Hong Kong offshore company advantages and why many business owners and freelancers who don’t live in Hong Kong choose to open a Hong Kong company.
Let us see what the Hong Kong offshore company advantages.
Hong Kong offshore company advantage 1: 0% taxes in Hong Kong
One Hong Kong offshore company advantage many always have dreamt of in the West : 0% taxes.
This dream can actually become true with a business in Hong Kong and your personal location.
For any Hong Kong company, you have 0% dividend tax on your profit as a stakeholder.
On top of this if you are a Hong Kong offshore company, then you can even enjoy a 0% corporate tax.
Even if it does not apply to you, you then would only pay 8.25% to 16% on your profit.
In a consultation call, we can validate whether your business case would fulfill the offshore label requirements. Feel free to book a call with our legal experts.
But caution!
You are not automatically eligible for a Hong Kong offshore company.
You actually have to apply for it and if you fulfill all requirements for this.
The tax government will then verify that after 3 years that you are indeed an offshore company and will not request any taxes from you.
Further reading:
Read more on what is needed to become a Hong Kong offshore company.
Hong Kong offshore company advantage 2: Global banks and payment gateways
Another Hong Kong offshore company advantage is that you and your business can access all global banking and payment gateway providers such as:
- HSBC
- DBS (HK)
- Airwallex
- Aspire
- Stripe
- PayPal
Especially from less developed countries (Cambodia, Vietnam, Philippines) accessing these banks and payment gateways can be very challenging for your business.
Most often you are limited to local banks and payment gateways which is not best for your business.
These problems are all solved with a Hong Kong offshore company!
Further reading:
Read more on how to easily open a business bank account in Hong Kong
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Hong Kong offshore company advantage 3: Stable legal and tax laws
Over the last decade the Hong Kong tax system has not seen any changes for business owners and this makes it very nice as a Hong Kong offshore company advantage.
Why? Because of three reasons.
1 – Changing laws and taxes may affect your business quite a lot. You probably don’t choose a Hong Kong company because you are living in Hong Kong, but rather for its perks (tax and legal laws).
An unstable government can make these perks vanish within days. It is not unlikely in other Asian countries that the government makes quick and unthoughtful decisions – but luckily not in Hong Kong.
2 – Less work for you.
Any change will in some way affect you also with more work, signature and your CPA having to discuss the new changes with you.
This is work and time that you can spend much better on your own business.
3 – Costs. Changing laws also means more work and this could also affect the money that your tax accountant charges you over the year.
A country that recently has made a huge tax change is Dubai.
Many use a Dubai offshore company to reduce their tax to 0%, but very recently (in 2024) the Dubai government has imposed a 9% tax after a certain threshold.
The change itself does not make it bad, but the fact that the government had promised for years that Dubai will always stay tax-free and many feel cheated and disappointed.
Hong Kong offshore company advantage 4: Save and invest your earnings
Many digital nomads who use offshore companies are afraid that any day the banks may close their account and their whole money gets blocked in an account for months.
So here comes a Hong Kong offshore company advantage that helps these digital nomads.
For one, a Hong Kong offshore company business is not a loophole (such as the US LLC for foreigners) and thus, it is intended for foreigners to open it.
As a US LLC is not and primarily a few smart people have found a backdoor, makes more banks suspicious the more time passes.
Not only can you save your money in a Hong Kong offshore company, but you can also invest your money in the name of your company on Interactive broker.
An interactive broker account for a Hong Kong company can easily be opened and we usually guide our clients through the whole process.
It is easy, but you need experience in order for the process to work out from A to B.
If you want to understand how you can also open an interactive broker account with a Hong Kong company, feel free to book a call with us and we guide you through.
Further reading:
Read how you can use a Hong Kong company to protect and invest your earnings.
Hong Kong offshore company advantage 6: Less red tape
For other offshore companies such as Singapore LLC, you cannot simply withdraw money as a stakeholder at any time and any amount.
But with a Hong Kong offshore company, we can make it possible.
We let our clients pay themselves a dividend (to any amount).
Be cautious:
This still needs proper documentation, so a tax officer can look over it.
Hong Kong offshore company advantage 7: Digital and completely remote
Another Hong Kong offshore company advantage is that you would never need to set foot in Hong Kong in order to open one.
This makes it very handy if you are living far away and a ticket is expensive.
You can open one from the comfort of your own home, from opening the company to opening a business bank account.
Be cautious:
If you want to have a company bank account with a traditional bank such as HSBC, they may require you to be there in Hong Kong.
If you want to know the difference between a traditional and digital bank, book a consultation call with our legal expert, so we can analyze your specific situation.
Further reading:
Read about how to register a company in Hong Kong completely online or watch this video:
Hong Kong offshore company advantage 8: Director and shareholder is one person.
A Hong Kong offshore company advantage would also be that the two roles (director and shareholder) can be exactly one individual.
In other countries such as Singapore, these two roles must be hold by different people.
As a matter of fact, the director can only be from Singapore.
This has two more advantages:
- Less financial burden to pay a local person to become a director
- You can fully own the company and there isn’t a third party involved
Hong Kong offshore company advantage 9: Tax certificates
Many digital nomads may want to settle in a western country with normal tax rates after a few years of “fun”.
For doing so, many Western countries ask for tax certificates, and your “books” to verify the source of funds for the last years.
Many offshore companies such as Dubai companies or a US LLC for foreigners do not offer such tax certificates or tax returns, audit reports records
This is a Hong Kong offshore company advantage where you can legally prove that you have legally paid taxes (even if it is 0%) and as Hong Kong is not considered as a tax heaven.
