Many foreigners and/or expatriates are able to come up with good business ideas, and they went straight into implementing their ideas. The founders and/or entrepreneurs would go through company registry in Hong Kong when their business plan is to sell their products/services to the large population of Chinese consumers.
For an expatriate, the advantages of setting up and running a company based in Hong Kong include the cost saving aspects below.
- The company profit tax rate is at 8.25% for the first two million of HK dollar of assessable profits (or earnings). Only when the company has assessable profits that is above two million of HK dollar, the tax rate increases to 16.5%.
- As a local company that is located in Hong Kong, the founder is exempt from paying offshore income.
- There is no capital gains tax
- There is no sales tax or VAT.
- The employees would also get certain benefits: Salaries profit tax is calculated progressively and the rate is from 2% to 17%.
When you look at it from a broader perspective, Hong Kong has other benefits.
- Hong Kong has a relatively independent legal system.
- It possesses relatively strict laws to prevent corruption.
- It provides an overall infrastructure with free flow of information.
- It is usually politically stable.
- Hong Kong’s location is already its big advantage: It is the gateway to Mainland China (for most western companies). Entrepreneurs and/or their employees would save on travel time between Hong Kong and many Asian countries due to the close proximity.
The founder/entrepreneur of the HK company is required to have a local registered address. It does not mean the expat person really own or rent a physically office right from the beginning. One simple and effective solution is to use a local agent to provide a registered office address.
To move it up one notch, sometimes the virtual office approach is preferred. The virtual office approach is when usually most of these local agents would also take care of other related operations. The operations may include collecting letters from local government offices, other mail and courier services, phone/fax services, meeting/event arrangement and conference facilities. When the expatriate can do this right, he could possibly save much cost from office rental, staff salary, and other office equipment expenses.
A bank account that is in local currency is important when the business is eventually to receive payments from clients/customers. The local agent may often be able to assist in the opening of bank accounts in Hong Kong.
The rest is up to the individual expatriate person to arrange his relocation to Hong Kong from his country of origin.