Hong Kong is one of the most famous countries in the world for an international company. Hong Kong is not a zero-tax location, but a low tax area. It also has a very simple system for performing tax returns and the like.
5 advantages of Hong Kong as a country for business:
- No taxation of capital extraction
- No withholding tax on dividends
- Tax free royalty and consultant income
- Low corporate tax
- Confidential ownership can provide anonymity with representative.
Tax rates in Hong Kong
Hong Kong is a good location for your international company thanks to its integration of sensible company setup packages. Hong Kong has a double taxation agreement with many jurisdictions which is attractive to some businesses.
Hong Kong has the following tax rates:
- 16.5 percent for corporations
- 15 percent for non-registered companies
- 2-17 percent on wages and pensions
- There is no capital gains tax and no inheritance tax in Hong Kong.
Territorial tax system
One of the advantages of Hong Kong is the territorial taxation, meaning only profits and income earned within Hong Kong is taxed. Overseas investment income and wages can therefore be totally exempt from local income tax. You can find out how much you will have to pay in income tax. Hong Kong lets you go through a pre-approval procedure that informs you whether the authorities will tax your income or not.
High personal deduction
Most foreigners living in Hong Kong will only be taxed on their local income from employment or other earnings. Most residents in Hong Kong pay no taxes thanks to the high personal tax deduction, although foreigners (expats) with high salaries are subject to a fixed tax rate of 15 percent. But if you are only in Hong Kong for a maximum of 60 days per year, you will not be taxed at all.
Strict entry requirements
The disadvantage of using Hong Kong are their strict entry requirements. Unless you have an employment contract (and a corresponding Employment Visa), your best option is either to enter with an Investment Visa or Capital Investment Group Visa where you are part of an investment group.
Investment Visas are for individuals wanting to establish a business in Hong Kong, which would then boost the economy and employ locals.
The most common solution is a Capital Investment Group Visa, which allows you to stay by investing in certain approved investments.
You used to have to be in the possession of HK $6.5 million (about £650,000) in “permissible investment assets” in order to qualify for entry. This has since increased to HK $10 million (about £1,000,000).
Real estate is not included in the list of permissible investment assets.
Read more about Hong Kong on Wikipedia