Hong Kong Ltd VS US Ltd VS UK Ltd

[JohnLocke]

MukaTukTuk said:
Yes, I've opened a Delaware corporate Wells Fargo account personally, as a non-US resident, in the last year.
Click to expand...

Did you do a personal visit and what was the requirements?

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[intlman]

banafinfodafuggiano said:
My HK accountant say there should be no problem getting the Tax exemption
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It's a bit hit or miss, but HK do expect you to have paid tax where you are managing the company from. Whether they ask for proof is another matter though.

I've heard of people in my network who got the exemption with very little effort/supporting documentation, and others who had to show that the company was paying tax elsewhere in the world.

Personally, I'd just rather pay a small/token amount of tax and be done with it, instead of chasing 0%. Any half-decent HK accountant should be able to reduce your tax burden substantially.

 

[banafinfodafuggiano]

intlman said:
It's a bit hit or miss, but HK do expect you to have paid tax where you are managing the company from. Whether they ask for proof is another matter though.

I've heard of people in my network who got the exemption with very little effort/supporting documentation, and others who had to show that the company was paying tax elsewhere in the world.

Personally, I'd just rather pay a small/token amount of tax and be done with it, instead of chasing 0%. Any half-decent HK accountant should be able to reduce your tax burden substantially.
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Do you know if that also applies to salary income tax paid from the HK company to the non-resident directors?

Paying corporate tax in hong kong and then also paying again a dividend tax in your country of residence adds up and eats up profits very quickly.

 

[intlman]

banafinfodafuggiano said:
Do you know if that also applies to salary income tax paid from the HK company to the non-resident directors?

Paying corporate tax in hong kong and then also paying again a dividend tax in your country of residence adds up and eats up profits very quickly.
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Salary is a completely different issue. I was just referring to CIT.

 

[daniels27]

banafinfodafuggiano said:
Do you know if that also applies to salary income tax paid from the HK company to the non-resident directors?
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If you are not in Hong Kong, they won't charge any tax on the salary paid.

 

[banafinfodafuggiano]

daniels27 said:
If you are not in Hong Kong, they won't charge any tax on the salary paid.
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Today the Tax planner literally said this (it costed me $800 USD for a consultation) , it's unbelievable, each tax advisor I speak to says a different thing:

" Payment of salaries or payment of service fees to another party to reduce the amount of profits of the Hong Kong company does not help. First of all, if the amount is unreasonable, the IRD will disallow the expense deduction claim on salaries / consultancy fees. For the salary income, we will have to prove it is offshore sourced. Otherwise, there will be HK Tax liabilities again. Eventually, you have to face the same questions. This will not work. Otherwise, no corporate has to pay tax in Hong Kong."


I am writing all these posts on Offshorecorp talk after talking to several tax advisors across the globe, and they make me way more confused each time.

 

[Marzio]

banafinfodafuggiano said:
they make me way more confused each time
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Because you are not using critical thinking.

I've read nonsense from you like "Do you really believe Bulgaria will find out..."

I have a news from you: you are the smartest in the room until you are not.

Do you really want to build a business hoping that BG taxman will not find out about you managing an offshore company from BG?

They may not find out but if they do, here's how your future will looks like:

Anyone who fails to declare or pay taxes in excess of 3000 BGN (€ 1534) is punished with imprisonment from one to six years
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https://www.offshorecorptalk.com/th...nia-what-are-the-downsides.39263/#post-238353
If i were in you i would stop playing fantasy business games and start getting real.

 

[daniels27]

I smell bananafudgio. Hey, how about we stop 10 threads on the same matter and focus on a solution together? You, @Roo @tnt500 and me, we all want the same thing.

For your Hong Kong question, yes, he is right. You can pay like 200k USD in salary without issues. If you pay more, there will be questions at some point whether the salary is appropriate and market value. If you pay 12k USD per year, there surprisingly won't be any questions in Hong Kong. I will look into the salary tax question for SG and HK for you and report back once I have solid evidence. (I know that even for SG, you may probably be exempt.)

 

[Xshore]

I belive a directors fee of more than 150k hkd is taxable in hk. However a regular salary isn't. At least this was the case a few years ago.

 

[daniels27]

Xshore said:
I belive a directors fee of more than 150k hkd is taxable in hk. However a regular salary isn't. At least this was the case a few years ago.
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HK has a very big tax discount. It varies year by year and then, there is also a consumption voucher to offset taxes. But this is mainly if you live there. Last year, I think it was like 300k HKD below which you did not pay any taxes on income.

But in the case here, your company is not tax resident and the recipient of the salary neither. Hence, there is no Hong Kong tax due in any case.

The main issue with both HK and SG is that the purpose of opening them (for bananafugio, Roo, and tnt500) is that they are flying under the radar or travelling extensively and thus won't be paying taxes anywhere. As mentioned by people before HK is dangerous in that extent. Singapore may be better, if you believe Sovereign. An alternative would be Guernsey or Gibraltar.

 

[banafinfodafuggiano]

daniels27 said:
HK has a very big tax discount. It varies year by year and then, there is also a consumption voucher to offset taxes. But this is mainly if you live there. Last year, I think it was like 300k HKD below which you did not pay any taxes on income.

But in the case here, your company is not tax resident and the recipient of the salary neither. Hence, there is no Hong Kong tax due in any case.

The main issue with both HK and SG is that the purpose of opening them (for bananafugio, Roo, and tnt500) is that they are flying under the radar or travelling extensively and thus won't be paying taxes anywhere. As mentioned by people before HK is dangerous in that extent. Singapore may be better, if you believe Sovereign. An alternative would be Guernsey or Gibraltar.
Click to expand...

I'm 99% sure Singapore taxes non-resident directors at a 22% fixed rate, can you double check this?
I have a call with a Singapore Tax advisor next week and I'll report back but I'm pretty sure about that from what I read online.

Why is HK more dangerous and Singapore better?

 

[Xshore]

daniels27 said:
HK has a very big tax discount. It varies year by year and then, there is also a consumption voucher to offset taxes. But this is mainly if you live there. Last year, I think it was like 300k HKD below which you did not pay any taxes on income.

But in the case here, your company is not tax resident and the recipient of the salary neither. Hence, there is no Hong Kong tax due in any case.

The main issue with both HK and SG is that the purpose of opening them (for bananafugio, Roo, and tnt500) is that they are flying under the radar or travelling extensively and thus won't be paying taxes anywhere. As mentioned by people before HK is dangerous in that extent. Singapore may be better, if you believe Sovereign. An alternative would be Guernsey or Gibraltar.
Click to expand...

Directors fee are taxable if the company is tax resident from HK, even if the director is non resident.

https://www.ird.gov.hk/eng/pdf/dipn10.pdf

34. Fees paid to persons who hold the office of director of a corporationwhose central management and control are exercised in Hong Kong, areincome arising in or derived from Hong Kong and chargeable to Salaries Taxunder the basic charge of section 8(1) irrespective of where the person resides.This is because the office of director of a corporation is located in a placewhere the central management and control of the corporation is exercised (seeMcMillan v. Guest, 24 TC 190). Thus, if an office is located in Hong Kong,any fees derived from the office can be said to arise in Hong Kong. Neitherthe extension to the basic charge under section 8(1A), nor the exclusion undersection 8(1A)(b) or (c), has any application to directors' fees. They applyonly to income from employment. This issue was before the Board of Reviewin Case No. D123/02, 18 IRBRD 150 in which the Board found that the officeof director held by the taxpayer was located in Hong Kong. In this case, theBoard found that part of the superior and directing authority of the companywas exercised in Hong Kong.
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[daniels27]

Xshore said:
Directors fee are taxable if the company is tax resident from HK, even if the director is non resident.

https://www.ird.gov.hk/eng/pdf/dipn10.pdf
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Yes that's exactly what I told him in the other thread. Could we maybe not discuss the same twice?

https://www.offshorecorptalk.com/th...-taxed-in-hong-kong-or-not.44824/#post-302278

banafinfodafuggiano said:
I'm 99% sure Singapore taxes non-resident directors at a 22% fixed rate, can you double check this?
I have a call with a Singapore Tax advisor next week and I'll report back but I'm pretty sure about that from what I read online.
Click to expand...

We my comment in the other thread. The 22% tax only applies if the company is tax resident.

https://www.offshorecorptalk.com/th...-taxed-in-hong-kong-or-not.44824/#post-302278
It is the same rule for both counties. And in both places you will have issues because your places if management is Bulgaria where are are not declaring it.

Hence the advise of @GPT not to be the director but a normal contractor.

Alternatively you may consider a company in Bulgaria and pay all in salary to yourself.

banafinfodafuggiano said:
Why is HK more dangerous and Singapore better?
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Hong Kong is known for not allowing the offshore exemption if they find you you have not paid tax anywhere else.

When you have the call with the guys:

• Which company it it?
• Do they think that Singapore will not ask where your company is paying taxes?
• Will they consider the company not tax resident automatically if you only have foreign income but remitted to Singapore?

banafinfodafuggiano said:
Do you have a solid source that clearly states Singaporean company can definitely be 0% Tax if there is foreign income, the director is a non resident and the money are not remitted to Singapore? Does that mean the funds have to be in EMIs or banks outside of Singapore only?
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I once had a very, very long discussion with @Xshore and you were also there. Have you forgotten?
https://www.offshorecorptalk.com/th...ture-for-offshore-taxation.43973/#post-290673
The relevant law is here
https://sso.agc.gov.sg/Act/ITA1947?ProvIds=P13-#pr10-
10.””(1) Income tax is, subject to the provisions of this Act, payable at the rate or rates specified hereinafter for each year of assessment upon the income of any person accruing in or derived from Singapore or received in Singapore from outside Singapore in respect of ””

(25) To avoid doubt, it is declared that the amounts described in the following paragraphs are income received in Singapore from outside Singapore whether or not the source from which the income is derived has ceased:

(a)	any amount from any income derived from outside Singapore which is remitted to, transmitted or brought into, Singapore;
(b)	any amount from any income derived from outside Singapore which is applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in Singapore; and
(c)	any amount from any income derived from outside Singapore which is applied to purchase any movable property which is brought into Singapore.

Yes, you cannot have customers from Singapore and you cannot use Singaporean banks and EMIs.

 

[banafinfodafuggiano]

daniels27 said:
Yes that's exactly what I told him in the other thread. Could we maybe not discuss the same twice?

https://www.offshorecorptalk.com/th...-taxed-in-hong-kong-or-not.44824/#post-302278

We my comment in the other thread. The 22% tax only applies if the company is tax resident.

https://www.offshorecorptalk.com/th...-taxed-in-hong-kong-or-not.44824/#post-302278
It is the same rule for both counties. And in both places you will have issues because your places if management is Bulgaria where are are not declaring it.

Hence the advise of @GPT not to be the director but a normal contractor.

Alternatively you may consider a company in Bulgaria and pay all in salary to yourself.


Hong Kong is known for not allowing the offshore exemption if they find you you have not paid tax anywhere else.

When you have the call with the guys:

• Which company it it?
• Do they think that Singapore will not ask where your company is paying taxes?
• Will they consider the company not tax resident automatically if you only have foreign income but remitted to Singapore?

I once had a very, very long discussion with @Xshore and you were also there. Have you forgotten?
https://www.offshorecorptalk.com/th...ture-for-offshore-taxation.43973/#post-290673
The relevant law is here
https://sso.agc.gov.sg/Act/ITA1947?ProvIds=P13-#pr10-
10.””(1) Income tax is, subject to the provisions of this Act, payable at the rate or rates specified hereinafter for each year of assessment upon the income of any person accruing in or derived from Singapore or received in Singapore from outside Singapore in respect of ””

(25) To avoid doubt, it is declared that the amounts described in the following paragraphs are income received in Singapore from outside Singapore whether or not the source from which the income is derived has ceased:

(a)	any amount from any income derived from outside Singapore which is remitted to, transmitted or brought into, Singapore;
(b)	any amount from any income derived from outside Singapore which is applied in or towards satisfaction of any debt incurred in respect of a trade or business carried on in Singapore; and
(c)	any amount from any income derived from outside Singapore which is applied to purchase any movable property which is brought into Singapore.

Yes, you cannot have customers from Singapore and you cannot use Singaporean banks and EMIs.
Click to expand...

Alright, I will ask several questions to the Singaporean tax advisor and I'll report back here in a couple of days.

I would need a real bank to operate under the Singapore company, not just EMIs, do you have any knowledge if other countries (Ireland, new zealand, Canada, EU) can open a bank account for the Singapore company without a secondary branch in that country?

I'm asking this because payment gateways will pay in SGD currency to EMIs, and EMIs like Wise or Airw-allex use SGD local bank details so the tax department may argue that the money was received into Singapore to a singaporean bank, even tho the EMI is registered elsewhere (e.g: Europe). Right?

Last edited: Apr 25, 2024

 

[daniels27]

Interesting question. Let me check. Where are you customer and what currency are you invoicing them? Apart from the gateway, what countries do you need real bank accounts or what are your requirements?

 

[banafinfodafuggiano]

daniels27 said:
Interesting question. Let me check. Where are you customer and what currency are you invoicing them? Apart from the gateway, what countries do you need real bank accounts or what are your requirements?
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My customers are across the globe, except Asia.
I charge AUD/NZD/USD/GBP/EUR because I run 30+ stores at the same time, however right now due to all my stores being registered in Canada, the only payout currency is CAD. and when I switch to the Singaporean company, it will only be SGD as the only payout currency available. Unless, I keep all the stores registered under my old Canadian company and then I send the funds into the Singaporean company EMI in CAD currency, but that sounds like trouble (?).

I need a real bank account, that possibly supports SGD but not in Singapore, this is tough I presume.
But let's say for a moment the only currency for overseas bank account is EURO in the Eurozone, do you reckon a European country will allow the Singaporean company to open a bank account there considering that customers are from that specific country as well? let's say Ireland. 20% of my customers come from there. I'm a EU citizen if that helps.

 

[yngmind]

banafinfodafuggiano said:
Alright fellas, I'm about to open a HK Ltd since the income my business receive is 100% offshore.
My HK accountant say there should be no problem getting the Tax exemption, and it's costing me approx 750 USD a month all included (auditing, book keeping, etc).
This is twice cheaper than just my accounting in Canada, plus there would be no taxes.

I also heard US LLCs and UK Ltds can be tax free, however, it looks like there are zero banking opportunities for non-residents,

can someone confirm all my statements above are true?

Also, can you purchase non-business related assets with the HK company such as vehicles, cars, houses, gold, crypto , etc or it's not possible?
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Shoot, that's still expensive.

You pay $1500 for accounting in Canada? WTF

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[daniels27]

yngmind said:
Shoot, that's still expensive.

You pay $1500 for accounting in Canada? WTF
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Honestly, it depends on what they do. But for high turnover and high amount of transactions, it is not uncommon. We pay more than that in Germany with a company.

 

[Xshore]

banafinfodafuggiano said:
I'm asking this because payment gateways will pay in SGD currency to EMIs, and EMIs like Wise or Airw-allex use SGD local bank details so the tax department may argue that the money was received into Singapore to a singaporean bank, even tho the EMI is registered elsewhere (e.g: Europe). Right?
Click to expand...

Emis are often registered in Singapore even when the currency held is usd etc.
And many processors require to settle to a bank account in the same country as the company.

 

[daniels27]

Xshore said:
Emis are often registered in Singapore even when the currency held is usd etc.
And many processors require to settle to a bank account in the same country as the company.
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@Xshore are you actually also looking for such a setup for your own purpose?

BTW: apart from Sovereign at least those agents also claim Singapore to be tax free possible:
https://incorporations.io/https://jaserodley.com/best-country-to-incorporate-an-online-business/https://www.offshore-protection.com/offshore-blog/start-online-business-offshore-companyhttps://bbcincorp.com/offshore/guide-and-tool/offshore-company-comparison
Maybe, we can call Mourant etc. as well and then make a list of whom claims what?

banafinfodafuggiano said:
My customers are across the globe, except Asia.
I charge AUD/NZD/USD/GBP/EUR because I run 30+ stores at the same time, however right now due to all my stores being registered in Canada, the only payout currency is CAD. and when I switch to the Singaporean company, it will only be SGD as the only payout currency available. Unless, I keep all the stores registered under my old Canadian company and then I send the funds into the Singaporean company EMI in CAD currency, but that sounds like trouble (?).

I need a real bank account, that possibly supports SGD but not in Singapore, this is tough I presume.
But let's say for a moment the only currency for overseas bank account is EURO in the Eurozone, do you reckon a European country will allow the Singaporean company to open a bank account there considering that customers are from that specific country as well? let's say Ireland. 20% of my customers come from there. I'm a EU citizen if that helps.
Click to expand...

I am checking that. I normally use a US acquirer for US payments and then another one for the rest. There are several that allow disbursement in the original currency, I am confident that we will find a solution here. But paying out all in SGD of course does not make sense. For bank accounts, AU and CA is not possible. US, HK, is possible with some effort. UK should be doable, but have never tried.

Last edited: Apr 25, 2024