6 Key Reasons to Start an Online Business in Hong Kong

If you are thinking of starting a new online or e-commerce business especially overseas, then Hong Kong should be on your radar. In fact, Hong Kong is one of the best countries to start an online business. The country is well-known as a global business hub with highly-advanced information and technology infrastructure, an incredibly favorable tax regime and a very efficient banking system.

Therefore, several investors and entrepreneurs are choosing to set up their businesses in jurisdictions like Hong Kong in order to enjoy the maximum benefits associated with it. So, are ready to start an online business in Hong Kong? If so, then one thing that you need to understand whether you are own an online business or offline or brick and mortar companies, you need to comply with all the rules and regulations of the country. In short, running an online business doesn’t shield your company from the many regulations that offline or brick and mortar companies face.

You are also required to gather relevant business permits, pay tax and comply with other requirements as per your businesses needs. However, you can significantly reduce the exposure of your e-business to such kind of requirements when you register your business in Hong Kong.

Are you still not convinced to set up an online business in Hong Kong? If so, then here are some reasons that will definitely help you in preparing your mind so that you can’t look further than Hong Kong when searching for a country in which to open an online business.

Easy Company Formation

The first and foremost reason to establish your online business in the freest economy of Hong Kong is the process of incorporating your company. The procedure for incorporating or registering your business is simple and straightforward in Hong Kong. As soon as you are done with the selection of your company’s name, all you need to do is to submit an online application to the Companies Registry.

After that, you don’t have to wait for several days; you can quickly open your company in about two week’s time in Hong Kong. More importantly, you can also open your online business with the help of professionals who are experts in opening an offshore corporation in Hong Kong while sitting in your hometown.

They can have your application reviewed within one day to have the certificate of incorporation issued to you immediately after being approved. In short, for opening an online business in Hong Kong and a week to have the company papers ready in your hand.

White-Listed Country

There is no denying the fact that those countries who have meagre interest rates, fascinate an ample number of international organizations and potent governments to incorporate their business. Even though the secrecy jurisdiction or tax havens are legal in various countries, they somehow help the corporations and individuals who have dubiously-acquired wealth to safely hide their assets from the reach of their home governments. However, registering your business entities in such kind of territory may assist you in lowering the tax liabilities.

Hence, as per the internationally agreed tax standard, the OECD (Organisation for Economic Co-operation and Development’s) has formulated “white”, “grey” and “black” lists. So, you must be thinking ‘what do you mean by these lists?’ Well, below shared are some information that will help you in getting a better idea about this concept.

White List — The countries whose jurisdictions have implemented the internationally agreed tax standard are considered in the white list. In short, those are not supposed to be a tax haven by the OECD.

Grey List — In this list, countries jurisdictions are committed to the internationally agreed tax standard but have not yet substantially implemented this standard.

Black List — The countries or states whose jurisdictions have not committed to the internationally agreed tax standard. In short, they are not taking any step or pledge to cooperate with the OECD in order to implement the standard.

So, you must be gleeful to know that Hong Kong falls in the category of the white list, which means that its taxation policies meet international tax standards, consequently, it is not considered a tax haven. In fact, the companies that are incorporated in Hong Kong are typically deemed to be vehicles for international business so that no one will raise a suspicious eye into the nature of your operations.

Effective Banking System

If you are thinking of making international trade, then one thing that you need to consider is to set up your companies in those countries which have efficient banking systems. And that’s the third reason why several successful entrepreneurs choose Hong Kong in order to set up their e-commerce business.

In fact, several companies have also confirmed that Hong Kong has a sound banking system. The city is home to 71 of the world’s 100 biggest international banks, including DBS Bank, Standard Chartered, Citibank, and HSBC.

Once you register your online business in Hong Kong, you will incur the liability to access to a wide range of banking services, and products, from the multicurrency accounts, and merchants. With the help of these liabilities, business owners can easily transfer their money internationally and can bank on these financial institutions to securely hold their money.

Most importantly, you don’t need to face any problem while opening a Hong Kong business bank account unless and until you have registered your organization correctly in the freest economy of Hong Kong.

Excellent Reputation with Stable Jurisdiction

Every business owner requires stable jurisdiction in order to set up and scale their business in the competitive business world. Hence, it is not surprising to say that companies which are incorporated in those countries that don’t have political stable jurisdictions are not able to cope up with the competition. Unstable jurisdictions always block or limit access to the internet, and affects the performance of online businesses. That’s why such countries generally don’t have high rates of foreign direct investment.

However, when you decide to set up your e-commerce business in Hong Kong, then you don’t have to worry about the jurisdictions. Hong Kong has an excellent reputation for good governance. While operating your organization, you are unlikely to encounter bureaucratic or corrupt government officers. In fact, due to its stable jurisdiction, good reputation. Hong Kong is increasingly becoming a preferred destination for global companies looking to set up regional headquarters in the Asia-Pacific region.

Favorable Taxation Policy

As a matter of fact, taxes are one of the primary concerns for business owners who are willing to set up their online business overseas. In this regard, Hong Kong boasts of being one of the lowest tax jurisdictions in the world. Hong Kong doesn’t impose any corporate tax on the offshore businesses, as long as they are operating their business from outside the country.

So, now you must be thinking, if you own online business in Hong Kong, then ‘are you eligible to pay corporate tax in Hong Kong?’ As a matter of fact, while operating your online business, all your sales activities must be managed or controlled over the internet.

Well, in Hong Kong, you don’t need to worry about this thing. As per the rules of the Inland Revenue Department (IRD), the contracts which are based on purchase or sell, and are not commuting outside the Hong Kong, but it is carried out in Hong Kong with the help of telephone, other electronic gadgets or another source such as the internet, then the contracts will be considered as having been effected in Hong Kong. In this regard, you need to pay tax on selling your products and services to the Hong Kong residents.

Other than this, the country also has zero:

Withholding tax — If you are willing to present your e-commerce company in the Stock Exchange of Hong Kong Limited, then you are not eligible to withhold any taxes on payment of share dividends to investors.

Inheritance tax/Estate duty– In Hong Kong, your company won’t be subject to estate tax. Your appointed successors will take over every piece of the company

Capital gains tax– Hong Kong also have zero capital gains tax. To be precise, if you have decided to sell some of your company’s property (non-inventory assets), then none of your profits (gains) will be taxed Sales or Value Added Tax.

Moreover, Hong Kong is not only famous for its zero tax rates, but the IRD of Hong Kong is also very transparent and making Hong Kong a suitable jurisdiction for your online business. So, you are worried about the tax rates, then you can set up your company with the confidence that Hong Kong’s current tax-regime won’t change abruptly in the future.

Advanced Information and Technology Infrastructure

In order to operate an online business efficiently run an online business, you need to have proper access to reliable data centers, servers, and other pieces of internet infrastructure. And when you incorporate your business in Hong Kong, you will easily figure out all the tools and tactics that you need to establish and grow your online business. These include:

• Free flow of information

As a matter of fact, an online business can’t survive in the competitive business world, if it lacks the free flow of information. To be more precise, For example, China has abandoned the use of Google in China because of the country’s content censorship laws. However, Hong Kong has great laws that usually support the free flow of information, and don’t limit the operations of online businesses.

• Power Supply

While operating your online business, the power supply is must, no doubt. And we all know that internet infrastructure is powered by electricity. So, if there is a frequent power cut, then it will be difficult for online business to thrive into the competition. However, when you set up your business in Hong Kong, then you don’t have to face those problems. Hong Kong has reliable power supply providers, and unplanned outages typically last for less than 3 minutes.

• Internet Readiness

As per the Office of the Chief Government Information Officer, Hong Kong has been cited as the second fastest internet with an average speed of 114 Mbps on the planet. In short, your online business would be best when the visitors can easily access it without delay.

• ICT Talents

There is no denying the fact that while scaling your business, you need to have a team who are skilled in IT field such as designers, engineers, and web developers. And in Hong Kong, there are numerous professionals in the IT field whom you can easily hire in order to build your robust and reliable team here.

• Data Privacy

Even though all the online businesses are required to protect their customers’ information, at certain times, this task becomes difficult when you register your business in a jurisdiction with weak data protection laws. However, in Hong Kong, you don’t have to face these kinds of problems also, because Hong Kong enforces strict privacy laws. Which means that unauthorized individuals or government authorities cannot access your data centers.

Conclusion

Now that you have a plethora of reasons to incorporate your online business in Hong Kong, and enjoy the maximum benefits associated with it. No matter, whether you are willing to form an offshore company just for tax-reduction purposes, or you wish to wreck into the vast Chinese market, Hong Kong would be your the best perspective. So, are you ready to register your online business in Hong Kong? If so, then Startupr is here for you. We can assist you in preparing, and rectifying all the documents for your online business without any hassle. For more information, contact us now!