Set up a company in Hong Kong and get a Hong Kong Corporate Credit Card
Bruce Lee, Rice noodles, pretty girls in nightclubs, any merchandise you could imagine, low tax, fast cars, rich people, poor people, moldy tofu, delicious duck. Hong Kong is the best place in the world to start a private equity fund, but its also an amazing place visit, live, or start a business – and a very applicable country for Flag Theory.
This article will detail:
- How To Set Up a Company in Hong Kong
- Taxation Issues
- Step by Step how to get a Hong Kong Corporate Credit Card
- How to Get a Hong Kong Passport / How to get a Hong Kong Permanent Residency
Strategically located next to China, “HK” is an island – one of the wealthiest in the world, and a place where many billionaires and millionaires live, work and retire. In my estimation, this has just as much to do with the rise of China – as the free market of Hong Kong, and the low taxes as well as ease of business.
Hong Kong has a tax system that actually makes sense. In places like Europe and the US where taxes are constantly on the rise, and “austerity measures” seems to be the buzzword – the governments and the people of the west are stuck in scarcity mode. Hong Kong is a place of abundance, where there is always more than enough.
What some governments seem not to understand is the Laffer Curve – which posits that the higher the taxes for a country, the less the government will actually receive. If taxes are low, citizens won’t waste time trying to avoid or worse, evade tax – they simply pay the tax because they are competitive and make sense.
All countries of the world need to realize that they are in a competition for the producers of society, entrepreneurs and that these highly productive citizens can be ‘recruited’ by making the country an attractive place for Flag Theory:
- Citizenship opportunities – Citizenship flag
- Low taxation- Tax Flag
- Common Law business laws, Affluent Clientele – Markets Flag
- Great Banking and Investment – Assets Flag
- High quality of life – Playgrounds flag
Hong Kong seems particularly well suited to fit any of the above categories. And besides, if you want to do business with China, a Hong Kong company is essentially a necessity. Hong Kong also makes a lot of sense as an “offshore” company – as it is very possible that your HK Co Ltd. can operate at a 0% tax rate.
Hong Kong is perhaps the most popular place in the world to set up a company, with a full 30% of all companies established in the world, based out of Hong Kong. The second most popular being a USA corporation in the state of Delaware (even though Wyoming is better than Delaware for incorporation) The popularity of HK has obviously propelled by the rapid growth of China over the past several decades, and vice versa.
A Hong Kong company can be used for a variety of different reasons including; banking outside your own name in a corporate account, as a holding company, to contain other entities, or running an active business or as a trading company.
Should I form a Hong Kong Company?
- Downsides = Yearly audits and Secretaries
Yearly Audits. Compared to a Belize company or BVI company, a Hong Kong company requires a good deal of upkeep. You are required to hire a Hong Kong accountant to submit yearly audited financials to the IRB.
- Public Directory.
Your name (if you establish the company or serve as a director) will be stored in a government database that is publicly searchable. Unlike a place like Wyoming, BVI or Hong Kong – there is a corporate database where your information is stored and can be mined by any interested parties. For this reason, a Hong Kong entity is not very private.
You could, however, use a nominee director to remove your name from the public database.
Banking through a Hong Kong entity is good – once you have it set up, and oftentimes this requires a trip to Hong Kong, as banking is slightly different here. Once the bank account is set up, you will enjoy some of the lowest wire transfer fees in the world – and Hong Kong banking is generally perceived as secure and safe.
- Low Tax | No Tax
Hong Kong has a tax regime that is territorial – meaning that in general profits earned outside of Hong Kong, will not be subject to the HK Inland Revenue Board (IRB) tax. This is a topic you should discuss with your HK secretary to make sure that you get right the first time. However being taxed onshore isn’t all that bad – as the tax rate in Hong Kong is at a low rate of 17%
If for instance, you want to sell to Hong Kong citizens, you would be taxed at 17% on these transactions. You can even split your balance sheet and be taxed at 17% for HK revenue, and 0% for revenue generated offshore.
- Common Law
Hong Kong law is derived from British common law, and most citizens speak English. This is one of the primary reasons why doing business in HK or establishing a Hong Kong legal entity is highly advantageous. Another reason includes British common law, and the prevalence of English speakers. Although most people in HK speak Cantonese – a dialect of Chinese spoken mostly in Hong Kong and Taiwan – almost everyone also speaks English.
Step 1: Set up a company in Hong Kong and begin the process of opening a bank account (this usually requires going to Hong Kong, unless you have a pre-existing relationship with a banker, like I do).
Step 2: Opening a personal bank account is never a bad idea, and this can help facilitate the process, although it is not necessary. The key here is that you fully open an account. As usual, you will need to prove three things:
- Proof of identity – passport copied and certified by banker, lawyer or notary
- Source of wealth – letter from banker or accountant stating that your funds are legit
- Proof of address – utility bill or credit card bill current within 60 days
Step 3: Set up your company’s documents. Everything needs to at least appear as if you are operating out of Hong Kong – your address, phone and fax should all reflect Hong Kong. You could get a Skype number and a virtual address. This address should not be the same as the company’s registered address – it is supposed to be your company office.
Step 4: After you open your personal account and receive your ATM card, opening statement, and online banking info; Log on to your online account and change your address to a HK Mailing address, and have all the other basic facts on the file including your telephone number reflect this change. You also need a residential address – which you can use your apartment, a friends house, but using a straight up PO Box won’t count.
The purpose of this process is to establish yourself (a director of the HK company) as a resident of HK. The idea behind all of this is that you are proving you are a HK resident, because the bank figures there is a lesser chance you’ll run off without paying your Credit Card bill.
Step 5: Apply for your Credit Card
There are several to choose from, several of which require a minimum deposit in your account at the bank. Really, this is more like a debit card in some ways, because you can’t just apply for tons of credit without having backup funds. However, this is not the case for established businesses with pre-existing credit or established trade lines.
When you apply for credit, 50,000 HKD ($6,500 USD) is a totally normal and accepted amount to apply for. If you require a higher limit, ask for an increase after you are accepted for the Credit Card.
Step 6: Follow up
If you have not heard back within 2 weeks, call your business banker. They will reapply for you and tell you what changes to make on your application so you will get your card. Another way around this is to use a pre-existing relationship with your bank to get a card. For instance, certain premier members may be able to open the account abroad. You can also open up a different corporation with an LLC from Belize, and LLC from Nevis, or many other jurisdictions.
Banking in Hong Kong
Banking in Hong Kong is really some of the best in the world. Most people decide to open up an HSBC account, because you can actually do this from abroad. In order to open an HSBC account abroad, you would go to a local branch and have them certify the documents that you bring. They may not be very willing or tell you that this is impossible because they don’t want to send your business to another branch.
You see, just because you go to a branch in Berlin to open the account, as long as you are opening an account in the Hong Kong branch – you are essentially on an entirely different jurisdiction – with different governing body – Financial services commission of Hong Kong.
At Flag Theory we have a strong relationship with our bank partners in Hong Kong, where our introduction can lead you to open a bank account in Hong Kong. You can check options and apply for a Hong Kong bank account at bankaccounts.io or filling this form.
Living in Hong Kong
If you want to live long-term in Hong Kong, you better be willing to shell out some cash! The place is one of the most expensive places on earth to live. However, it is amazing in Hong Kong, and truly one of my favorite cities. The food, the nightlife, the busy business environment, the city skyline and nightly light show – Hong Kong is a fantastic place to live.
Similar to Singapore in many respects, Hong Kong has more edge – there isn’t the polished feel, and it seems a bit older and with a deeper culture. Hong Kong is like Bangkok in that pretty much anything you could ever need, you can find in Hong Kong. Highly recommend for at least a visit, HK is a place you absolutely need to see before you die, and if you go – set up a bank account.
Hong Kong Citizenship?
There is technically no such thing as Hong Kong is not a country but a SAR – special administrative region, and although travel documents are issued, all that is possible to attain is permanent residency, might be worth pursuing but only if you have lived there for 7 years and you fit into one of the categories below:
- You are a Chinese citizen (that is a citizen of the People’s Republic of China) born to a parent who is a Chinese citizen born in Hong Kong, or to a parent that is a Chinese citizen who has lived 7 years in Hong Kong and obtained ROA before your birth.
- You were born between January 1, 1983 and June 30, 1997 and were a British Dependent Territories Citizen associated with Hong Kong, i.e. one that was born to a parent that was a BDTC born in Hong Kong, or to a BDTC that naturalized as a British subject in Hong Kong before your birth. The BDTC parent can either be the mother or legitimate father.
- You were born before January 1, 1983 and at your birth were a Hong Kong Belonger. A Hong Kong Belonger is a British subject with a close connection to Hong Kong. If you were born before 1983 and you were a Citizen of the United Kingdom and Colonies (CUKC) or a Commonwealth citizen, you were a British subject.
This will actually only give you a right to abode. If you are interested in more, to see how you can fulfill more requirements check out this guide –> http://www.sm128c.com/hk/
Set up a company in Hong Kong today
If you want to set up a company in Hong Kong, you can do it now acquiring the Hong Kong Incorporation Professional Package.
At Flag Theory, we help you to find the best locations globally to structure your business and your life. We offer incorporation, residency and banking options in strategic jurisdictions, in order to improve your privacy, freedom and wealth. Through our free tools, passports.io / incorporations.io / bankaccounts.io, you can compare jurisdictions to get a second citizenship, incorporate a company or do banking. If you need personalized advice, contact us or check how we can help you from an integral approach, to find the most suitable internationalization solution for your specific personal and business circumstances, needs and priorities.