The best financial reward available from Hong Kong company formation is a comparatively low rate of tax. The law provides a relatively uncomplicated taxation system. Profits derived from business corporations are highly tax-free while those earned by foreign firms operated by individuals living outside of Hong Kong are tax-free. The absence of direct taxation on these enterprises has resulted in many highly professional and highly productive businesses based in Hong Kong. The local economy is highly diversified, providing opportunities to companies in different sectors to grow and expand.
Companies can incorporate in Hong Kong either through the agent system, known as Companies House or through the self-administer the system, known as the Limited Liability Company system (LLC). Both systems have their advantages and disadvantages for Hong Kong business formation. Through the company secretary system, the entire management, and the board of directors of the company are immobile, except for the secretary. Through the self-administer system, the company secretary also personally administers the company, but there is some limitation concerning the number of directors and the amount of control.
There are many other incentives offered by the Hong Kong government for businesses wishing to set up operations in the region. The most important of these is the freedom to be involved in political activities and the exemption from paying taxes on ownership and profits. These two privileges attract many people to live in Hong Kong, and they contribute to the vibrant economic development of the region. Moreover, these freedoms enhance the benefits of Hong Kong’s business formation.
Freedom to engage in political activities is a key advantage offered by companies in Hong Kong business formation. It is essential as Hong Kong is not under the control of any international political authority. Political parties are free to come and go as they wish, and there is no law preventing them from going into opposition. Thus, there are great incentives for entrepreneurs to become active politically. They can also choose the type of political party that best suits their interests, and this freedom of initiative makes them attractive to investors. For this reason, many investors prefer to invest in companies having political affiliations.
The Hong Kong government’s tax benefits are another significant advantage for companies wishing to establish operations in the region. Many companies in Hong Kong business formation opt for offshore tax havens like those in the Bahamas and Seychelles. These havens enable these firms to enjoy very low, or even zero taxes on dividends paid capital gains and many other income types derived from the firm’s working. Besides, companies are not required to pay corporate taxes on assets located in different parts of the world. As a result of all these advantages, many investors in the region choose to set up their firms based in Hong Kong.
There are other significant benefits of starting a new venture in Hong Kong business formation. Among these are the right to buy and manage the new company’s property and assets, including office buildings and retail premises. The new owners also enjoy the right of being registered as the company’s director or shareholder. Besides, they are entitled to receive company benefits, including the paid annual leave and the company benefits such as the paid holidays.
When an investor decides to set up a business in Hong Kong, he must abide by some laws imposed by the region’s statutory bodies. Most importantly, the person needs to register the new company. The procedure to register the new business entity can take up to one month, depending on the amount of paperwork that needs to be submitted. Companies must submit relevant documents to the appropriate authorities in Hong Kong before the expiration of the registration period.
Moreover, before a company can be deemed a qualified company, it needs to have one business. It is one thing that makes start-up Hong Kong so attractive. It allows investors to open a branch office in one place, thereby reducing operational costs. They must pay a minimal amount as administrative fees to the government authorities in Hong Kong.