In today's global economy, an increasing number of companies are setting up offshore operations. Today, a sizable number of MNCs and small to medium sized companies are based offshore. Likewise, numerous self-employed consultants hold offshore companies and offer their services to clients across the world. There are several reasons behind why businesses are choosing to incorporate offshore companies such as low taxes, ease of company formation and ongoing compliance, transparent and efficient legal system, and access to world-class financial institutes.
™
A number of factors need to be considered and deliberated upon while setting up an offshore business. In order to choose the right business jurisdiction, critical elements such as the business environment, costs involved, ease of company formation, ease of ongoing compliance, bureaucracy levels, and tax regime need to be taken into account.
Ease of company formation, minimal statutory compliance, and low bureaucracy levels
Incorporating an offshore entity holds many benefits for a company; easier business administration being one of the key advantages. Businesses that are constrained by the convoluted legislation, red tape and compliance-related hurdles in their own countries often choose to incorporate an offshore company. Tax rates, regulatory requirements, and economic incentives differ greatly from country to country. Choosing the right jurisdiction for incorporating a business should therefore be done keeping these considerations in mind. Business incorporation takes very little time these days and the administrative tangles are minimal with most of them being handled by a company agent. All you need to do is make use of the company incorporation services offered by a consultancy that specializes in the field.
Conducive business environment
The general business climate should be pro-business and pro-talent and this is usually reflected in a country's immigration policies, regulatory environment, and the openness of its people. It is important to choose a jurisdiction that not only ensures the availability of excellent infrastructure but also enforces policies and laws that promote entrepreneurship and commerce.
Higher profitability
Offshore business incorporation can be highly profitable as a wide-variety of shares, bonds, commodities and other financial instruments can be held and managed through a single offshore company. Moreover, investments made through an offshore company are generally exempted from tax on the income from the investments.
Low taxes
Many leading jurisdictions that cater to global investors offer low tax rates and minimum reporting requirements. This means that the company benefits not only from low corporate tax, but also from lesser compliance and other regulatory costs. Moreover, many such countries offer no inheritance tax or capital gains tax.
Singapore as your destination for business incorporation
Singapore offers numerous advantages which makes it one of the best places to start a business.
According to the Doing Business 2010 Report Singapore retained its ranking as the world's easiest location to do business, due to its low import and export costs, well-framed laws for protecting investors, and labour regulations that favour employers. Due to its low and simple tax regime, Forbes rated Singapore as having the 11th lowest tax misery in the world. Singapore is also the most competitive country in Asia according to the World Economic Forum's Global Competitiveness Report. Unlike other jurisdictions, there is no requirement to rent or purchase a physical office in Singapore for company incorporation. Singapore's corporate tax rate is a flat 17%. Additionally, there are tax exemptions for startup companies. There is no capital gains tax in Singapore. Furthermore, incorporating a company in Singapore only takes one day. All these factors make the country an ideal jurisdiction for business incorporation.
Hong Kong as your destination for business incorporation
Like Singapore, Hong Kong is one of Asia's major economies and a preferred choice for business incorporation. Hong Kong is ranked as the world's freest economy and also ranked third in the World Bank's 'Ease of Doing Business Report', 2010. Hong Kong has the lowest tax rates in Asia and one of the lowest rates in the world. Taxes in Hong Kong are levied on the "territorial principle". In other words, taxes are only levied on income "derived from or arising in" Hong Kong and not on income sourced outside Hong Kong. No tax is levied on profits arising abroad, even if they are remitted to Hong Kong.
As an international metropolis with abundant information and opportunities, Hong Kong company formation gives unmatchable access to an estimated consumer market of 450 million people in southern China alone. With sound infrastructure and complete legal system of its own, it provides an advantaged financial & commercial environment to many entrepreneurs and traders. Therefore, Hong Kong is a popular jurisdiction with international entrepreneurs looking to penetrate Chinese markets, and more and more people establish their own companies in Hong Kong with different purposes, which improve not only the image of the company itself, but also the competitive ability in the international market. The following information will help you determine whether Hong Kong company formation is the optimum strategy through which to achieve this.
We know there are many reasons or factors can contribute to the success of business. While Hong Kong is considered one of the best cities to establish and run a business, as it scores high on factors that matter to businesses. Below are some of the key benefits of setting up a business in Hong Kong and will serve to provide you with the answers whether Hong Kong company formation is the optimum strategy.
1. Being international center of information exchange and transportation hub. A focal point of all maritime activities in southern China and is one of the major ports of the world in terms of tonnage of shipping using its facilities, cargo handled and the number of passengers carried.
2. World's most dynamic economies driven by the principles of free enterprise, free trade and free markets open to all. No restriction on inward and outward investment, no foreign exchange controls and no foreign ownership restrictions
3. Strategically located in close proximity to China. Air, rail, road and sea links are modern and efficient and offer unrivalled access to China's booming southern provinces for many foreign entrepreneurs.
4. With very low tax rate (around 16.5% on net profit), tax exempt for income not incurred in Hong Kong (offshore income)
5. With Robust Infrastructure, stable social and political environment, Most businesses choose to set up operations in Hong Kong as it believed to be politically stable with a pro-business governance and free market principles.
6. Enjoy convenience of international banking system. A number of banks represent the interest of 32 foreign countries. The Hong Kong banking and financial services is regulated by the Hong Kong Monetary Authority (HKMA). The features and benefits of using Hong Kong for private banking, bank accounts, corporations and offshore asset protection are extensive.
Hong Kong Company Formation process is relatively straight forward. The main requirements are:
1. Require at least One company director/shareholder and a Hong Kong resident company secretary (above the age of 18 ).
2. Confirm the company name and corporate structure
3. A minimum issued capital requirement of HKD 10,000, Paid-up capital requirement is only the sum of one dollar.
4. Business scope. There is almost no restriction in the field of business scope when you set up a Hong Kong company.
5. Operational requirements, like opening a Hong Kong corporate bank account, setting 開公司費用 up office (virtual office is an option) etc.