Hong Kong

  • Posted By : Admin
  • March 29, 2018
  • Tax havens
  • 0 Comments

Hong Kong is the fourth largest financial center in the world and is one of the strongest economies in the world. Hong Kong is a leading offshore financial center that specializes in e-commerce, stock exchange investments, currencies and real estate investments. Hong Kong is a country completely independent from the United Kingdom since 1997 and is considered by China as a special administrative region.

General information

Capital
Hong Kong
Official language
Chinese / English
Area
1,108 km2
Form of government
Special administrative region
Currency
Hong Kong Dollar (HKD)
UTC time zone
UTC + 8
Legal system
Legislation based on English Common law


Taxes for non-residents in Hong Kong

Hong Kong maintains favorable tax laws for foreign investment in the country. It is considered a tax haven and natural and legal persons that do not reside in the country and whose incomes don´t not come from its territory are not obliged to pay tax. Investors who decide to open a bank account in Hong Kong or register a company will not pay taxes such as rent, corporation taxes, VAT, inheritance, donations and will not suffer the dreaded tax deductions for subsequent years. Investors who decide to invest in Dominica and repatriate the money to their country of residence can save on taxes through double taxation agreements.

Characteristics of Hong Kong Companies

Types of companies
Public Limited Company and Private Limited Company are two types of most common forms of companies in Hong Kong.
Share capital
Minimum share capital depends on the type of company but in most cases it is equal to 1,000 HKD, not paid up when the company is registered.
Constitution time
12 days
Taxes
Taxes are applied only in cases when the company's income comes from the territory of Hong Kong.
Directors
1 director minimum. The director can be an individual resident of any country. The resident secretary is required in Hong Kong.
Shareholders
1 shareholder minimum. The shareholders can be individuals or companies with residence in any country.
Shares
Registered. Bearer shares are not allowed.
Legal address
The company must have its legal address on the territory of the country.
Privacy
High level. The law recognizes as the offense the disclosure of any type of official information related to the company and its beneficiary except for the information requested by judicial order on the criminal activities of the company. Hong Kong commercial registry is not public.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
Once a year, the company is obliged to present a declaration in order to confirm the identity of the shareholders and directors.

Financial system in Hong Kong

Financial services
Banks in Hong Kong are specialized in electronic commerce, payment processing, games and real estate investments. The client may request any type of financial services: current accounts, savings accounts, virtual pos, credit cards, foreign currency accounts, investment accounts in the stock market, credits etc.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Banks in Hong Kong can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Hong Kong banks cover client´s deposits up to 50.000 USD.

Automatic information exchange in Hong Kong

Hong Kong has signed the automatic exchange of information treaty that has entered into force on January 1 of 2018 but has not signed a bilateral agreement with any country.

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.


The treaty of automatic exchange of information does not affect the fiscal status of the country, that is, if the tax laws in Hong Kong establish that people and non-resident companies pay 0% of taxes, the signing of the treaty will not make it pay taxes in Hong Kong. The treaty of automatic exchange of information is presenting many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. What does this mean? If, for example, India is interested in exchanging information with Hong Kong but Hong Kong is not interested in reporting information to India, there will be NO information exchange and clients privacy will be protected. Currently, 29-03-2018 Hong Kong has not signed any bilateral agreement to automatically exchange information. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Hong Kong

Year 2017
No bilateral agreement has been signed for this year.
Year 2018
No bilateral agreement has been signed for this year.


The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Using offshore jurisdictions what can be achieved is a reduction and postponement of tax payments. As a general rule high-tax countries force natural and legal persons to declare all the world's income. But what happens when you have an offshore company and you do not divide dividends or have gone bankrupt? For example, a person has a company and account in Hong Kong, the company has generated annual benefits and the final beneficiary doesn’t want to repatriate them to his country of residence. So what happens? The answer is very simple: there will not be any kind of tax payment until the benefits obtained from Hong Kong reach the territory of a tax residence of the final beneficiary. Therefore, if you are required to report benefits obtained from abroad, it is advisable to inform your tax agency so when you will be offered a tax advantage in your country of residence to repatriate them.

Advantages of Hong Kong

Hong Kong is one of the best offshore jurisdictions to invest for the following reasons: 

  • No tax obligations if the commercial activity is not developed in Hong Kong.
  • Legal security guaranteed by law. 
  • Privacy.
  • Jurisdiction specializing in e-commerce, stock exchange investments, foreign currency exchange investments and real estate investments.
  • Good telecommunications infrastructure. 
  • There is no restriction by nationality. 
  • Best geographical location in the world for commerce.
  • Economically stable financial center.