Hong Kong is one of the most famous and leading Asian centers for both finance and commerce. Its enduring appeal is built on political stability, pro-business governance, rule of law and an independent legal system, free market principles, free flow of information, and English as the language of business.
Advantages of a Hong Kong company
Gateway to China
For more than 150 years, Hong Kong is a major gateway for investment and finance into China (the second largest economy after United States) and the rest of Asia. Its’ renowned free economy and international business environment continues to provide a safe, familiar and smarter route into Mainland China for overseas businesses.
The Closer Economic Partnership Agreement (CEPA) was signed in 2003 by Central People’s Government and the Government of Hong Kong Special Administrative Region. It provides preferential access to China market and reduced tariffs for qualified enterprises. This arrangement is exclusive to Hong Kong. Therefore, it further strengthens Hong Kong’s position as the ideal location from which to do business with China.
Taxation
Hong Kong is one of the few countries in the world that tax is charged on a territorial basis. No taxes are levied on income earned outside Hong Kong. Consequently, this means that a company that carries on a business in Hong Kong but derives profits from another place, is not required to pay tax in Hong Kong on those profits. For example, if shipment of a trading company goes directly from a developing country e.g. China to a developed country e.g. Germany, and the negotiation, conclusion and execution of the contracts are outside Hong Kong as well, the income derived from the trading is not taxable in Hong Kong. If a business earns commission by securing buyers/suppliers for products, and if the arrangement of such business to be transacted between the principals is outside Hong Kong, say in USA, the income earned is also not taxable in Hong Kong. In addition, the location of bank accounts is insignificant. For instance, the above-mentioned HK companies with bank accounts in HK will not be subject of HK taxes. In fact, Hong Kong is a low taxation city. Its tax laws are simple and straight forward. Even if income of a business is sourced in Hong Kong, the profit derived is subject to 16.5% tax rate only. Therefore, Hong Kong, as an international financial centre, is considered an extremely cost-effective tax-planning vehicle for business.
Legal System
With British legal system as background, which is well adopted, each company limited is a separated legal entity and is well protected by laws and regulations.
Banking System
Hong Kong is one of the leading Asian centers for both finance and commerce.135 licensed banks with over 120 foreign banks having representative offices in Hong Kong. There are no exchange controls and tax-free markets exist in gold, stocks and futures. Few restrictions exist in Hong Kong on foreign investment or the transfer of income and capital, meaning that funds can be flown freely in and out of the territory. However, to open bank account in Hong Kong, the client must visit the bank there and pass through the demanding due diligence procedure.
Hong Kong company formation
We can incorporate a Hong Kong company with a name of your choice or from our shelf list. We can do this quickly and efficiently, while providing the best advice as to how to structure your new business.
Use of a Hong Kong company
– Trading company, e.g. handling shipment goods, invoicing etc
– Market entry, we help Hong Kong companies to enter market, expand research, promote planning and promote trading.
– Investment: Investment accounts for securities, bonds, options, precious metals etc. can be opened for Hong Kong companies. Capital gains and dividends are tax-free in Hong Kong.
– Re invoicing: a Hong Kong company can be used for re-invoicing purposes. Profit made on buying goods from one country (e.g. China) and reselling to another (e.g. Bulgaria) will be tax-free as goods are shipped directly between two countries, without going through Hong Kong.
– Income: Overseas commissions, royalties from patents, books, rights, consultation fees, rental fees, interest, dividends etc are tax free in Hong Kong and can be received in the name of a Hong Kong company.
– Asset Holding: Hong Kong companies may hold overseas or local real estate, vessels, companies, stock, etc. to protect owners from estate tax, probate, and divorce settlements. Asset can change hands easier and cheaper by transferring the shares of the holding company.
Incorporation requirements
The companies incorporated in the Hong Kong are governed by the New Companies Ordinance Chapter 622 introduced as from 3.3.2014 and the main requirements are shown below:
1. At least 1 director who can be an individual of any nationality or in case the director is corporate entity, then a second director physical person is required
2. At least 1 shareholder who can be an individual of any nationality or a corporate entity
3. At least 1 company secretary who must be a HK company or a HK resident
4. Registered address in Hong Kong is required.
5. Director and shareholder can be the same person or the same corporate entity.
6. Company names must end with “Limited”. Shelf companies are available and it takes 1-2 days for document preparation. Or you may tailor-make the name of your choice which may take 6 days for incorporation.
7. The memorandum and articles are the legal documents of a company. They must be filed to Companies Registry at the time of incorporation.
8. The New Company Ordinance abolished the concept of nominal value of shares as from 03.03.2014. Under the new legislation, shares are issued at:
– No par value
– There is no minimum amount of numbers or paid up capital under the previous legislation Companies Ordinance Chapter 32 (there was a minimum authorized capital of HK$ 10.000 with 10.000 shares of HK$1,00 per share).
Maintenance requirements
1. Duty to Business Registration Office – renew business registration
2. Duty to Company Registry – file Annual Return
3. Duty to Inland Revenue Department – file Tax Return and maintain proper accounting records for 7 years
4. File Employer’s Return for payroll information.
5. Prepare audited financial statements; under the new Companies Ordinance, it is possible for companies who meet certain conditions to file simplified financial statements.
6. Offshore tax exemption claim: if the income is generated outside the territory of Hong Kong, then claim for offshore tax exemption is lodged together with:
– Profits tax return
– Financial Statements
– Auditor’s report
– Tax computation
For any further information or clarification you can contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.
Globalserve Malta offers the services of international tax planning and incorporation and management of Maltese companies. Our office specializes in Malta companies, trusts and foundations, online gaming and intellectual property. Services of Secretary, Registered office and directorship are offered. Globalserve Malta Ltd is engaged to provide its’ clients with a spherical consultation and focus on each client’s particular needs.Check more about Malta Companies in our website for Malta www.globalservemalta.com
Videos for Maltese Companies
Information on the incorporation and management of Maltese companies:
MALTA COMPANY FORMATION
Regarding a Maltese company formation, a limited liability company may be incorporated in Malta for the purpose of carrying on any activities in Malta or internationally and whether such activities are of a “trading” or “holding” nature. Such limited liability companies can therefore trade in any sector and may hold assets whether tangible or intangible and whether movable or immovable.
Malta Taxation
In terms of Malta law, a company which is incorporated in Malta is deemed to be “ordinarily resident and domiciled” in Malta for tax purposes and would be taxable on its income and chargeable gains in Malta on a worldwide basis, irrespective of where its management and control is situated.
A company incorporated outside of Malta may still be considered tax resident in Malta (albeit not ordinarily resident and domiciled in Malta), where it is managed and controlled in or from Malta. In such situation, the company’s liability to tax would be limited to chargeable income or gains earned in, derived from or realized in Malta. Foreign source would not be taxable in Malta.
Rate of Tax
There is no corporate taxation in Malta and companies are subject to income tax rate at a flat rate of 35% (equal to the marginal rate at which individuals are taxed). The combined overall Malta effective tax rate can however be lowered substantially either by virtue of the refundable tax creditor by application of the participation exemption (as explained below).
Taxable Income
A Malta company’s taxable income would include gains or profits derived from trade or business, dividends, premiums, interest or discounts; rents, royalties and other profits arising from property; any charge, annuity or annual payment; and certain chargeable capital gains.
Tax accounts
For Malta tax purposes, all companies registered in Malta are required to maintain five tax accounts to which all of the profits must be allocated, namely:
The Final Tax Account
The Immovable Property Account
The Foreign Income Account
The Maltese Taxed Account; and
The Untaxed Account
Any profits (income or gains) derived by a company registered in Malta would be allocable to these five tax accounts based on their nature and source and in order to determine the tax treatment thereof.
Participation Exemption
A Malta company in receipt of income (dividend income) derived from a “participating holding”, or gains derived from the disposal of shares in a participating holding, may at its option elect to exempt such profits applying the participation exemption (as opposed to taxation at 35% with a full refund of tax at the level of the share holder as explained further below).
A Malta company is deemed to have a “participating holding” in an entity if:
It holds at least 10% of the equity shares in such entity which holding confers the right to any two of the following: the right to vote, profits available for distribution, assets available for distribution upon winding up;
It has a minimum equity investment of EURO 1,164,000 which it holds for an uninterrupted period of 183 days;
It holds one or more equity shares with the option of acquiring the balance
It holds one or more equity shares which together offer the right of first refusal in the event of a disposal, redemption or cancellation of the balance
It holds one or more equity shares and an entitlement to sit on the Board of Directors of such non-resident entity or to appoint a person on such Board
It holds one or more equity shares in furtherance of its business but not as trading stocl for the purpose of a trade.
Although the above exemption would apply in all cases with regards to gains derived from the disposal of shares in a “participating holding”, certain conditions must be satisfied in order for dividend income derived from a “participating holding” acquired on or after 1st January 2007 (or any participating holding with effect from 1st January 2011) to qualify for exemption. Such dividends would only qualify to be exempt if the “participation holding” is held in an entity which is either:
Resident or incorporated in an EU country or territory or
Is subject to foreign tax rate at a rate of at least 15%; or
Derives less than 50% of its income from “ passive interest or royalties”
Where none of these three alternative conditions are satisfied, two cumulative conditions may be satisfied instead, namely:
The equity holding in the non-resident entity must not be a “portfolio investment”, and
The non-resident entity or its passive interest or royalties must be subject to foreign tax at a rate of at least 5%
Income from Royalties
Royalties and similar income derived from patents in respect of inventions, whether in the course of a trade, business, profession or vocation or otherwise subject to the satisfaction of certain terms and conditions, as well as any dividends distributed out of profits derived from such royalty income may likewise fall to be exempt
Income from Aviation
Income derived from the ownership or the leasing or operation of aircraft or of aircraft engines shall, be deemed to arise outside Malta for Malta tax purposes. This deeming provision shall also apply when the aircraft and/or aircraft engine is registered in Malta; and/or has called at, or is operated from, any airport in Malta. This entails that payments made to non-Maltese resident owners, lessors or operators of such aircraft or aircraft engines should not be subject to tax in Malta allowing for some interesting tax planning opportunities.
Double Taxation Relief
In computing its taxable profits, a Malta company would be able to claim double taxation relief. In terms of Malta law, the three main ways in order to claim relief from double taxation are as follows:
Treaty relief
Unilateral relief
Flat Rate Foreign Tax Credit (FRFTC)
The foreign tax credit is an ordinary tax credit with per-country and per-source limitations. In the case of the FRFTC is a notional flat rate foreign tax credit of 25% for companies specifically empowered to receive foreign source income.
SHAREHOLDERS OF MALTA COMPANIES
Dividend income-The Full Imputation System
Malta operates a full imputation system for the taxation of dividends. A shareholder (whether an individual or a corporate entity) in receipt of a dividend distributed by a company registered in Malta would be entitled to claim a tax credit equal to the amount of underlying income tax paid by the distributing company on the profits out of which the dividends was distributed. Hence no further tax would be payable at the level of the shareholder.
Shareholders in receipt of a dividend from company registered in Malta are therefore not required to declare such dividend in their tax return.
Shareholders of a company registered in Malta are generally also entitled to a refund of all or part of the tax paid on the profits out of which such dividend was distributed. Such refunds of tax have bet the approval of the EU Commission and are applicable to all shareholders in Maltese companies regardless of their legal form, status, or tax residence.
Refunds of tax
A shareholder in receipt of a dividend paid out of profits allocated to the Maltese Taxed account (typically trading income or local passive income)or the Foreign Income Account (typically passive foreign source income)of a company registered in Malta would be entitled to claim a refund of part or all of the tax suffered by the company on the said profits. The refunds would as follows:
Full (100%) refund: such refund would be available upon receipt of a dividend paid by the Maltese company our of the profits (dividend income or gains) derived from a participating holding (as an alternative to the participation exemption)
I. 6.7ths refund: this is the most common refund available on profits (generally trading income) which do not constitute “passive interest or royalties” or upon which the company has not claimed double taxation relief.
II. 5.7ths refund: this refund applies upon receipt of a dividend distributed out of profits which constitute “passive interest or royalties” as defined.
III. 2.3rds refund: this refund applies upon receipt of a dividend out or profits allocated to the Foreign Income Account and upon which the Maltese company has claimed double taxation relief.
Withholding taxes
There is no withholding tax on dividends in Malta. Insofar as Malta operates a full imputation system, no further tax is payable on dividends irrespective of where the shareholder is tax resident and irrespective of whether the shareholder is an individual or a corporate entity.
There is no withholding tax on outbound interest or royalties from Malta with some exception.
OTHER TAXES
Stamp duty
Although stamp duty is gener5ally levied on documents evidencing a transfer of marketable securities at a rate of 2% or at 5% on the transfer of marketable securities in a company where 75% or more of the company’s assets consist of immovable property situated in Malta. Exemption from stamp duty can apply.
Anti-abuse
Apart from a general anti-abuse provision and a number of specific anti-abuse provisions addressed at particular activities, it should be noted that in Malta there are currently:
No controlled Foreign Companies (CFC) legislation
No Thin-capitalization riles
No Transfer-pricing legislation/guidelines
No Transfer taxes
No Capital duty
Publications on Maltese companies:
Introduction
Singapore is a citystate located at the southern tip of the Malaysian Peninsular with a population of approximately 4.8 million. It is known as one of the four “Asian Tigers” and is the major centre for business and trade within the region.
The official business language in Singapore is English and the work force is well educated. Singapore is one of the leading international financial centers in the region with most of the major banks present along with numerous financial institutions, investments, investment management companies and accounting and legal firms.
Company Administration Guidelines
The majority of Singapore Company Incorporations are formed as private limited companies (commonly known as limited liability company). A limited liability company is a separate legal entity in its own right therefore shareholders are not liable for the company’s debts beyond the amount of share capital they have put into the company. The name of a limited private company has to include the following abbreviation – Pte Ltd.
All private limited companies must comply with the statutory regulations set out by ACRA (Accounting and Corporate Regulatory Authority) and the IRAS (Inland Revenue Authority of Singapore)
- Authorized and Issued Share Capital – The concept of authorized share capital was abolished in January 2006. The minimum number of issued shares is 1
- Classes of shares permitted – Ordinary Shares & Preference Shares
- Directors – A minimum of one director is required however at least one must be a Singapore resident individual. Shareholders – A minimum of one shareholder is required. Shareholders may be corporate or individuals and 100% foreign ownership is permitted
- Secretary – It is obligatory to have a secretary. This must be a natural person who is a resident of Singapore. The company secretary is responsible for keeping and filing corporate documents with ACRA
- Registered Office – Every company in Singapore is required to have a registered general office where a register of directors, shareholders, secretary and minutes of general and director meetings are kept
- Confidentiality – details of the directors, shareholders and company secretary are placed on public record
Taxes
- Personal Income Tax has a tier system that starts from 3.5% up to 20% for income above SG$ 320,000
- Corporate Tax of Singapore private limited companies with profits up to SG$ 300,000 is 8.5% (subject to IRAS approval) and is capped at 17% for profits above SG$ 300,000
- IT and Financial companies have a preferential corporate rate of just 10%.
First 3 years of Income Tax Filing:
Taxable Income (S$) Tax Rate
0-100,000 0%
100,001-300,000 8.5%
300,001-2,000,000 17%
After the First 3 years of Income Tax Filing:
Taxable Income (S$) Tax Rate
0-300,000 8.5%
300,001-2,000,000 17%
- No restriction on the free entry and repatriation of funds
- Any income which is not Singapore source income and has been remitted into Singapore by a non-Singapore company is exempt from Singapore taxation
- Companies with a turnover of less than S$5 million are not required to undergo audit and accounts can be filed without audit. It however the company has individual rather than corporate shareholders an audit is required
- Singapore has over 60 comprehensive Double Taxation Agreements signed
- Singapore is the major centre for business and trade within the region and has a highly regarded international reputation. Singapore is on the OECD White list, this identifies Singapore as a transparent offshore jurisdiction.
