These days, more company owners and investors have decided to set up their companies in other countries, such as Hong Kong. 2019 The World Bank ranked Hong Kong as the fourth easiest country to do business in. The main causes of this trend are gaining benefits from tax shelters and facilitating entry into foreign markets.
Hong Kong is often rated as one of the best places for forming a company in Hong Kong because it has an excellent reputation for matters that are important to companies.
Benefit 1: Productive Workforce
Workers in Hong Kong are active, versatile, and highly trained. This would automatically mean that the availability of competent workers would be high. A Hong Kong company would not face a language barrier so hard since English is its second primary language.
Hong Kong boasts a highly educated, talented, and trained workforce. Workers drawn from this local talent pool include seasoned individuals and entrepreneurs. They are referred to as understanding the business culture in rapidly developing cities on the Mainland very well.
Staff members are identified as being hardworking, competitive, and determined to excel. Because of the close relations with China, most of the workforce can speak Mandarin and Cantonese fluently, even though English is used in commerce.
Benefit 2: Free Trade Policy
In January 2004, the CEPA between Hong Kong and the People’s Republic of China was implemented. Under the bilateral free trade agreement of CEPA , all items made in Hong Kong and imported to mainland China will be non-tariffed.
A Certificate of Hong Kong Origin must accompany every shipment of products bound for mainland China if they are to enjoy tariff-free status. One of the five Government Approved Certification Organizations, the Trade and Industry Department, issues this. The four organizations recognized by the government as certification bodies are the following:
- the Federation of Hong Kong Industries
- the Indian Chamber of Hong Kong
- the Chinese General Chamber,
- the Chinese Manufacturers Association
You get zero tariffs, and CEPA makes it easy and fast to work with qualified service providers in Hong Kong. In areas including promoting trade and investment, streamlining customs processing, and increasing regulatory clarity, this serves to ease the way for investment and commerce between Hong Kong and Mainland China. So, it’s a great time to form a company in Hong Kong since the Free Trade Policy makes it easier to trade and invest.
Benefit 3: Low Taxes
Hong Kong has one of the world’s most tax-friendly regimes , which is great news for businesses and people. There are three separate forms of direct taxes, and taxpayers may lower their out-of-pocket costs thanks to many tax breaks.
- Corporate income is subject to a two-pronged profits tax: an 8.25% rate for the first HKD2 million in assessable profits and a 16.5% rate for profits over that amount. Tax rates of 7.5% and 15% are in place for partnerships and sole proprietorships, which are considered unincorporated enterprises.
- Payroll tax at the usual rate of fifteen percent
- Tax on real estate at 15%
- You won’t have to worry about paying sales tax, value-added tax, withholding tax on earnings and interest, capital gains tax, inheritance tax, worldwide tax, or wine duty.
Hong Kong levies a corporate income tax on all earnings earned in or received from Hong Kong-based trade, profession, or company, except capital asset sales. As a result, residents and non-residents are treated equally. Consequently, a Hong Kong resident may receive their overseas earnings tax-free in Hong Kong, regardless of where they are sent.
Benefit 4: Convenient Location in the Continent
Because of its central location in Asia, Hong Kong is an ideal trading post. Most markets in the Asia-Pacific area can be reached by a flight that takes five to eight hours. Mainland China’s southeast coast, flanked by the Pearl River Delta, makes Hong Kong is an ideal location to access the Chinese mainland market. This makes it possible to take a trip from and to Hong Kong to other important Chinese cities, such as Shanghai and Beijing, in only one day.
One hundred airlines fly into Hong Kong International Airport (HKIA) , making it the eighth busiest airport in the world. HKIA serves more than 180 locations, including important cities in the Americas, Europe, the Middle East, and Asia Pacific, as well as over 40 locations in mainland China.
Fast maritime transit to and from six mainland ports is provided by cross-border ferries, and the bus service serves over 90 cities and towns throughout the PRD. No stranger to plaudits and honors, the HKIA is a perennial contender for “Best Airport in the World” status. Hong Kong is a large port in terms of the number of people transported, cargo handled, and the tonnage of ships utilizing its facilities. It is also the center of all nautical activity in southern China.
Benefit 5: Government Businesses Assistance
The government and private sector of Hong Kong have launched a variety of programs meant to assist businesses like yours in developing and improving in all areas. There are a lot of financial incentives and programs designed to help small and medium-sized enterprises (SMEs) develop . Groups like the Hong Kong Trade Development Council facilitate trade between Hong Kong and the Mainland and other Asian countries, and vice versa.
Hong Kong companies are encouraged by the Hong Kong Productivity Council to adopt more efficient practices and raise productivity levels. One one-stop shop for all things related to small and medium-sized enterprises (SMEs) is the Support and Consultation Centre. Several Government Funding Schemes provide financial aid.
Hong Kong has considerable independence except for foreign and military policy issues. Hong Kong’s political, economic, and judicial institutions are preserved, as stated in the Basic Law and the Sino-British Joint Declaration (1984). The political stability, pro-business administration , and free market principles of Hong Kong are the main reasons why most companies opt to establish operations there. It is also said to be one of the world’s least corrupt economies. The ICAC was established in Hong Kong to explicitly combat corruption in the public and private sectors.
Benefit 6: Liberal Immigration Policy
Regarding immigration, Hong Kong is rather lenient. Hong Kong does not need a visa for citizens from approximately 170 nations and territories for stays between 7 and 180 days. With a tourist visa or entrance permission, short-term travelers to Hong Kong may engage in business conversations and execute contracts.
To accommodate business owners who are considering relocating to Hong Kong or who are looking to recruit overseas experts to join their team, the government has implemented suitable work visa arrangements. Professionals from other countries, as well as those from the mainland and those looking to invest , may take advantage of several different programs and policies.
The bearer of a dependent visa is authorized to engage in almost any legitimate occupation in Hong Kong. The Work and Business Visa Schemes in Hong Kong provide more details.
Benefit 7: 100% Foreign Ownership
Company registration charges are minimal, creating a company in Hong Kong is straightforward, and the climate is conducive to business growth. Both domestic and foreign investments are free to flow in either direction, and ownership of businesses is not contingent on a person’s nationality. Non -residents can invest in almost any company and eventually hold all the shares. Small and medium-sized enterprises (SMEs) and trade firms usually go with the Private Limited corporation structure when forming a corporation in Hong Kong. You may form a corporation with any share capital at the Companies Registry (Hong Kong). The bare minimum quantity of paid-up capital is not required by law.
The director might serve as the only shareholder of the corporation, and stockholders need not be Hong Kong citizens. You may form a private limited company in as little as one or two business days, and there are even instantaneous options for pre-registered corporations. Any fully established firm in Hong Kong, including a private limited company, is eligible for all the tax advantages and discounts offered by the Closer Economic Partnership Arrangement (CEPA) , a free trade deal with Mainland China.
Benefit 8: Relatively Easier Setup
The reputation of Hong Kong as an easy location to establish a company is well-deserved. It would take around two weeks to launch your business in Hong Kong. Business premises are easy to find, and the infrastructure is highly rated. There are strict laws to protect the intellectual property. Disputes can be handled in various ways for companies.
It lures foreign investors due to its business-friendly, straightforward tax regime. Foreigners who want to set up a business in Hong Kong do not have much hassle when trying to get their work visas. Hong Kong’s economy has been a leading regional player, and the ideas of free business, free trade, and open markets have made this possible. After 20 years, the economy has grown very well, with GDP increasing by more than 5% yearly.
No controls are imposed on foreign currency control, foreign ownership, or investment outflow-in flow. Hong Kong is business-friendly due to its stable banking system, low public indebtedness, strong legal frameworks, large reserves of foreign currency, and effective anti- corruption programs.
Furthermore, the CEPA is a free trade agreement between the Central People’s Government and Hong Kong Administrative Region governments . It allows Hong Kong’s established businesses, including foreign firms, preferential access to the market of Mainland China.
There is no export duty to the Mainland for any items certified as having Hong Kong origin. In addition, service providers in 40 designated areas of Hong Kong may enjoy special treatment while forming a company in Hong Kong on the Mainland.
Benefit 9: Direct Access to Greater Bay Area (GBA)
Hong Kong has a very dynamic and cooperative commercial relationship with the Chinese mainland due to its status as a Special Administrative Region (SAR) of China. It serves as the principal offshore capital-raising hub and channel for foreign investment in the nation.
To drive development and innovation in China’s long-established center of research and industry, the government first revealed the Greater Bay Area (GBA ) concept in 2016. Aiming to facilitate the movement of goods, people, and capital within the Pearl River Delta, this The ambitious national plan seeks to integrate the two Special Administrative Regions of Macao and Hong Kong as well as the nine cities in the delta: Huizhou, Zhongshan, Guangzhou, Dongguan, Jiangmen, Zhuhai, Foshan, Shenzhen, and Zhaoqing.
With a total of 72 million inhabitants and a current GDP of around USD 1.65 trillion, the GBA has surpassed all other metropolitan areas in terms of population and economic power. It offers a potential market ten times larger than Hong Kong and is the eleventh biggest economy in the world, behind only Russia and Canada. About fourteen percent of China’s gross domestic product comes from the Guangdong Province, home to the two megacities Guangzhou and Shenzhen.
Hong Kong is well-known as a global financial center and the most welcoming city in the Greater Bay Area (GBA). The Innovation & Technology Fund provides substantial funding to the following sectors: biomedicine, electronics, renewable energy, “smart city” and Internet of Things (IoT) technologies, artificial intelligence and robotics, and financial technology. These sectors are the primary areas of concentration for Hong Kong within the GBA.
Benefit 10: Good Quality of Life and Work Balance
Most international company owners and professionals who shop in Hong Kong bring their families. Consequently, most people in Hong Kong are thinking about improving their quality of life in terms of social conditions, housing, education, and the cost of living.
- Cosmopolitanism is reflected in the social and ethnic fabric, a unique combination of people and cultures.
- Unfortunately, the city’s high levels of polluted air and heavy traffic belie its sophisticated and Westernized reputation.
- Rental prices for homes in Hong Kong are high, on par with those in other big global cities like New York and London.
- Because of its abundance of authentic regional Chinese cuisines, Hong Kong is often called China’s culinary capital. Additionally, it caters to foreign preferences with equally superb gourmet offerings.
- The public transit system is connected, spotless, secure, fast, dependable, and, most importantly, inexpensive. Hong Kong’s extensive public transportation system makes getting around a breeze.
- Several foreign schools in Hong Kong adhere strictly to the curricula of their native countries. Hong Kong offers its inhabitants nine years of free compulsory education, with a strong focus on education, as the city strives to transition into a knowledge-based economy.
- Professionals and first-rate public and private healthcare facilities are available in Hong Kong. Cleanliness, efficiency, safety, and cost-effectiveness characterize the healthcare setting.
- Hong Kong is known as the “city that never sleeps” due to its bustling nightlife and plenty of leisure opportunities.
- Hong Kong is seen by many as a safe place because of its low crime rates.
Conclusion
Having read this article, you should be aware of all the benefits associated with company registration in Hong Kong – from a favorable tax climate to easy incorporation and accessibility, as well as high worker productivity. SetupHK will be helpful if you need a helping hand while registering and promoting your business in Hong Kong. Together with our customers, we will develop a strategy to take your business rocketing at the cheapest possible price.
