Registering a company in Hong Kong is different from registering in America. The procedures, taxes, and paperwork required are all different. But with the following information, we can help you get started on your American company’s future in the world’s third-largest financial hub.
This article will discuss what it takes to register an American company in Hong Kong and what you need to know about taxes and regulations.
Deciding to register an American company in Hong Kong
There are some benefits to registering an American company in Hong Kong, but it is not necessary to establish residency in Hong Kong.
The registration process takes about two months, which includes time spent receiving approval from the Ministry of Commerce of China and submitting documents through your American headquarters. You will need at least one director who is a resident of Hong Kong, an officer with signature power, and a sponsoring bank in HKD or USD.
One important thing to keep in mind when registering an American company in Hong Kong is taxes and regulations. As a general rule, you should consult your accountant before doing anything with international investments. Taxes vary depending on where you conduct business and what type of business it is.
There are several factors that will determine how much tax you might pay, such as location, type of business, value of assets, ownership percentage, etcetera.
In addition to taxation considerations when registering an American company in Hong Kong, there are other factors that should be considered before deciding whether or not this would be a good option for your company.
It should be duly noted that where there’s the need to establish residency in Hong Kong, your business may not be run solely by its American headquarters.
You will also need to register with the Commissioner of Taxation (CT) and file a return annually with all profits made outside of Hong Kong.
If you decide to register your business in Hong Kong, that is, the Hong Kong incorporation of a business, remember that you must abide by certain regulations. There are strict rules on what you can do with your company’s money if it was earned overseas or within Hong Kong.
The process of registering an American company in Hong Kong
The process of registering an American company in Hong Kong can be done through the company’s American headquarters. It is important to note that only active companies may be registered in Hong Kong.
It is also not necessary for a company to be headquartered in Hong Kong; however, there are some advantages for doing so. One of these advantages is that you would not need to pay corporate taxes on profits earned outside of Hong Kong provided that they are repatriated back into HKD (Hong Kong Dollar).
Registering an American company in Hong Kong is a complicated process. The first step is to create a WFOE (Wholly Foreign Owned Enterprise) which you will need help from a legal professional.
They will help you register the company, apply for an IPC code, and provide accounting services. The next step is to open your bank account with HSBC or Standard Chartered Bank.
These banks are the most respected banks in Hong Kong and it’s easier to transfer money between these two banks than any other banks in Hong Kong.
However, this doesn’t mean that you cannot use any other bank if you want to. You also have to register your trademark before doing anything else because registering your trademark after setting up the business will be more expensive.
If you want to sell products under your brand name, then register it as soon as possible and make sure it is protected by copyright and patent laws.
Finally, registering your company with the Companies Registry (CR) entails filing five documents:
(1) Articles of Association; (2) Memorandum and Articles of Association; (3) Certificate of Incorporation; (4) Business Registration Certificate; and (5) Company Profile Sheet. These documents allow you to register your business legally in Hong Kong and must be submitted electronically or postmarked.
What you need to know about taxes and regulations
Taxes are not an issue when you are operating an American company in Hong Kong. The U.S. imposes no tax on foreign-source income, and Hong Kong has no withholding taxes on dividends or capital gains. This means that any profits generated from the Hong Kong operations will be taxable to the Hong Kong government and not to the U.S.
An American company can benefit from zero taxation on foreign-source income and zero withholding tax on dividends or capital gains.
The foreign-source income refers to any income generated outside of Hong Kong, which is still subject to taxation by the country where it was generated.
For example, if an American company earns $100,000 from its employees in Taiwan, they would have to pay taxes there even though their headquarters are registered in Hong Kong.
However, if you’re a Hong Kong resident and you own shares in this business, then there may be taxes imposed by the U.S., which is referred to as ‘U.S person’ for taxation purposes.
It’s important to know that if your company is registered in the same name as the registered American company, you will need to get approval from the company’s headquarters before pursuing certain transactions, including:
- Converting shares into cash
- Selling shares to a non-related party
- Transferring shares of stock
