual fees for the company in HK:
- Agent fees + State fees + Taxes + Employee Return + Annual return = 749 EUR
+ accountancy fees (if activity): - accountancy audit, from 590 € (depends on CA and the number of transactions, but we will obtain the best prices from our accountant in HK).
If not you can find your own accountant in Hong Kong if you prefer.

Overview by our Hong Kong Company Formation specialist:

1. HK source of profits
Hong Kong adopts a territorial source principle of taxation. Only profits which have a source in Hong Kong are taxable here. Profits sourced elsewhere are not subject to Hong Kong Profits Tax. The principle itself is very clear but its application in particular cases can be, at times, contentious. To clarify the operation of the principle, IRD has prepared a simple guide on the territorial source principle of taxation. It gives a brief explanation of how the principle operates and provides simple examples for illustrative purposes of the tests applied to different types of businesses. The Courts have over the years considered the subject of the source of profits. The following principles have emerged from authoritative court decisions.

1.1 Matter of fact
The question of locality of profits is a hard, practical matter of fact. No universal rule can apply to every scenario. Whether profits arise in or are derived from Hong Kong depends on the nature of the profits and of the transactions which give rise to such profits.

1.2 The operations test
The broad guiding principle is that one looks to see what the taxpayer has done to earn the profits in question and where he has done it. In other words, the proper approach is to identify the operations which produced the relevant profits and ascertain where those operations took place.

1.3 Gross profits from transactions
The distinction between Hong Kong profits and offshore profits is made by reference to the gross profits arising from individual transactions. Only those business activities which directly produce the gross profits are taken into consideration in determining the source of profits. Activities such as general administration are normally not relevant.

1.4 Place where decision is made
The place where the day-to-day investment/business decisions take place is only one factor which has to be taken into account in determining the source of profits. It is not usually the deciding factor.

1.5 Business presence overseas
A business may maintain a presence overseas which earns profits outside Hong Kong but the absence of a business presence overseas does not, of itself, mean that all the profits of a Hong Kong business invariably arise in or are derived from Hong Kong. However, in the vast majority of cases where the principal place of business is located in Hong Kong and there is no business presence overseas, profits earned by that business are likely to be chargeable to Profits Tax in Hong Kong. The HK tax authority, i.e. Inland Revenue Dept (”IRD”), has the final rights to judge whether the profit of a company is HK sourced basing on the above factors. If a company is non-HK-sourced profit, it will not have to pay HK tax, but it shall still prepare audited report and submit tax return to IRD every year.

2. Benefits of setting up company in HK

2.1 Reliable banking system
HK, being an international finance centre & a tax haven, has a lot of branches of major international banks which are trustworthy and have a lot of branches all over the world. HK banks will only need a passport copy and addressof the client to comply with the HK law, which also requires that no HK banks can disclose their client’s details to any one without their permission.

2.2 Well-established legal system
HK has a well-established legal system, which is based on the English legal system.

2.3 Genuine trading
HK has a lot of genuine trading activities. Therefore an offshore company with a HK correspondence address will have an advantage over those without a HK correspondence address.

2.4 No exchange control
HK has no exchange control. Money can be deposited, withdrawn or transferred out of a HK bank account freely without paying any taxes, including withholfing taxes.

2.5 Confidentiality
All banks in HK are governed by the HK Laws, not to disclose any customer’s information to any one without the customer’s prior consent, except if the customer is suspected for money laundry or criminal offence, or the HK Inland Revenue Department suspects that he/she has evaded HK taxes (not taxes in other countries). Further the HK Inland Revenue Department is not allowed by the HK Laws to disclose any information to any one, including local or overseas governments.

2.6 Simple procedures
Formation procedures for offshore companies are simple. There is no need to come to HK for company formation or opening of HK bank accounts, and the bank accounts can be operated at overseas without coming to HK.

3. HK Profits Tax
Profits tax is charged on every person from carrying on a trade, profession or business in Hong Kong in respect of his assessable profits arising in or derived from Hong Kong from such trade, profession or business. “Person” includes a corporation, partnership, trustee and body of persons. Profits from trading activities outside Hong Kong with only goods handling, banking documentation and bookkeeping done in Hong Kong are tax exempted. Profits arising from the sale of capital assets are excluded from the charge Dividend received are not taxable No withholding tax on dividend payments Interest income Interest income of an individual is not taxable Interest income of a corporation, sole trader and partnership not arising in or derived from Hong Kong is not taxable (except financial institutes) With effect from 22 June 1998, interest income from bank deposits is not taxable if certain conditions are fulfilled (except financial institutes)

Standard Profits Tax Rate 2003/04 Onwards :

• Corporation 17.5%
• Unincorporated businesses 16%

Price :

Company formation + Bank account opening in Hong Kong from € 1699.00

Options :

• Apostille ( Normal postal service (30 days): € 150.00 or Express courier (7 days) : € 300.00)
• HK business address : € 499.00
• Ready made company : € 150.00

Annual fees :

Agency fees + State fees + Tax + Employee return + Annual return = € 749.00

+ accountancy fees (if activity) from € 549.00 depending of C.A, activity etc…)

You have also the choice to choose your own accountant in HK.

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