Take a closer look at your business or startup idea and think of where you want to be in the next ten or more years. The aspiration of an entrepreneur is to see his/her company grow rapidly and rock an impressive balance sheet. This is possible, but only if you take strategic steps. One of the most important of these is registering the company in a high-potential jurisdiction such as Hong Kong.
Going offshore means that you are able to enjoy a bigger market share and increase profitability. This is why the jurisdiction has become highly attractive to top multinationals. In this post, we take a closer look to answer the big question, “what are the main advantages for incorporating a company in Hong Kong?”
A Brief about Hong Kong
Hong Kong, one of the Special Administrative Regions of China, was ceded by China to Great Britain in 1842 but regained its independence in 1997. When the British walked away in 1997, Hong Kong was reunited with China, but it regained a great deal of independence from the mainland. Indeed, it operates as a completely separate unit from China, with a functioning parliament, currency and central bank.
The autonomy of the jurisdiction has largely been exploited in creating a pro-business economy that investors can use to rapidly grow their enterprises. This is why almost every big company you hear of is likely to have some presence in Hong Kong. Other facts about this jurisdiction include:
- Hong Kong has a population of slightly more than 7.5 million.
- The jurisdiction’s nominal GDP is USD368.633 billion (2021 estimates).
- GDP growth over the last four years was +2.8 (2018), -1.7% (2019), 16.5% (2020), and +6.3% (2021).
- The economy of Hong Kong is governed by the principle of positive non-interventionism, which means that the success of a business is largely dependent on its strategy.
Special Benefits of Registering a Company in Hong Kong
Here are the main benefits to anticipate for incorporating a company in Hong Kong:
- Hong Kong Enjoys a Low and Straightforward Tax Regime
High taxation is one of the main reasons why many companies back home make little or no profits. To attract more companies into its fold, Hong Kong uses a two-tiered tax system, which aims at ensuring businesses retain the bulk of their profits for growth.
Under the 2-tiered tax model the corporate tax for the first HKD2 million of the assessable profit is lowered to 8.25%. This is 50% lower than the standard rate of 16.25%. Again there is no withholding tax on interest and dividends.
- Allows 100% Foreign Shareholding
Unlike many jurisdictions where foreign investors are disallowed from having 100% shareholding, Hong Kong is different. In the island you can open a company in any field as far as it adheres to the rules provided in the Companies Ordinance. Also, there is no restriction on capital flow from the companies registered in Hong Kong.
- Intellectual Production
Hong Kong is one of the jurisdictions that have put a lot of effort into protecting businesses and their innovations. It has set up the Intellectual Property Department that handles IP matters, including stringent regulations for registered copyrights and patents. Therefore, you are sure of optimizing returns from your innovations for higher profitability.
The benefits we have listed above are only a few of what you should anticipate from registering a company in Hong Kong. Others include a highly developed infrastructure and an educated workforce. Remember that you can only enjoy these benefits by working with the best agency for company registration. One of the best agencies that you can count on is GMHK.
The agency not only comprises top-rated professionals to assist with company registration but will also come in handy in helping with market entry strategy formulation, carrying out due diligence, accounting and payroll management.