Why is Hong Kong a good place to start a business?
A large number of investors are attracted to Hong Kong, and the reason is apparent. The number of benefits Hong Kong offers is uncountable. A big attraction for a foreign business person is the tax-friendly environment of Hong Kong. A stable political environment, a rich legal system, and pro-business service are few factors that offer plenty of profitable businesses, besides an attractive tax regime and productive workforce.
Therefore, if you are looking for a place to start your new business with a simple tax regime, convenient location, and world-class infrastructure, it would help if you considered Hong Kong to be on your radar. Hong Kong is the 5th fastest growing ecosystem globally and ranking 25th globally. Hong Kong has likely USD 3.2 Billion as the value of the startup ecosystem.
A large number of investors are electing to set up their businesses overseas, with one of the most popular jurisdictions being Hong Kong. The reasons behind this trend are finding a way to enter an international market and benefit from tax-friendly jurisdictions. Hong Kong is one of the best cities for establishing and running a business, with high scores on elements that matter to businesses.
Hong Kong is recognized as such a thriving business center because of its:
- Location.
- A political environment and economy that are trustworthy.
- A tax and business approach that is business-friendly.
- A world-class infrastructure.
- A productive legal system.
Why would you want to choose Hong Kong to set up a business? The following are some vital answers to that question:
- A foreigner is permitted to own 100% of a Hong Kong company, and they are able to be the sole director and shareholder in a Hong Kong company. There are no requirements to be a local resident or a specific nationality.
- In comparison to the surrounding countries, Hong Kong provides stability and worldwide recognition.
- Companies in Hong Kong are permitted to open multi-currency bank accounts.
- Hong Kong uses the territorial source principle of taxation, in which profits made outside of Hong Kong are tax-free.
- Ranking ahead of the USA, Germany, Japan, and the UK, Hong Kong distinguishes being one of the least corrupt nations in the world.
Still, if you are not convinced about the benefits of opening your startup in Hong Kong, here are a few more reasons that will explain you better.
Reason-1 World’s Top Economy
The economic freedom that the country offers is the first reason to be in Hong Kong for your business. Hong Kong is one of the most progressive economic systems due to its free trade policy, no trade barriers, and no limit for foreign onshore business. Consequently, the sky limits employment and earnings from the company. This officially makes the city the most liberalized economy. It is ideal for building and expanding an enterprise, with a favorable climate for trade, investment, and goods movement.
Reason 2: Preferential access to Mainland China
The jurisdiction is a gateway to Mainland China which undoubtedly is one of the significant advantages of setting up a business in Hong Kong. A company set up in Hong Kong gets special access to the Mainland market in China as part of the Closer Economic Partnership Arrangement. China and Hong Kong signed a free trade agreement with the Central People’s Government. The Hong Kong Special Administrative Region Government, granting exclusive mainland market access benefits.
In case you intend to do business with a Chinese partner, you can gain immense profit from starting a company in Hong Kong. A business producing goods in Hong Kong can export to the Mainland without any tariff. That means all made-in Hong Kong goods are exempt from taxes in Mainland China.
Reason-3 Easy Tax System
Hong Kong charges some of the lowest tax rates in the world, which complements its simple tax system. It is one of the main reasons why foreigners intend to begin their business in Hong Kong in the first place. The profit tax is similar for foreigners and local companies that are capped at the lowest rates of 16.5% approximately.
The redemption on capital gains tax in Hong Kong, withholding tax on dividends, and interest or collection of social security benefits. The salaries tax rate is at a maximum speed of 15% that will inflict only on all salary income of individuals derived in or from Hong Kong. The salaries tax is managed yearly and is paid in two installments. Added compelling reason to commence your business in Hong Kong is the zero corporate tax on business activities outside Hong Kong. A business person has to pay taxes only on the business activities carried out inside Hong Kong.
Reason-4 Easy place to do business
Hong Kong serves as the world’s third easiest place to do business. Hong Kong ranked third globally amongst 190 countries. It is an ideal place for operating a startup to reach the exciting business markets. Unlike many other countries that limit foreign business owners from opening their businesses, China welcomes foreign entrepreneurs. They encourage their business owners to strengthen their companies in Hong Kong.
Reason-5 Liberal immigration policy
A visa-free entry policy is suitable for overseas investors from 170 countries. Work visa requirements for foreign entrepreneurs intrigued to relocate to Hong Kong. Hong Kong possesses a high degree of autonomy in various matters, besides its foreign and defense affairs. Political stability, free market, and corruption-free economy are some of the benefits of starting a business in Hong Kong.
Several pro-business organizations have been set up to present a conducive atmosphere for foreign companies to do business in the Mainland and Asia. Advisory support is possible for small and medium enterprises with the Support and Consultation Centre. In addition to this, any company with financial problems can get access to government-funded schemes for assistance.
Reason 6: Full ownership
100% ownership rights of a company incorporated are available for foreigners based in Hong Kong, and the law does not require local residency requirements. This permits a foreigner to be the sole director and shareholder. Another great advantage of starting a business in Hong Kong is that a physical address is irrelevant to work within the jurisdiction. This also indicated that you could run the business from anywhere in the world. All you need to have is a registered office address. Additionally, companies can open multi-currency accounts in banks.
In case the company directors are not residents of Hong Kong, the company is eligible for off-shore company status. If that is the case all you need to do as a business person is pay taxes on the profits generated within the jurisdiction of Hong Kong. Setting up a business in Hong Kong is relatively simple and hassle-free. This makes the administrative jurisdiction of Hong Kong an attractive destination for businesses.
Undoubtedly, Hong Kong is becoming a haven for startups looking towards business expansion or those who are willing to commence their new business in Asia. The facilities of Hong Kong are ideal for anyone to get started from any part of the world. The above reasons have hopefully brought great confidence and surety about the region. If you are ready to start your business in Hong Kong, feel free to contact a professional for the incorporation and registration process. It would be best if a certified agent guides you in the best way to start your business in Hong Kong.
