Managed Limited Companies
The Territorial Tax System & The 4% Corporate Tax Rate*
The key benefit of Hong Kong for those conducting business outside of the territory is that it employs a territorial tax system which in effect means that only profits generated from within the territory are subject to the local corporate tax rate of 16%. Hong Kong operates a well-run tax system and that by convention the authorities expect to see taxes paid on around 25% of declared proﬁts or, in other words, if based on the standard 16% corporate tax rate, a mere 4% annual corporate tax if a business is really conducted outside of Hong Kong! It should be emphasized that not to pay such taxes can expose a trading company both to considerable fines and negate the protection that is afforded from 3rd party countries — i.e. normally the country of the beneﬁcial owners fiscal residence – by being able to show that there is a real trading company being operated from Hong Kong, carrying on real business and paying local taxes. Unlike many Far-Eastern countries Hong Kong employs and enforces international accountancy standards, which are very similar to those in the United Kingdom. In addition, our British and Irish clients will also be very familiar with local company law and legal documents as they bare a close correlation with those – such as the Memorandum & Articles of Association — employed back in Britain and Ireland. In other words, Hong Kong is an ideal base for those conducting business in the Far East who don’t want too alien an environment.
Domestic Corporate Tax Only 16% Hong Kong Based Companies
Where business needs to be carried out in Hong Kong itself then it still provides a very attractive location since the corporate taxes are only 16%
In Hong Kong this is known as the Salaries Tax and as its name implies it only applies to employment income and not dividend or capital gains receipts. The rates of taxes start at only 2% on employment income but cannot go beyond 16% and that is before tax credits are taken into account. All in all, Hong Kong is a very favorable personal tax location.
Double Taxation Treaty Network
Until 2001 Hong Kong didn’t have any double taxation avoidance (DTA’s) or double taxation treaties (DTT’s). Today it has DTA’s with Belgium, Luxembourg, China, Thailand and Vietnam and DTT’s awaiting ratification with the UK, Ireland, the Netherlands, Luxembourg, France, Liechtenstein and Austria.
Why register a Hong Kong Managed Company?
- Pro-business environment with corporate taxes varying from 4% to 16% depending on a company’s territorial base;
- Highly respectable and credible jurisdiction;
- Highly educated population with English being the language of commerce;
- Highly developed corporate and general law based on UK law;
- Excellent communications;
- HK has a territorial tax system;
- Corporate taxes can be as low as 4% for a trading company;
- Personal taxes only apply to employment income;
- Personal tax rates vary from 2% to a max. of 16%;
- No taxation on dividends or capital gains;
- Legal system based on that of the United Kingdom;
- Accountancy standards are to international standard;
- Ideally located as a base for investment into China;
- Company registration procedures are very efficient and take no more than 2-3 weeks;
- English is the language of commerce;
- Stable economic environment.
Hong Kong uses the common law system and still employs company statutes based on English & Welsh Companies’ Acts dating back to 1948.
Double Taxation Treaty Network
Whilst HK has been developing a tax treaty network over the last decade or so it is still not as comprehensive as other jurisdictions, which is why proving OECD approved management and control is particularly important for Hong Kong based companies.
ADMINISTRATION & ACCOUNTANCY SERVICES
Managed Hong Kong Limited Liability Company
The key service offered by the SCF Accountancy & Law is that of a fully managed Hong Kong company where-by we can register your Company, act as the daily legal and accountancy administrators, liaise on your behalf with the local authorities, maintain the registered office, company minutes and in fact everything necessary to provide you with a fully functional Hong Kong limited liability company including, online banking and management.
Our Range of Fully Managed Company Services
- The appointment of a qualified accountant to act as Company Secretary;
- The opening up of a bank account for your company with access provisions agreed by SCF, the bank and of course the beneficial owners;
- A Full Management Agreement setting out the rights and obligations of all parties;
- The provision of an Hong Kong registered office address for service of process and official mail;
- The maintenance of all requisite company minutes, ongoing companies’ registration office submissions, annual returns and AGM preparation;
- The annual submission of the Annual Assessment of Tax Form;
- The maintenance of the company’s accounts supported by a quarterly ready for the submission to the Revenue Commissioners’ including the corporate tax calculation. Accountancy will be maintained in either SAGE or Quick Books format;
- The appointment, if required or appropriate, of auditors;
Set-Up & Annual Maintenance Fees
Please see separate SCF Accountancy & Law Hong Kong Managed Company Fee Quotation.
For more information on Hong Kong companies please contact a SCF Consultant.