Opening a Business in Hong Kong As a Foreign Or Expatriate
As a foreign individual, you can open a business in Hong Kong as a foreign company. There is a great business climate in Hong Kong, so many international companies establish offices in this part of the city. The tax benefits, low labour costs, and relaxed business laws contribute to business registration in Hong Kong. Opening a Company in Hong Kong also provides an easy avenue for expatriates to own a profitable and stable business in a foreign country. However, you must know some of the benefits of company formation in Hong Kong before deciding to open a company there.
The advantages of opening a business in Hong Kong as a foreign include the absence of capital gains tax (CGT) and income tax. You will be treated as an unfamiliar person for income tax purposes, and this could reduce your taxable income. You may also benefit from other tax benefits such as discounts on property purchases. These benefits are available to company formations made before July 1, 1996. If you have existing foreign investments, you can choose to use company formation services in Hong Kong to minimize your tax liability on those investments.
The business environment in Hong Kong is fast-growing. The local market is highly competitive and dynamic. It means a high risk of obtaining a loan before getting a loan to start your business. Thus, you will be required to have a sound business plan and demonstrate a clear understanding of your business’s financial needs. Your foreign partner can provide you with valuable inputs regarding the business environment in Hong Kong.
Many expatriates are apprehensive about starting a business in Hong Kong because of the uncertain tax environment. However, even in the past, the tax regime was favourable to expatriates. The Basic Payment Ordinance introduced in 1997 allows expatriates to pay taxes only to the designated foreign jurisdiction. For example, an individual could deduct the tax he or she spends in his or her home country, and then the same amount can be paid to the designated foreign jurisdiction as the Basic Payment Ordinance.
Other concerns related to your business in Hong Kong are the laws on business and property laws. The rules and regulations regarding these two areas are subject to change regularly. Thus, it would help if you always were prepared for any changes and update your knowledge of these areas. You can obtain the necessary information and awareness on business and property laws from the British High Commission (HKC) or the China Foreign Affairs office (CFIA). You can also get more detailed information and advice from the British High Commission or the CFIA on the internet.
The Business Information Centre (BIC) is another useful tool that the expatriate may find helpful in preparing for the business environment in Hong Kong. This information and reference resource are operated by the Chinese government and are accessible at the Government website on the Chinese expatriate website. BIC provides essential information on business and the commercial law applicable in the country. It also includes a list of agencies and organizations that assist expatriates and people of Chinese descent.
Another helpful entity is the Office of Taxation. This office offers comprehensive tax services to foreigners working in the country. It is also a good source of information and resource for understanding the taxation system in the country. You can also find useful information on the different taxation brackets in the country.
To start your own business in Hong Kong as a foreign or expatriate, you need to be aware of the local business market. The local population is highly educated and has an advanced level of technology. Therefore, most foreign business people who intend to establish a business in China will require a capable consultant to understand the market and its business environment. A Chinese consultant can help you assess the business potentials in the business field in the country. He/she will also help you determine the appropriate legal forms required to be filed with the government authorities.