What is an offshore company?
An offshore company is a company that conducts zero or insubstantial business activity in the region where they are incorporated. An offshore company must be incorporated as an entity and its incorporators are foreigners.
Why choose to incorporate an offshore company in Hong Kong?
There are several reasons that may lead to the choice of setting up an offshore company in Hong Kong. Below are some:
- To protect your asset.
- To participate in offshore banking activities.
- It allows one to engage in investment activities.
- It avails an investor an opportunity to participate in international trade.
- It avails you a means to legally reduce international taxation. You will not be taxed on income generated out of your jurisdiction.
Advantages of Hong Kong Offshore Company Incorporation
Incorporating an offshore company in Hong Kong offers the following benefits:
- It is easy to set up because it does not involve a lot of bureaucracy and you are also allowed to have total ownership of the company as a foreign investor.
- Economic and political stability
- There are lower corporate tax rates compared to other regions of Asia and even worldwide.
- There are no controls on foreign exchange.
- You can use nominee directors and shareholders for privacy concerns.
- Hong Kong offers easy access to Mainland China, thus providing an opportunity for more markets.
- Modern legislation system.
Incorporating a new Hong Kong offshore company
Incorporating a new Hong Kong offshore company is one of the two options available for having an offshore company in Hong Kong. The other option is through the purchase of a shelf company. The process to incorporate an offshore company is easy, simple, and fast. You can incorporate an offshore company within 4 – 7 working days. You can also choose to incorporate it as a Private Limited Liability Company (PLLC) in case you want to use a specific name.
Things to know before incorporating a Hong Kong offshore company
- You will be mandated to disclose the details of shareholders and directors via the Online Companies Registrar. The good news is that you can go around this by using a nominee director and shareholder in case you want to protect the identities of your directors and shareholders.
- Most banks require your physical presence when opening a corporate bank account.
- You are mandated to audit and submit financial statements annually.
- To be exempt from corporate income tax in Hong Kong, you will have to register your company as a “Paper Company.” A paper company cannot have any staff.
- All official documents are translated into the two officially recognized languages, which are English and Chinese.
Requirements for incorporating an Offshore Company in Hong Kong
An offshore company names
Have your proposed offshore company name approved by the company Registrar of Hong Kong before it is incorporated.
Put directors in place
There must be at least one director in the company. However, there is an unlimited number when it comes to the maximum number of directors. A director can either be a natural person or a company from any of the acceptable countries. In the absence of such a director, you can enlist the services of a nominee director.
Have at least one shareholder
A shareholder in the offshore company can be a natural person or a company. You are mandated to have at least one shareholder. You can have up to a maximum of 50 shareholders from any country. The main director can also be the main shareholder and there are no restrictions as to whether he/she is a resident or a foreign citizen.
You must employ a company secretary
You are mandated to enlist the services of a company secretary. He/she can be a resident or a corporate resident. The main director or shareholder of an offshore company cannot double up as a company secretary.
You are required to provide a Hong Kong physical address which is not a post office number.
As an offshore company, you must deposit any amount of share capital into the bank account of your company. You must however not deposit bearer shares.
Once your offshore company has been incorporated, you must continue to comply with a certain set of regulations put in place for all Hong Kong companies. These compliances are:
- Annual auditing of company accounts
- Filling of tax returns to the Department of Inland Revenue.
- Informing the Registrar of companies about any changes made to the company in terms of membership.
- Holding Annual General Meetings (AGMs) at the appropriate time.
- File your company’s annual returns.
- Renew your Certificate of Business Registration.
- Having a proper record of all your accounting businesses and that of your documents of the business.
Steps involved in incorporating an Offshore Company in Hong Kong
Incorporating an offshore company involves two steps. Make sure your offshore company name is approved. Then, you are mandated to submit the following documents to the registrar of companies for the incorporation of your offshore company:
- Your Incorporation application form
- Your company Articles.
- The proof of overseas residential address.
- Present a letter from the bank for each shareholder or director who is a non-resident.
- Present a copy of the Identity Card for your local shareholder or director if you have such locals as part of your team.
- Present the registration documents of your parent company.
Post Incorporation Requirements
After incorporating an offshore company, you are required to do the following:
1. File your documents at the Company Registry within 14 days (about 2 weeks) of incorporation. These documents are:
- Appointment notification letters for your secretary and your directors.
- Director’s proof of consent for the position.
- Notification of a registered address and,
- Any other document as requested by the registrar of companies.
2. Open a corporate bank account in any major Hong Kong banks. Most of these banks need you to be physically present during the opening of the corporate bank account.
3. Register your offshore company with the Department of Inland Revenue within the first month of incorporation after which the department presents you a Certificate of Business Registration.
4. Obtain relevant licenses and permits for all your business dealings, where applicable, before starting your business activity. It is good to note that each license and permit have their prerequisite which must be accomplished before being issued.
Businesses associated with offshore companies
An offshore company can engage in activities such as import and export businesses, international businesses, internet businesses, investment in stock, forex, securities, and commodities. It can also act as a holding company for the parent company.
The most advantageous thing with incorporating an offshore company in Hong Kong is that you get to enjoy zero taxation on all income generated outside of Hong Kong. Even though income generated within Hong Kong is taxed, the corporate tax rate is only 16.5%. Also, the incorporation process is easy and fast.
Why setup a Hong Kong Offshore Company? FAQs
How will I know that my offshore company incorporation process is complete and am ready to commence business activities?
You will be given an incorporation certificate, a rubber stamp, a company seal, and share certificates, among other things.
You are mandated to enlist the help of a local agent/firm to incorporate an offshore company. The firm is responsible for taking you through the requirements and steps, answering your concerns, and filling your application. The firm will also assist you to locate the Inland Revenue Department in case you have other concerns.
The agent/firm may also provide you with the registered address needed during incorporation, and fax, and other services like fax or email forwarding.
No, you cannot change the name of your company. To do so will force your company to be deregistered and you will have to incorporate it afresh. Also, another reason is that the company name approval is the first step of company incorporation, it must be approved for use.
After incorporating my Hong Kong offshore company, am I allowed to make any changes to the company composition?
Yes. You can make changes to the company composition in terms of members, shareholders, and the rest. However, you must notify the changes to the registrar of companies.
You can incorporate an offshore company by registering it as a new company or,by purchasing a Hong Kong shelf company.