Hong Kong: Why It is the Best Jurisdiction for Opening an International Business
For decades Hong Kong has stood out as a global international hub that entrepreneurs can look to when they want to catapult their businesses. Think of any multinational you know today, and the chances are that it has a presence in Hong Kong or used the jurisdiction as a stepping stone for growth. So, let us cut the chase here and ask the big question: Why Hong Kong?
In this pose, we take a closer look at Hong Kong to tell you why it should be your first choice when seeking to grow your business.
Hong Kong is the Main Gateway to China and Entire Asia
When we talk about opening your business in Hong Kong, it implies a tip of the iceberg. Look at the bigger picture and it will be amazing. Because of its location at the heart of Asia, Hong Kong serves as the main gateway not just to the Hong Kong market but also to Mainland China and the entire Far East. This is why Hong Kong has won the tag “meeting point between the East and West.”
Over the years, Hong Kong has cultivated a trustworthy environment for investors from the west and used all efforts to build robust economic ties with neighboring countries. For example, the Hong Kong administration has entered into bilateral economic agreements with most neighboring countries, which means you can easily grow beyond Hong Kong.
Hong Kong is the World Freest Economy
As an island with no land for agriculture or mineral resources. Hong Kong adopted a business-based approach to drive its economy. The economy is run by the principles of free trade, free markets, and free businesses, which implies that it is open to all people. Here are some core elements that help to propel the economy to the next level:
- No legal restrictions on inward and outward investments.
- Strict-anti-corruption regime.
- Robust legal system.
- You can import your goods to China under zero tariffs.
Relatively Hassle-Free Business Setup
To take your business offshore, the first step is registering it. But this has always been a challenge for many jurisdictions because of many hurdles put on the way. But not with Hong Kong. To incorporate a company in Hong Kong is pretty straightforward. The process is well documented in the Hong Kong Companies Ordinance, which details the documents that you need, fees and time requirements. And you know what? You can now register a company in Hong Kong without going there. Here is the process:
- Identify an agency to register the company on your behalf.
- The agency prepares the documents and submits them to the registry on your behalf.
- You get the certificate of incorporation so that you can start running your business in Hong Kong.
If you are looking forward to opening an offshore business, one of the best jurisdictions is Hong Kong. The benefits associated with taking your business to Hong Kong are many, and we have just pointed a few. You will also enjoy low & straightforward tax regime, and highly developed infrastructure. If you want to grow, it is time to move to Hong Kong.
An Insight into the Hong Kong CRS Framework
Are you planning to open an offshore company or already have a business running in Hong Kong? One of the things that you need to understand is the Hong Kong CRS framework. So what is CRS? What is Hong Kong CRS Framework?
A Brief Look at CRS
When OECD’s Convention on Mutual Administrative Assistance in Tax Matters was held in 2014, the primary resolution was the adoption of Corporate Reporting Standards (CRS). The new system was developed to try and curb tax avoidance after it emerged that the previous method that only required sharing of tax information only on request was not working. CRS strongly borrowed from the US FATCA that requires every US citizen to report to the federal government about the cash held in their foreign accounts.
Although not a member of OECD, Hong Kong was among the first states to commit to implementing the new CRS system. This is what led to the development of the Hong Kong CRS Framework.
Hong Kong CRS Framework and Business Operations in Hong Kong
To adopt the OECD framework, Hong Kong had to amend its IRD (Inland Revenue Department) laws to accommodate it. In 2016, Hong Kong passed the CRS Framework that provided a clear roadmap for the implementation of Automatic Exchange of Financial Information (AEOI). So, what is contained in the Framework?
- Hong Kong CRS framework Implementation
The Hong Kong CRS framework provides an outline for identifying reportable, call them risky, offshore accounts. It also highlights the details that should be gathered from such accounts. So, what does it mean for businesses?
- As a business, you need to know whether you are a reporting entity. This is particularly crucial for offshore businesses that are in the financial related enterprises.
- When opening bank accounts for a Hong Kong company, you will be required to provide more information about tax details of shareholders and directors in their home countries.
- The process of opening bank accounts, especially for businesses, could, therefore, take a longer period. Therefore, it is important to ensure that all the information that your bank needs, including the need for clarifications, are responded to promptly.
For Hong Kong, the CRS Framework came at an opportune time when it was seeking a way to bolster bilateral relations with other countries. So, the Hong Kong administration pegged the Automatic Exchange of Financial Information (AEOI) on reciprocity. This implies that if a country wants to share tax information about foreigners working in its jurisdiction, it must enter into a bilateral trade agreement. Further, the cooperating country must enter into a Competent Authority Agreement (CAA) that defines the channel for passing the financial information.
- Hong Kong Used CRS to Build Partnerships with Other Countries
The passing of the Hong Kong CRS framework demonstrates the administration’s focus on building a business economy that supports enterprises for success. So, while the CRS targets to address tax avoidance issues, Hong Kong steered it to build more partnerships for business. This was a very smart move!
The Hong Kong CRS framework demonstrates the resolve of the Hong Kong administration to progressively build the jurisdiction as a global economic hub. With a jurisdiction such as Hong Kong, you can never get it wrong about business growth.
Mistakes You Must Avoid when Registering a Business in Hong Kong
Hong Kong is a business paradise that entrepreneurs look to for success. Located in the heart of the Far East, Hong Kong has established itself as a good firing canon that will elevate your enterprise into a multinational. So, whether you are in the import/export, technology, telecoms or hospitality, you can rest assured of success after incorporating the company in Hong Kong.
While it is true that Hong Kong is unmatched when it comes to supporting businesses for success, we must also mention that a significant number of enterprises trying to venture into the Hong Kong market also fail. The big question is, why? In this post, we will highlight the core mistakes that you should always avoid when registering a company in Hong Kong.
Buying a Shelf Company
When investors decide to venture into the Hong Kong market, it is not uncommon to see some of them looking for ways to accelerate the process, such as using shelf companies. This could be caused by deals that have gone through to fast or the need to complete the process faster. Shelf companies are companies that have already been registered by the original owners no longer need them. Indeed, there are some people who only register companies with the focus of selling them. Although buying a shelf company might look simple, it gets really murky along the way and could result in huge losses.
While the process of buying an already established company is not prohibited in law, you will find it challenging to try and open bank accounts. In many instances, it becomes difficult to convince different stakeholders that the objectives of the company are similar. This implies that you are likely to get stuck with a company that cannot do business. Indeed, it is not uncommon to see the process of buying a shelf company unfolding into a lengthy court battle.
Instead of focusing on buying a shelf company, it is advisable to register a company in Hong Kong from the start. Indeed, you can accelerate the process and incorporate the company faster by using an agency.
Selecting the Wrong Company Secretary
One of the primary requirements for company incorporation in Hong Kong is that you must have a resident company secretary. This is a very important position because the person or entity you select will be part of the board meetings and act as the custodian of the company statutory documents. Therefore, any people try to look for family members or friends to serve as their company secretaries. But this is the wrong idea because the position is very important and requires a lot of experience.
The best way to look for a good company secretary is ensuring to select the most qualified and experienced person. The selected person should also be fully committed to helping your company to achieve its growth targets.
Failing to Study the Hong Kong Market Well
Notably, as you have identified good business opportunities in Hong Kong, the chances are that there are others who are already in operation. Therefore, failure to study the market and draw good strategies for operations could result in serious challenges. Particularly, you need to study the competitor and the targeted audience so that you only sell the right product or service.
If you want to take your business to Hong Kong, it is prudent to avoid the above mistakes. Make sure to register your company in line with the Companies Ordinance, understand the target market, and have the right people on your team.
How to Identify a Good Company Secretary for Your Hong Kong Company
Hong Kong is known as a global investment hub. Starting from the era when the jurisdiction was under British colonial rule, it has cultivated a progressive pro-businesses approach that has made it the must-go-to option for enterprises that want to sprint to global arena. For more than a decade, Hong Kong has been ranked by World Bank one of the best jurisdictions on the ease of doing business index.
When you think of taking advantage of this pronounced ease of doing business index, the process starts with company registration. In Hong Kong, the process of registering a company is guided by the Companies Ordinance. One of the most emphasized requirements when registering a company in Hong Kong is a company Secretary.
Who is a Company Secretary and what are His Roles?
The company secretary is a person or a registered entity that is required to act as the bridge between the company and the Hong Kong administration. Besides, the secretary is charged with the principle duty of ensuring that the company is fully compliant with all the rules, regulations, and policies of the Hong Kong administration. But these are not the only roles of the Company Secretary in Hong Kong.
- Maintain the statutory books of the company.
- Help prepare board meetings and take the minutes.
- Advice the business on matters related to compliance.
- If the company needs to be deregistered, the secretary has to oversee the process.
How do You Select the Best Company Secretary for Your Company
From the above roles of a company secretary in Hong Kong, there is no doubt that this position is a professional one. Therefore, you cannot simply select any person out there. To help you identify the best, here are some useful tips to help you:
- Go for the Most Qualified
The biggest mistake that you can make when looking for a company secretary is selecting friends or family friends. Instead, you should go for experts with both academic and professional experience. For example, a good company secretary should have held such a position and achieved enviable success.
- The Secretary Must Be a Resident in Hong Kong
The Hong Kong Companies Ordinance makes it clear that the selected company secretary should be a resident on the island. Furthermore, the person should have a clear understanding of the Hong Kong market in order to help your company grow. This implies that you should not simply pick the secretary for compliance, but the ideal candidate to help your enterprise to grow.
- Go for the Secretary who is Committed to See Your Enterprise Grow
Notably, the company secretary you select will be part of your enterprise. For example, he will have access to all the documents and decisions on company operations. This means that you need a person with relentless commitment to see your company grow and succeed.
When it comes to selecting a company secretary, you cannot afford to pick the wrong person or entity. Instead, you must select the best. This is the person or entity with the highest qualifications, experience, and commitment to see your enterprise grow to the next level.
How to Select a Good Offshore Jurisdiction for Growth
Are you thinking of growing your business abroad? This is the first most crucial and bold step for building a multinational. But you need to make the first step, selecting the right jurisdiction. Here are the key considerations to help you select the right jurisdiction.
Supportive Administration
A good jurisdiction for offshore investment should have a supportive regime. This is an administration that uses every effort to help the enterprises in its jurisdiction grow and become a success. So, look for key policies that are meant to support your enterprises both directly and indirectly. Here is what to look for:
- Pro-business policies that help enterprises to easily establish and grow.
- A jurisdiction that has entered into many bilateral take arrangementsso that traders can access more markets.
- An administration with good programs, such as start-up incubation programsand financial support, that helps businesses to grow faster.
Easy process of registering New Companies
One of the issues that make investors hold back of even fail to take their businesses offshore is a complicated process of company incorporation offshore. The best jurisdiction should have a simplified way of company registration so that investors can easily register their businesses and start operating there. For example, a jurisdiction such as Hong Kong allows investors to register their companies without travelling there.
Advanced Infrastructure
For a business to thrive, the selected jurisdiction should have a well-developed infrastructure. Think of an entrepreneur who wants to invest in manufacturing offshore. To start such a venture, the investment needs good road network for raw materials and finished products movement. Investors also need well-developed air transport network, communication system, and electricity supply.
Access to a Large Market
Whether you are moving your business to grow in the international arena or simply want to run away from unsupportive regimes back at home, one of the things you must consider is the available market. The aim should be identifying the country that has a large population ready to buy and use the services or products you have to offer. Note that when looking at the market size, you should not only look for the local market but also check the possibility of accessing markets in the neighboring countries.
Why Hong Kong is the Best Offshore Jurisdiction for Your Company
Looking at the above considerations, one jurisdiction that fits them well is Hong Kong. The jurisdiction has, for many years, made a name globally because of its pro-business policies. For about two decades, Hong Kong has been ranked by the World Bank as one of the freest economies. This implies that once you register a company in Hong Kong, you have a level playing field, so if you make good products and market them well, the business will thrive. Other things that make Hong Kong stand out include:
- The jurisdiction enjoys great autonomy from Mainland China, which it uses to advance its pro-business policies.
- The country acts as the gateway to Mainland China and the Far East.
- The tax regime in Hong Kong is straightforward.
If you have been thinking about taking your company offshore, you can only be successful by identifying the right jurisdiction. Hong Kong is a global business hub and will be a great choice to help catapult your enterprise into a regional and global giant.
Business Success in Hong Kong: Five Most Important Things to Do
Have you been thinking of growing your business abroad? One of the most potential jurisdictions is Hong Kong. For about two decades, Hong Kong has stood out as a business hub that no entrepreneur wants to miss. Here are some important things you need to know about Hong Kong:
- The jurisdiction is run by an administration with pro-business approaches.
- It is ranked at the top of the World Bank’s Ease of Doing Business Index.
- Hong Kong has a very straightforward tax regime.
- Companies getting into Hong Kong are sure of enjoying a larger market, including Mainland China and the entire Far East.
- Hong Kong has a highly developed infrastructure for business growth and success.
With these benefits, it is easy to understand why every business, including top financial organization wants to have some presence in Hong Kong. So, here are some useful tips for business success in Hong Kong.
Register the Company in Line with the Companies Ordinance
The first step if you need to succeed in Hong Kong is ensuring your business is properly incorporated. This means that you must meet all the requirements for company incorporation in Hong Kong. This will help to ensure your business is legit to avoid getting into conflict with the law. You also need to ensure:
- Ensure the business gets all the necessary licenses for operations in the selected niche.
- Acquire a business registration certificate (BRC).
- Keep the Significant Controllers Register.
- File your annual tax returns correctly and on time.
Hire the Right People for Your Business
A business is as good as the people working there. After registering a company in Hong Kong, you need to put every effort into selecting the right people. These are employees who are interested in seeing your company grow from one level to another. Remember that selecting employees with the right qualifications is not enough; you also need to do the following:
- Train them progressively.
- Provide the right working environment.
- Motivate the staff.
- Facilitate the development of a good organizational culture.
Study Your Competitors and Craft Winning Strategies
Although you are simply entering the Hong Kong market, it is important to appreciate that others have already been there. Therefore, competition is likely to be very stiff. To beat the competitors, you need to three things:
- Study the competitors: This will help you to understand what strategies they use, their target clients and the nature of their products.
- Understand the targeted clients: When you understand your Hong Kong market, it becomes easy to tailor your products or services to address their needs. For example, if you have a company dealing with fitness, the main question to ask might be: What do people want?
- Craft strategies for success: This is the most important thing when running a business in Hong Kong.The strategy you develop should be based on innovations and aimed at beating your competitors.
Demonstrate Tax Substance
The main goal of opening a company in Hong Kong is to enjoy a bigger market. To grow your company beyond Hong Kong, you should make sure to demonstrate tax substance. This means that your enterprise’s activities, in addition to being registered in Hong Kong, also helps to promote the growth of other enterprises. To do this, you do activities that promote local businesses, such as holding business meetings in Hong Kong, maintaining a physical office that has its own expenses and staff, and partnering with other enterprises.
When you decide to register your business in Hong Kong, it is the first step in the right direction. But you also need to be smart to steer the company to success. Make sure also to use the above tips and be as creative as possible to grow the enterprise faster.