1. HONG
KONG
COMPANY
INCORPORATION
–
WHITE
PAPER
Hong
Kong
has
evolved
into
one
of
the
important
business
centers
in
the
region.
Located
on
the
South
East
Coast
of
China
it
became
part
of
China
on
1
July,
1997.
It
is
a
Special
Administrative
Region
(SAR)
within
the
People’s
Republic
of
China
with
its
own
legislature
and
courts.
Despite
the
presence
of
business
centers
such
as
Shanghai,
Hong
Kong
continues
to
gain
popularity
as
an
offshore
jurisdiction
and
commercial
hub
because
of
the
economic
and
political
stability
and
simple
and
straightforward
tax
regime
and
legislative
system.
A
Hong
Kong
offshore
company
is
a
very
popular
vehicle
for
conducting
offshore
banking
activities,
international
trade,
investment
activities,
and
for
asset
protection.
Some
of
the
key
benefits
of
Hong
Kong
as
an
offshore
jurisdiction
include:
Favorable
Tax
regime:
Hong
Kong
follows
a
territorial
policy
of
taxation,
the
companies
are
taxed
only
on
the
income
that
is
derived
from
Hong
Kong
and
profits
earned
beyond
the
shores
of
Hong
Kong
are
exempted
from
tax.
Moreover
there
is
no
VAT,
or
capital
gains
tax
or
tax
on
dividends
-‐
this
makes
it
a
highly
desirable
jurisdiction.
Thus,
a
Hong
Kong
offshore
company
that
generates
income
from
abroad
practically
pays
zero
tax.
Overseas
profits
are
exempt
from
taxation
in
Hong
Kong
even
if
it
is
brought
back
to
the
jurisdiction.
Even
for
revenue
generated
from
Hong
Kong
the
tax
applicable
on
taxable
profit
is
just
16.5%,
one
of
the
lowest
in
the
region.
After
deductions
and
exemption
the
effective
tax
rate
will
be
much
lower
than
the
headline
tax
rate.
Positive
Image:
Hong
Kong
companies
are
not
perceived
as
offshore
tax
haven
as
Hong
Kong
is
not
regarded
as
a
tax
shelter.
In
an
article
published
in
May
2009,
the
Director
of
the
OECD’s
Centre
for
Tax
Policy
and
Administration
commended
Hong
Kong’s
efforts
to
comply
with
the
international
standards
on
tax
transparency
and
exchange
of
information
while
pointing
out
that
Hong
Kong
is
not
a
tax
haven
according
to
the
OECD
criteria.
Subsequently,
in
its
September
2009
report,
the
OECD
vindicated
again
that
Hong
Kong
is
not
a
tax
haven
and
2. recognised
Hong
Kong’s
commitments
to
the
OECD
standards.
Therefore
a
Hong
Kong
Offshore
company
commands
a
respectable
image.
Strategic
Location:
Hong
Kong
is
considered
as
the
gateway
to
China,
the
world’s
biggest
market
and
facilitates
easy
access
to
mainland
China
and
all
the
key
markets
of
Asia,
most
of
the
Asian
cities
are
within
four
hours
flying
radius.
Free
economy:
Hong
Kong
is
regarded
as
the
world’s
most
free
economy
with
the
lack
of
restrictions
and
government
interventions
in
trade.
The
economic
policy
allows
free
inflow
and
outflow
of
capital
and
there
is
no
exchange
control.
The
jurisdiction
allows
100%
foreign
ownership
of
companies.
It
has
been
ranked
as
the
freest
in
the
world
by
the
Index
of
Economic
Freedom
for
15
consecutive
years.
Political
Stability:
Hong
Kong
a
former
British
Dependent
Territory
became
a
Special
Administrative
Region
of
People’s
Republic
of
China
in
July
1997.
Since
then
Hong
Kong
has
retained
its
autonomous
status
and
under
the
“one
country
two
systems”
concept,
the
Chinese
government
does
not
interfere
with
the
governance
of
Hong
Kong
which
has
flourished
by
leaps
and
bounds
with
a
significant
share
of
the
world’s
largest
banks,
corporations
and
high
net
worth
individuals.
World
Investment
Report
2009
released
by
the
United
Nations
Conference
on
Trade
and
Development
(UNCTAD)
reaffirmed
Hong
Kong
as
one
of
the
world’s
and
Asia’s
most
attractive
destinations
for
FDI.
Despite
the
tough
economic
situation
Hong
Kong
attracted
US$63
billion
inward
investment
in
2008
and
continues
to
be
Asia’s
second
largest
and
is
the
world’s
seventh
largest
FDI
recipient.
This
reflects
the
investment
climate
and
investor’s
confidence
which
are
a
direct
outcome
of
political
stability.
Strong
Economy:
With
a
population
of
7
million
and
foreign
exchange
reserves
of
over
US$140
billion
the
economy
of
Hong
Kong
is
resilient
and
vibrant.
The
Hong
Kong
Stock
Exchange
is
Asia’s
second
largest
stock
exchange
in
terms
of
market
capitalization,
behind
the
Tokyo
Stock
Exchange.
As
of
31
December
2007,
the
Hong
Kong
Stock
Exchange
had
1,241
listed
companies
with
a
combined
market
capitalization
of
$2.7
trillion.
3. Absence
of
Nationality
or
Residency
Limitation:
As
an
international
business
center
the
jurisdiction
does
not
have
any
stipulation
regarding
the
nationality
or
the
residency
of
share
holders
and
directors.
A
minimum
of
one
director
and
shareholder
is
required
and
there
is
no
cap
on
the
maximum
numbers
and
a
foreigner
who
is
not
residing
in
Hong
Kong
can
act
as
the
director.
The
director
and
shareholder
can
be
the
same
person.
However
the
company
secretary
must
be
a
resident
individual
or
a
resident
company.
Minimum
Share
Capital:
The
minimum
paid
up
capital
is
HK
$1
and
recommended
share
capital
is
HK$10,000.
Bearer
shares
are
not
allowed.
Filing
of
Returns:
If
a
company
does
not
do
any
business
in
Hong
Kong,
which
is
usually
the
case
with
offshore
companies,
there
is
generally
no
requirement
to
file
financial
statements
and
no
audit
is
required.
It
is
only
necessary
to
file
an
annual
Declaration
of
“No
business
activity
in
Hong
Kong.”
However
if
the
offshore
company
has
an
office
in
Hong
Kong
or
has
employees
in
Hong
Kong
then
it
is
required
to
file
audited
financial
accounts.
Moreover
the
government
reserves
the
right
to
request
for
filing
annual
statements
at
a
short
notice
any
time
therefore
it
is
recommended
to
maintain
the
books
up-‐to-‐date.
Provision
for
Anonymity:
The
names
and
details
of
the
Directors
and
Shareholders
are
disclosed
in
public
records
however
the
nominee
provision
could
be
used
in
order
to
maintain
anonymity.
Regulatory
Compliance:
The
other
regulatory
compliance
are
simple
and
is
similar
to
any
resident
companies
such
as
maintenance
of
proper
records,
renewal
of
licenses,
notifying
any
changes
in
the
registered
details
etc.
Investment
Environment:
Apart
from
certain
narrow
areas
(for
example,
broadcasting),
foreign
investment
is
not
subject
to
special
regulatory
regimes
or
requirements.
Funds
from
profit
or
capital
accounts
can
be
freely
repatriated
and
remitted
overseas,
and
there
is
no
foreign
exchange
control.
4.
The
general
tax
environment
in
Hong
Kong
is
favourable
to
investors
and
in
addition
there
are
a
number
of
exemptions
from
tax
or
allowances
designed
to
stimulate
particular
industries
or
businesses.
The
most
common
forms
of
business
vehicle
used
by
foreign
companies
are:
● Representative
offices.
● Branches
of
parent
companies.
● Locally
incorporated
subsidiaries
of
parent
companies.
● Partnerships.
● Joint
ventures.
● Trusts.
Registration
formalities.
The
incorporation
of
a
private
company
in
Hong
Kong
is
registered
on
the
filing
of
the
memorandum
of
association
and
articles
of
association.
After
the
constitutional
documents
are
filed
with
(and
a
statement
of
compliance
and
the
prescribed
capital
fee
are
submitted
to)
the
Registrar
of
Companies
(Registrar),
he
issues
a
certificate
of
incorporation
certifying
the
name
and
the
date
of
incorporation
of
the
company.
This
process
takes
about
six
working
days.
Every
person
establishing
a
place
of
business
in
Hong
Kong
must
also
register
with
the
Business
Registration
Office.
Share
capital.
Apart
from
certain
companies
that
are
regulated
(for
example,
banking,
securities
and
insurance),
there
is
no
required
minimum
or
maximum
authorised
capital.
Non-‐cash
consideration.
Shares
can
be
allotted
for
cash,
services
or
other
consideration
such
as
the
transfer
of
property.
The
issued
share
capital
may
be
issued
at
par
value,
partly
paid-‐up
or
paid
at
a
premium.
If
a
company's
articles
of
association
permit,
shares
can
also
be
issued
as
redeemable
shares.
Rights
attaching
to
shares.
The
rights
attaching
to
shares
are
normally
set
out
in
the
company's
memorandum
and
articles
of
association
and
subject
to
the
provisions
of
the
5. Companies
Ordinance.
Foreign
shareholders.
There
is
no
requirement
that
a
shareholder
be
resident
in
Hong
Kong
except
in
certain
narrow
circumstances.
Management
structure.
A
private
company
must
have
at
least
one
director
while
a
public
company
must
have
at
least
two.
Listed
companies
have
more
detailed
obligations
concerning
the
composition
of
their
boards
of
directors.
There
are
no
restrictions
on
foreign
managers.
Directors'
liability.
If
a
director
does
not
comply
with
his
duties
he
may
be
liable
to
civil
or
criminal
proceedings
and
may
be
disqualified
from
acting
as
a
director.
Certain
non-‐
statutory
guidelines
on
directors'
duties
have
been
issued
by
the
Companies
Registry.
Parent
company
liability.
The
parent
company
is
not
liable
for
the
debts
of
its
subsidiary;
its
legal
liability
is
limited
to
the
amount
of
any
unpaid
issued
share
capital.
Reporting
requirements.
A
profit
and
loss
account
and
a
balance
sheet
for
the
company
must
be
audited
by
Hong
Kong
registered
auditors
and
laid
before
the
shareholders
at
a
general
meeting
within
18
months
of
incorporation
and
then
at
least
once
in
every
calendar
year.
Generally,
Hong
Kong
private
companies
with
share
capital
are
not
required
to
file
their
accounts
with
the
Registrar
of
Companies.
In
addition,
an
annual
return
must
be
filed
with
the
Registrar
of
Companies
at
least
once
a
year
(unless
there
has
been
no
change
in
the
filed
particulars
since
the
date
of
the
last
annual
return,
in
which
case
a
certificate
confirming
this
fact
can
be
filed
instead
of
an
annual
return).
A
company
must
also
notify
the
Registrar
of
certain
changes
concerning
the
company
(for
example,
any
change
in
the
directors
or
secretary
or
in
the
filed
particulars
of
any
existing
directors
or
secretary).
Visas
and
work
permits:
Foreign
employees
must
obtain
a
Hong
Kong
employment
visa
6. to
work
in
Hong
Kong.
To
qualify
for
this
visa,
a
person
must
possess
skills,
knowledge
or
experience
relevant
to
the
job
that
is
unavailable
locally.
This
test
can
generally
be
satisfied
in
the
case
of
an
intra-‐company
or
intragroup
transfer.
The
applicant
also
needs
to
nominate
a
sponsor,
which
must
be
a
Hong
Kong
company
or
a
foreign
company
registered
in
Hong
Kong.
The
sponsor
is
usually
the
employer
company.
It
normally
takes
six
weeks
for
the
application
to
be
processed.
The
government
charges
nominal
fee
for
the
visa
if
the
application
is
approved.
Imports
and
exports:
Hong
Kong
does
not
impose
export
tax.
Imports
of
the
following
items
are
taxed
(the
rate
of
taxation
varies
depending
on
the
specific
good
concerned):
● Liquor
with
an
alcoholic
strength
of
more
than
30%
by
volume
measured
at
a
temperature
of
20
degrees
Celsius.
● Tobacco.
● Hydrocarbon
oil.
● Methyl
alcohol
and
any
mixture
containing
methyl
alcohol.
● Motor
vehicles.
Double
Tax
Agreements:
Hong
Kong
has:
● Comprehensive
double
tax
treaties
with
Belgium,
Luxembourg,
the
People's
Republic
of
China
(PRC),
Thailand
and
Vietnam,
and
double
tax
treaties
have
been
signed
with
Austria,
Brunei,
Hungary,
Indonesia,
Ireland,
Kuwait,
Liechtenstein,
The
Netherlands
and
the
UK
but
are
not
yet
in
effect.
● Double
tax
arrangements
concerning
airline
and
shipping
income
with
Denmark,
Germany,
The
Netherlands,
Norway,
Singapore,
Sri
Lanka
and
the
UK.
● Double
tax
arrangements
concerning
airline
income
with
Bangladesh,
Canada,
Croatia,
Ethiopia,
Finland,
Iceland,
Israel,
Jordan,
Kenya,
Korea,
Kuwait,
Mauritius,
Mexico,
New
Zealand,
the
Russian
Federation,
Sweden
and
Switzerland.
Double
tax
arrangements
concerning
airline
income
have
been
signed
with
Estonia,
Fiji,
Laos,
Maldives
and
Macau,
but
are
not
yet
in
effect.
● Double
tax
arrangements
concerning
shipping
income
with
the
US.
7.
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The
information
in
this
document
is
of
a
general
nature
and
is
not
intended
to
address
the
circumstances
of
any
particular
individual
or
entity.
There
can
be
no
guarantee
that
the
information
in
this
document
is
accurate
as
of
the
date
it
is
received,or
that
it
will
continue
to
be
accuratein
the
future.
No
individual
or
entity
should
act
on
the
contents
herein
without
appropriate
professional
advice
and
only
after
a
complete
examination
of
their
particular
circumstances.