How to Use Hong Kong Companies in 2021 to Protect Your Assets and Reduce Taxes
Hong Kong Companies can still offer several advantages over other jurisdictions. In general Hong Kong companies offer more credibility than companies from more traditional offshore jurisdictions.
So, just what re the advantages of Hong Kong companies? Hong Kong is a major trading hub. It’s not blacklisted anywhere or known as an offshore jurisdiction. A Hong Kong Company can easily trade and open bank accounts around the world without any problem.
Hong Kong is home to some of the world’s best and most efficient banks. You can hold as many foreign currencies as you want and exchange them whenever you need to.
Hong Kong doesn’t tax foreign profits of companies. There’s no difference between local controlled companies and foreign controlled companies. There are no taxes on dividends or capital gains either. Any profits made in Hong Kong are taxed at 16.5%.
Hong Kong Companies are used for:
Hong Kong is an ideal banking jurisdiction. You can bank in whatever currency you want. The banks are highly efficient. You can have precious metal accounts too. Exchange rates for foreign currencies are amongst the most competitive anywhere. There are no taxes on bank interest in Hong Kong. Unfortunately it’s become more difficult to open accounts in Hong Kong in recent years for non-residents. But if you can get one opened it’s well worthwhile.
There is a good selection of brokers in Hong Kong. You can invest anywhere in the world from Hong Kong. The investment profits will not be taxed there. All the major banks offer brokerage services and every global brokerage has a presence in Hong Kong.
One of the most common uses of a Hong Kong Company is for trading in goods. If your Company buys goods in China and ships them to Europe or the US there will be no tax due on the profits generated as the goods did not touch Hong Kong. The profits can still be booked by the Hong Kong Company. This could be an ideal structure for Amazon FBA sellers looking to reduce taxes.
A Hong Kong Company can own local or foreign real estate. Owning real estate via a Company protects it from legal actions and makes it easier to transfer as you can transfer the shares in the Company to the new owner of the property. Rental income can be received tax free.
Income from royalties, mineral rights, publishing, consulting fees and so on can be received tax free in Hong Kong. If you’re an author or a musician you can assign the rights of your work to a Hong Kong Company and royalties will be received tax free. Be sure to assign the rights to the Hong Kong company at fair value.
Hong Kong Companies are often used for re-invoicing. This is where the Hong Kong Company will buy goods from a Company in one country and sell them on to a Company in another country. The Hong Kong Company will book the profit which will be tax free in Hong Kong. The profit generated by the other, connected companies is subsequently reduced.
As you can see there are many and varied uses for a Hong Kong Company. It’s much more likely to be accepted as a normal trading Company in other jurisdictions. It will appear much less suspicious than a Belize Company, for example, when dealing with international counterparties.
Hong Kong companies are easy to form. You’ll need a registered agent in Hong Kong, who will take care of everything that needs to be filed locally. They’ll also provide a registered office address for the company. You’ll have to travel to Hong Kong to open a bank account there. However you can easily use a Hong Kong company and open the bank account in another jurisdiction. You can even open a branch of your Hong Kong company in a European country like Serbia and open a bank account there. More information on Hong Kong companies can be found at The Hong Kong Companies Registry.
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