Hong Kong is located in the South China Sea 100 miles south east of Guangzhou (formerly known as
Canton). As of the 1st July 1997 under the Sino-British Agreement of December 1984 Hong Kong became
a Special Administrative Region (HKSAR) of the People’s Republic of China. The Basic Law, which is the
Constitution of the HKSAR, is intended to maintain the HKSAR and the PRC as separate governmental, legal
and economic systems. This is known as the “One Country, Two Systems” concept. Hong Kong is governed
by a Chief Executive, an Executive Council and a Legislative Council. The Chief Executive is voted in by an
Election Committee of 1,200 individuals and members of the Executive Council are appointed by the Chief
Executive. Half of the Legislative Council are elected by universal suffrage and the other half are indirectly
elected. The Basic Law states that the ultimate goal is for the Chief Executive and all of the Legislative
Council to be elected by universal suffrage but it remains to be seen when this will be implemented.
The legal system of Hong Kong is based on the English Common Law supplemented by locally enacted
Ordinances. Under the Basic Law the UK court system and UK law, except that a local Court of Final Appeal
has replaced the Privy Council in London, are guaranteed to remain in place for 50 years unless the matter
in question involves a threat to PRC national security. There is now a bilingual legal system with Ordinances
being translated into Chinese but English will continue to prevail. There is an excellent range of professional
services available as Hong Kong serves as the major business centre for the whole of the Far East. This is
unlikely to change in the foreseeable future.
The local currency is the Hong Kong Dollar which is freely interchangeable but has a pegged exchange rate
against the US Dollar – US$1 is worth HK$7.8. Hong Kong has no exchange controls and is consistently voted
as one of the easiest and most open places to do business.
One of the major advantages of utilising a Hong Kong company is that there is no immediate suggestion
that the company is a tax avoidance vehicle as Hong Kong is a major trading entity in its own right. It is the
world’s tenth largest importer and the world’s twelfth largest exporter and a substantial sum of the Hong
Kong companies incorporated annually are local trading companies doing real business in the region.
Hong Kong has ratified 29 double taxation treaties and is negotiating a further 10 tax treaties.
It is possible to create a Hong Kong registered corporate entity in two different ways:- (1) by incorporating
a new Hong Kong company; (2) by registering an existing foreign company in Hong Kong under Part
XI of the Hong Kong Companies Ordinance. This latter procedure, although more expensive, can have
substantial advantages and these are summarised later.
The Hong Kong Incorporated Company
A company incorporated in Hong Kong has the following characteristics:-
The rate of taxation is 16.5% on Hong Kong source income only. In practice this means that, with careful
structuring, as long as a Hong Kong company is not actually doing business in Hong Kong it would normally
be possible to arrange the affairs of the company so that no tax would be payable. Detailed advice on this
aspect is available on request.
A minimum of one shareholder is required whose details are filed on the public register. Corporate
shareholders are permitted and anonymity can be achieved by the use of nominee shareholders.
A minimum of one director is required and full details must be filed with the Public Registry. Currently
corporate directors are permitted but as of early 2014 a Hong Kong Company must appoint at least one
natural person as a director. There is no requirement for board meetings to be held within Hong Kong and
directors may be resident anywhere in the world.
As the director is legally responsible for compliance with the Hong Kong Companies Ordinance and the
Inland Revenue Ordinance, in cases where we act as a director, an amount of US$2,500 (HK$20,000) will
have to be deposited in order to guarantee such compliance. This amount may be returned when business
operations cease and the company has been wound up in the manner required by law.
Hong Kong companies are required to file full audited accounts but small private companies meeting certain
criteria may apply for “reporting exemption” and prepare simplified accounts and simplified directors’
reports. All Hong Kong companies must also prepare and file an annual return which gives details of the
current directors and of the shareholders who have held shares in the company at any time during the year.
Incorporation of a Hong Kong company normally takes about 5 working days but ready-made companies
are available for immediate use.
Restriction on Name and Activity
Names which suggest any connection to the UK head of state are generally prohibited and certain words
which suggest specialist activity can only be used when the appropriate licenses have been obtained e.g.
bank, insurance company and other specialist financial enterprises.
As a matter of local company law the company MUST maintain a registered office address within Hong
Kong and must also appoint a Hong Kong resident to act as company secretary. The secretary cannot be the
sole director of the company. We would generally provide these services as part of the domiciliary service
Schedule of Fees
|Domiciliary services to include registered office,resident agent and company secretary||US$||1500|
|Business registration fee||US$||295|
|Annual government filing fee||US$||15|
|Provision of director and/or shareholder and HK office remail||US$||4000|
TOTAL FIRST YEAR’S FEES
SECOND AND SUBSEQUENT YEARS’ FEES
For holding companies, the directors fee can be discounted to a minimum of $2,500.
International initiatives such as US FATCA, UK FATCA, Common Reporting Standards (CRS) and many others
have greatly increased the ongoing costs of compliance. As per industry standards, we will charge a nominal
fee of £100 or equivalent as shown towards the costs of compliance. Extra charges may be levied where
additional work is required.
As can be seen from the section entitled “Annual Reporting” a Hong Kong company must prepare accounts
(audited in the case of a Hong Kong incorporated company and unaudited for the Part XI company) giving
details of all transactions undertaken during the accounting year whether these produce Hong Kong source
income or not. Additionally, both types of company will be required to submit various reports to the Hong
Kong Inland Revenue including a “Profits Tax Return” and an “Employers Return of Remunerations and
Pensions”. All these reports must be made in a timely fashion if penalties are not to be visited upon the
company for late filing. For this reason we offer to act as the “Fiscal Agent” for your company and assist in
completing and filing the necessary returns, assisting with the preparation of the company accounts and
liaising with the company auditors and the tax department to ensure that the financial obligations of the
company are met in a full and timely fashion. For the provision of this service we charge from US$500 per
Most onshore countries have provisions within their tax legislation whereby any company, no matter where
it is incorporated, which is managed or controlled from within their jurisdiction will be tax resident there
and taxable on its worldwide income at local rates. For example, any offshore company which had UK
based directors would be tax resident in the UK and subject to UK tax on its worldwide income. Failure
by the directors to declare the liability of the offshore company to UK tax would be an offence under UK
law with potentially very serious financial and criminal consequences. Most onshore countries have similar
provisions within their tax legislation so it will rarely be advisable for onshore resident clients to act as the
directors of an offshore company. To establish that the management and control of the company does take
place offshore and the company is therefore tax resident offshore as well as incorporated there we can,
and habitually do, provide directors. In most cases this service is essential if legitimate tax savings are to be
made. Fees for the provision of management services are included above. If you require this service please
tick the appropriate box in the application form.
We can assist with the opening of bank accounts for the company in most places in the world and our fees
for attending to the account opening procedures would be from US$1,000 plus the costs of preparing any
additional notarised documentation which a particular bank may require.
Remailing, Fax, Tel. and Office Facilities
As part of the domiciliary services package we provide a registered office address in the jurisdiction of the
incorporation of your company in order to meet the local statutory requirement. An additional service is the
provision of an address, telephone and fax number to receive correspondence which can be the same as the
registered office address or another of our Group offices’ addresses. When we receive communications we
will deal with them according to your wishes. Fees for the provision of this service are included above plus
handling charges (US$3 per item plus disbursements). If you require this service please tick the appropriate
box in the application form.
Dedicated Telephone Lines
For those companies which are particularly active or wish to have a higher profile or more substance we can
arrange the immediate allocation of a dedicated telephone line answered with the name of your company.
Additional costs apply to this service.
Using a trust to own the shares of an offshore company can result in very substantial tax and non-tax related
advantages which will accrue both on death and during the lifetime of the trust settlor. These advantages
may be summarised as follows:-
(1) Saving on Inheritance Tax: On death, the inheritance tax which would normally be assessed on the value
of the shares would generally be eradicated.
(2) Asset Protection: Assets placed into trust are generally beyond the reach of creditors who might arise as
a result of financial difficulties, divorce proceedings, litigation etc.
(3) Avoidance of Probate: A trust provides a means whereby assets can be smoothly passed on to the
next generation without the disruption, delays, substantial costs, loss of confidentiality associated with the
probate procedure which necessarily follows when assets are bequeathed by will.
(4) Continuity: Trusts provide a means whereby assets can continue to be administered in accordance with
the wishes of the settlor after his death so the weak can be protected from others and the spendthrift can
be protected from himself.
(5) Lifetime Tax Savings: During lifetime, substantial income and capital gains tax advantages may result
from setting up the trust.
Trust services can be provided by our licensed trust corporations in Gibraltar, Guernsey, the Isle of Man,
Singapore and the Turks & Caicos Islands through our various Group offices. Fees for drafting the trust deed
and for the provision of trustee services will be quoted on a case by case basis.