Because of the City’s prominence as a free port and financial centre, many foreign entrepreneurs choose to transact their business in Hong Kong. If you prefer to relocate here, then you should be conversant with some critical issues like taxes, visas and business entities. Setting up a company in Hong Kong can prove to be a complicated affair.
Nonetheless, it is not an impossible task. Information can be obtained from the Government to facilitate starting up a company or investing in one. However, the time and effort required to open up a business in this Asian City should not be underestimated.
There are visa options in case you need to establish a Hong Kong offshore company or merge with an existing business. You will still need a sponsor to do so. You need to develop a professional network before attempting a start-up business in this city. Apart from having some knowledge of the local business world, it would also be beneficial to understand the Hong Kong business culture and work on improving your Chinese skills.
Even with all the support, you may receive; operating your own business in this city still requires lots of work, time and money. You need to have a thorough business plan and some local support for your business. There are some guidelines available for starting up a business or investing in one that is established. Nevertheless, these cannot take the place of expert advisors. You should consider hiring the services of a local accountant, lawyer or consultant.
Owning your Business in Hong Kong; Self-Employment Visas
A visa category is available for investors who need to establish new companies or team up with existing ones. This provides you with the chance to be your own boss. You do not have to prove that local entrepreneurs infill the niche your company will be filling. However, this visa requirement does not apply to residents of mainland China and nationals of some countries. These nations include Albania, Afghanistan, Cuba, Cambodia, Laos, North Korea Nepal and Vietnam.
In filling your application, some requirements include a good education and some professional qualifications. Any police records of serious crimes may disqualify you. Loitering or jaywalking may not be considered as serious crimes. Your business should qualify as a significant contributor to the local economy.
Like many other work visas, a sponsor is required in the process of setting up a company in Hong Kong. Your sponsor should fit the necessary criteria, i.e. 18 years and above and a local resident whom you are well acquainted with.
Application forms for ID 999A and sponsor ID 999B can be downloaded from the immigration department’s official webpage. These forms can also be obtained at any Chinese missions. Some supporting documents are also required to support your application forms. These include recent passport photographs, proof of professional experience, academic qualifications, a copy of your passport, a copy of your business registration certificate, investor’s background information, investor’s background activities and a detailed two-year business plan.
Hong Kong’s Banks Are Secure And Stable
Banks in H.K. have made it through the just concluded global financial crisis in a better position than many banks in the US and Europe. Hong Kong Monetary Authority (HKMA) that has been mandated to license H.K.’s banks, the accumulated capital adequacy ratio of the banking sector, the classified loan ratio, liquidity ratio, and other banking asset-quality markers continue to be favorable.
In their statement in September 2010, HKMA suggested that the local banks would have less difficulty complying with the recent changes to international capital adequacy rules, noting the banks’ capital ratios were well above existing standards.
Hong Kong has three types of banking institutions: restricted license banks, licensed banks and deposit-taking companies. Only the institutions that have been authorized by the HKMA as licensed banks are allowed to take deposits and provide savings and checking accounts.
Banks with a license must be incorporated, and it is a requirement they publish their annual audit reports and monthly returns showing assets and liabilities and reveal their realized profits, inner reserves, as well as net assets. The audit reports are analyzed for compliance with the banking laws, and standards and infringement of the laws and standards are punishable by imprisonment, fines or both.
A license to come into the financial service market in Hong Kong will enable a foreign-owned commercial bank to establish its branch in the city. There are an estimated 200 foreign-owned commercial banks from 30 countries doing business here and local representatives of foreign banks in the city doing business.
The City Has An Affirmative Tax Policy
Hong Kong does not classify itself as an offshore banking place but a low tax area, which grants offshore account holders amicable tax laws.
The tax rates are not only lower than other jurisdictions but also levied on income that has been earned in the city and not on income outside the jurisdiction. There are also no sales taxes, no withholding taxes, no capital gains taxes and also no annual net worth or accumulated earning taxes on companies that retain earnings.
Presently, it takes around 4-7 working days to start a Hong Kong offshore company in Hong Kong. The new legislation being in place means the Hong Kong company incorporation process can be completed within one working day, which is the current norm for its main competitor Singapore. The e-system will help businesses save on time, cost and resources. Hong Kong’s technology drive and company law reform will improve business processes and enhance Hong Kong’s attractiveness as a regional business hub.