Given that Hong Kong and Singapore have continuously topped the World Bank’s Ease of Doing Business Index, a very common dilemma for foreign companies seeking to enter the Asian market would be the pros and cons of a Hong Kong vs Singapore offshore company. Understanding the steps to register offshore company in Hong Kong might thus help you to make your decision. With Tetra Consultants at the wheel, you will be able to dedicate your time and resources to other more important channels. With our lean-and-mean mentality, you can rely on our team of experts to provide you with a seamless experience when you setup offshore company in Hong Kong. Tetra Consultants advises you to read through this guide to fully understand the steps required on how to incorporate an offshore company and set up a bank account in Hong Kong.
Is choosing to register offshore company in Hong Kong right for you?
- Offshore companies are companies that do not carry out business operations or management activities within their country of incorporation. Instead, they operate internationally and trade with customers worldwide or can sometimes be used as a holding company. This allows them to qualify for numerous tax exemptions.
- In the case of Hong Kong, offshore companies are exempt from tax when they generate their income out of the country. Given that Hong Kong is currently ranked 3rd on the World Bank’s 2020 Ease of Doing Business Index, it is likely that it will be easier and cheaper for foreigners to start a business in Hong Kong as opposed to their home country. It might also be relatively easier to maintain a Hong Kong company since the process of filing tax returns and financial reports are streamlined. Thus, setting up an offshore company in Hong Kong might be the most convenient way for a foreigner to start a business.
- By systematically following the 6 steps below, you can expect to start conducting business with your Hong Kong company within 5 weeks. See this webpage for more information on the process of company incorporation.
Steps to register offshore company in Hong Kong
[ps2id id=’step1′ target=”/]Step 1: Choosing a suitable business structure
- There are three main types of business structures in Hong Kong for foreign companies, each with varying levels of personal liability protection, tax ramifications, ownership and management flexibility as well as compliance requirements.
- At the start of each engagement, Tetra Consultants will seek to fully understand your business activities and needs before recommending the most optimum business structure for you. Our consultants will also offer more information on the requirements imposed to set up these entities.
- These three business structures are:
- Limited liability company. This structure is suitable for new businesses since they do not require a registered foreign parent company prior to incorporation of their offshore company in Hong Kong and has minimal additional requirements. It also offers ease of management and liability protection, which is why it is the most commonly used business structure.
- Branch office. This structure is suitable for existing businesses looking to enter the Hong Kong market. It is cheaper to run and manage than a limited liability company since it is considered an extension of the parent company as opposed to a separate entity. However, branch offices do not offer protection from liabilities incurred while running the business.
- Representative office. This structure is prohibited from carrying out any profit-generating activities and would thus be more suited for firms looking to conduct market research or data collection activities.
[ps2id id=’step2′ target=”/]Step 2: Reservation of company name
- Tetra Consultants will reserve your preferred company name with the Hong Kong Companies Registry. The name should not be offensive or connote criminal activity.
- We will also help you to conduct a name search to ensure that your name is unique, ensuring its timely approval, and allowing you to proceed with the formation of the company.
[ps2id id=’step3′ target=”/]Step 3: Preparation of supporting documents
- The directors and shareholders are required to provide basic KYC documents. These documents include the names of directors, certified true passport copies, proof of address, and CV for our internal due diligence checks.
- Our team will also provide our international clients who are looking to incorporate in Hong Kong with a local office address and a local company secretary.
- According to the business activity and corporate structure, Tetra Consultants will also draft Articles of Association, business plan and other incorporation documents.
[ps2id id=’step4′ target=”/]Step 4: Filing for registration
- After you have reviewed the drafted documents, we will file for registration with the Hong Kong Companies Registry.
- After receiving approval from the Registry, Tetra Consultants will courier the Certificate of Incorporation, Memorandum and Articles of Association and other corporate documents to your preferred address. The whole process of company incorporation is expected to take one week.
- According to your business activities, we will also assist in acquiring any additional business licenses as needed.
[ps2id id=’step5′ target=”/]Step 5: Corporate bank account opening
- After registration, Tetra Consultants will assist you in opening a corporate bank account. Engaging our services allows you to tap on our extensive network of banking partners. Some of the banks that we have established good working relationships with include Citibank, HSBC, Hang Seng and DBS Hong Kong.
- Typically, a corporate bank account opening will take roughly four weeks. Hong Kong banks have made it mandatory for you to travel for a face-to-face interview, but we will send a representative to accompany our clients to ensure that this process goes smoothly and so that you will not face any communication barriers. Prior to the interview, we will also prepare you as to the potential questions that they might ask and prepare a business plan to be presented to the bank.
- Once your bank account has been successfully opened, Tetra Consultants will courier the internet banking token and access codes to your preferred address.
[ps2id id=’step6′ target=”/]Step 6: Financial reporting and taxation obligations
Accounting, financial reporting and auditing requirements
- Your company is required to keep relevant and accurate transaction records and accounts. These include the supporting documents needed to verify these transactions such as bank statements, receipts and invoices.
- You will also be required to file an annual return (Form NAR1) with the Hong Kong Companies Registry detailing the organizational structure of your company unless you have applied for dormant status.
- Financial statements must also be filed and audited annually.
Taxation policy in Hong Kong
- A properly structured offshore business with no domestic business activities will not be subject to any corporate income tax.
- Despite being tax exempted, an offshore company in Hong Kong must still register with the Hong Kong Inland Revenue Department. The deadline to complete this is within one month from the incorporation date. Upon registration, the Inland Revenue Department will issue a business registration certificate with their company trade register number. See this page for more information.
How can Tetra Consultants assist you to register offshore company in Hong Kong?
Tetra Consultants offers you a full suite of services to help you register your offshore company in Hong Kong.
- Company registration with the Hong Kong Companies Registry
- Local company secretary and registered address
- Nominee director services
- Corporate bank account opening
- Financial and business license applications
- Annual accounting and Hong Kong offshore company tax services
Contact us to find out more about how to open offshore company in Hong Kong. Our team of experts will revert within the next 24 hours.