Company registration in Hong Kong for IT business

    Experience is a comb that we get after losing hair. (c) Chinese proverb

    At the request of readers, in the continuation of a series of publications on incorporation abroad (see previous articles on Belize and Estonia ) I want to talk about the registration of a company in Hong Kong.

    Our next task was to register a company in Hong Kong for a client and in the same jurisdiction to open a bank account for the SaaS project.

    Jurisdiction Overview

    The Hong Kong legal system is based on the norms of British law, which is certainly a plus (it is not hard for a lawyer to assess the benefits of this fact, in simple words: a convenient judicial system and ease of contracting).

    Hong Kong is not offshore from the point of view of the legislation of Ukraine and Belarus ,
    from the point of view of the legislation of the Russian Federation - is.

    A shareholder of a company can be either an individual or a legal entity. The minimum quantity has not been established (it is logical that at least one).

    Bearer shares are prohibited.

    Share capital may be 1 dollar.

    A minimum number of directors has not been established, but at least one of them must be an individual.

    Companies are required to keep financial statements and submit it to the auditor for review at the end of each financial year. (The price of auditing and accounting with the number of transactions up to 300 per year is ~ 500 US $. But after registration, this procedure is carried out for the first time only after 18 months and costs about 1100 US $).

    Geographically, reporting is possible anywhere, but it should be borne in mind that at the request of Hong Kong tax, it may be required for verification.

    Corporate tax rates (income tax) - 16.5% of profits earned in Hong Kong and 0% - of profits earned outside its territory.

    I’ll better explain in simple words. So, if you
    don’t work in the domestic market,
    you don’t have customers / buyers in Hong Kong,
    - There is no real office and employees in Hong Kong,

    then you do not need to pay tax.

    You must have supporting documents for all transactions, as you will be required (through auditors) to prove that you can apply a rate of 0% to your profit.

    VAT is not provided.

    Registration cost (provided that the shareholder of the company is an individual) *

    * Please note that the prices are provided for informational purposes, as in the comments anyway, someone will ask about this. These are the prices of the local (from Hong Kong) registrar (they may differ from the prices of other registrars).

    Hong Kong Government fee 530 US $ (for incorporation and business license);
    Incorporation fee 59 US $;
    Registered address 150 US $ ($ 12.5 per month);
    Agent / secretary - 75 US $ / 1year;
    Annual Return and e-Certifcate: 50 US $ + 55 US $ (Includes govt. Fee of 25 US $);
    Certified copy of Documents fee 125 US $ + 95 US $ (HSBC, Standard Chartered, Hang Seng require certified documents by CPA);
    Total: 1139 US $

    Since citizens of Ukraine do not have the right to register companies according to the decisions of the Cabinet of Ministers of Ukraine without obtaining an individual NBU license, I advise you not to break the law and draw up a gift agreement for the company. These are not significant costs, but you will openly and legally own the company. Below is the calculation of the cost of issuing a “gift”:

    Transfer of shares as a gift:
    transfer of XXX share / s 280 US $
    Preparing of the “Instrument of Transfer” - (not commencement of business, M&A, Statement on landed property) 95 US $
    postal and handling fee 55 US $
    Total: 430 US $

    The registration process itself takes about 7 business days + delivery of original documents.
    I don’t throw out the link to the registrar for public access.

    The main documents that you will receive are the
    Incorporation form ;
    Business registration ceertificate ;
    Certificate of incorporation and other documents that can be viewed at this link .

    Bank Account
    If You Need a PayPal Business Account, then the account must be opened in Hong Kong (PayPal requirement - the bank and the company must be located in the same jurisdiction, and the card issued by the bank must be Visa).

    Below is a list of banks that you can work with:

    - HSBC (the most popular bank, opening an account is free, and, by the way, you can open a merchant here);
    - Hang Seng;
    - Standard Charter;
    - Bank of China;
    - China Trust;

    To open an account in Hong Kong, the personal presence of the beneficiary of the account is required. As they say in China: “No rumor can replace meetings” (c) On the list of documents, you can contact the bank manager, or ask the registrar (for a fee) to help you open an account.

    If you do not need PayPal, then you can open an account not in Hong Kong. Jurisdiction can choose both European and any other of your choice.

    APDATE (03/17/2015):
    Several clients from Ukraine have closed accounts in HSBC, due to the unstable situation in the country. Unlock accounts do not intend to do, even with a personal presence.

    You can open a European account now without any problems, but in addition you need to pay 350-400 US dollars for apostille of documents.

    Summarizing: Hong Kong is a universal solution for different types of IT-business, with the ability to open a PayPal business account and the option of withdrawing money to a Visa card. This is a good tool in tax planning your business.

    Yes, it is necessary to pay for the upkeep and audit, but this price is comparable to the price for maintaining the company in the CIS countries.

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