BWI: GuideMeHongKong.com Identifies Key Advantages for Incorporating in Hong Kong

Press release from Business Wire India
Source: GuideMeHongKong.com
Tuesday, November 09, 2010 10:30 AM IST (05:00 AM GMT)
Editors: General: Economy; Business: Accounting & management consultancy services, Banking & financial services, Business services, Financial Analyst
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GuideMeHongKong.com Identifies Key Advantages for Incorporating in Hong Kong
An in-depth analysis conducted by GuideMeHongKong.com identifies the key benefits that drive foreign companies and entrepreneurs to incorporate a company in Hong Kong

Hong Kong S.A.R, Tuesday, November 09, 2010 -- (Business Wire India) -- A recent analysis by www.GuideMeHongKong.com - a leading Hong Kong business incorporation portal, has identified key reasons why foreign companies and investors prefer to incorporate in Hong Kong.

According to the analysis, Hong Kong - the Special Administrative Region of China is gaining a lot of traction from international enterprises and investors as a preferred gateway to the world's biggest and fastest growing economy, China. Excluding a few sensitive sectors such as banking, broadcasting and publication, Hong Kong remains true to its reputation as the world's freest economy, as it allows foreign investment and ownership of companies in almost all sectors. Hong Kong offshore company formation activity has surged in the recent past and is expected to grow strongly in the near future as the East gains dominance in the global economic landscape. The top reasons identified by GuideMeHongKong.com's analysis include:

#1: Hong Kong taxes are the lowest in the region; corporate taxable profits are charged only 16.5%. The effective tax rates are much lower than the headline rates after allowing deductions. Since Hong Kong follows a territorial policy of taxation, companies are taxed only on income that is derived from Hong Kong and profits earned outside Hong Kong are exempted from tax. Moreover, Hong Kong does not levy VAT, tax on capital gains or tax on dividends making it a highly advantageous location to set up a company. Profits made overseas are exempted from taxation in Hong Kong even if it is remitted into the jurisdiction. A Hong Kong entity's bank account can accumulate income and funds, free of tax and can also earn interest on the same. Moreover, trading companies can capitalize on its low tax rate, by re-invoicing and marking-up their overseas exports from their Hong Kong offices.

#2: Hong Kong, irrespective of its lowest tax rates, is considered a legitimate business center with thriving trade and an active financial industry. Thus Hong Kong companies are not perceived as a vehicle to escape tax but as genuine business entities with strong commercial goals. The OECD has itself endorsed Hong Kong's commitment to OECD standards.

#3: Hong Kong is absolutely receptive to foreign ownership of companies. As an international business center the jurisdiction does not have any stipulation regarding the nationality or the residency of shareholders and directors. A minimum of one director and shareholder is required to form a company in Hong Kong and there is no cap on the maximum numbers. Furthermore, 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.

#4: Hong Kong is a better route to enter China, which is relatively closed to foreign companies with its innumerous restrictive policies. In order to circumvent the hurdles of entering China, foreign enterprises and investors choose to form Hong Kong companies. In addition to easing the way into China, a Hong Kong entity acting as a holding company can also help to limit the liabilities of the foreign parent company. China is replete with many regulatory barriers preventing the selling or restructuring of a China investment, but it can be easier when these changes are done at the holding company level.

#5: Hong Kong has a wide spanning network of trade agreements and avoidance of double taxation agreements with many key countries. More specifically, Hong Kong's FTA and DTA with China open a huge market for Hong Kong companies. Because of the double taxation agreement existing between Hong Kong and China the withholding tax on dividends payable by a Chinese subsidiary to a Hong Kong parent company is reduced from 20% to 5%. If the Hong Kong Company procures and sells goods manufactured by its China subsidiary then only 50% of the profits thus generated are treated as sourced in Hong Kong and subjected to tax. The Closer Economic Partnership Arrangement (CEPA) between mainland China and Hong Kong grants easier access to mainland markets for made-in Hong Kong products and Hong Kong domiciled companies in various sectors.

Apart from the aforementioned reasons there are more intangible advantages for a Hong Kong company. It has a cosmopolitan culture, high living standards, versatile workforce and ultra modern facilities of any developed economy. These factors make company formation as well its operations by a competent team a feasible task.

Commenting on the analysis, Mr. Andrew Chen - a senior member of editorial team at GuideMeHongKong.com said "Since UK parted ways in 1997, Hong Kong has retained its autonomous status and under the 'one country two systems' concept it has fared well in most of the international surveys. Hong Kong has been ranked as the freest economy in the world by the Index of Economic Freedom for 15 consecutive years. 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. It continues to be Asia's second largest and is the world's seventh largest FDI recipient. This reflects on the investment climate and investor's confidence in Hong Kong. The ongoing regulatory requirements are also very simple and straightforward".

For more information about doing business in Hong Kong, refer to http://www.GuideMeHongKong.com.

About GuideMeHongKong.com

GuideMeHongKong.com is a Hong Kong focused business portal that provides Hong Kong company incorporation, taxation, and immigration related information for organizations and individuals worldwide.


CONTACT DETAILS
Andrew Chen, GuideMeHongKong.com, +65-6222-7445, contact@guidemehongkong.com

KEYWORDS
ECONOMY, CONSULTANCY SERVICES, BANKING, BUSINESS SERVICES, Financial Analyst

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