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Hong Kong is a trap, a fake good offshore jurisdiction

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Has anyone here actually set up a HK company and bank account here?

Some of‌ the advice I would take as a pinch of salt. I personal found a service‍ who incorporated it for me and gave me the questions and files to present to⁠ the bank HSBC which I had to file to open.

Yes Iv hear many stories⁤ of corps and owners being put in jail for outstanding gov fees when they arrive⁣ in HK. HK don't mess around.

But regarding tax they are awesome in my opinion⁢ as all my funds come from US to my HK account so I'm exempt. Since︀ my account has been open since 2014.

I'm so far happy. Off the top my︁ head I can't remember their fees, but if there is a request I can dig︂ it out and provide the company who sorted it out for me.
 
i think for many of us here, and many who were less informed prior, Hong‌ Kong would be a mistake. However if your goal is low taxes with a good‍ image, and you have a large enough turnover to warrant the extra costs, Hong Kong⁠ can be great. The majority of international companies I deal with are incorporated in Hong⁤ Kong & I have a couple friends who have also taken that route without issue.⁣ Depending on your business you may find a lot more customers willing to deal with⁢ a Hong Kong company rather than some overnight incorporation with no accounting or other requirements︀ from a jurisdiction they've never heard of! You just need to be well informed and︁ prepared to pay extra for this image in Hong Kong.
 
Hi guys, someone just linked this thread to me from another forum. Thought it was‌ interesting discussion so decided to join. You can count me into the boat of people‍ who formed a company too quick without doing proper research 😉. I opened a HK⁠ company last year together with a HSBC account. Suprisingly the bank account opening was successful⁤ despite the black hat nature of my business.. Guess I am good at presentations 😛

It was only during the recent months that I discovered the high cost of audits as⁣ well as the difficulties gaining the offshore status for a HK company. My business is⁢ based on a very high number of transactions and profit margin of 5-10% so I︀ was very worried of the audit costs. I did plenty of research on this and︁ found an accountant via a personal recommendation. A small company that doesn't even have a︂ website but seemed like nice guys and had several people recommend them. They quoted me︃ around HKD20k for the yearly audit based on 150k transactions and $1m in revenue. It︄ was a pleasant surprise! To apply for the offshore status, they quoted another HKD20k as︅ starting price (subject to number of inquiries by the IRD).

So all in all, I︆ don't think this deal is too bad. Let's think about it this way: if year︇ 1 I don't make any consiredable profits, I will pay myself the total tax-free allowance︈ in directors fees (HDK132k). On top of this, I will maximise expenses for the company,︉ such as my condominium home office rent and any other expenses that can be claimed︊ as business expenses. My accountant said I could even include playing golf as company entertainment.︋ My accountant also mentioned that income taxes in Hong Kong start from 2%, so if︌ you were to pay more in directors fees than the allowance, it wouldn't necessarily raise︍ the taxes to crazy numbers. So in summary, I think it's possible to reduce the︎ taxable income to an absolute minimum by effective planning.

Later on, if my income goes️ very high and I can't make up any more expenses, I will apply for the‌ offshore status. But at this point, the profits should be sufficient to justify a cost‍ of HKD20k + for 0% corporate tax for the next 3 years. My accountant said⁠ the status remains valid for 3 years although yearly audits must be still done as⁤ usual, of course.

Interested to hear more opinions. Let me know if I have misunderstood⁣ something..
 
that sucks pretty much and you are sure there is no way out of this! I⁣ would let the Company go and form a new one maybe in a different jurisdiction⁢ where accounting and filing of tax either is way cheaper or not required.
 
I don't know if it really is that bad. I mean⁤ for example, if the accounting, audit and offshore status application costs total HKD 50,000, that⁣ would be around USD 6,000. Lets say at this revenue total profit for the year⁢ would be USD 100,000. This would be a 6% expense of total profits. Since the︀ offshore status stays valid for 3 years, that would only leave the audit + accounting︁ yearly, that would be a small fraction.

For me personally, I chose Hong Kong because︂ my business is dependent on PayPal accounts. PayPal Hong Kong accepts the combination of company︃ + bank account in Hong Kong, with residency outside of HK.

With other setups, I︄ read its not easy. For example, if you have a Seychelles company and Singapore business︅ bank account, PayPal will not accept this. They must be all from the same country.︆ I've also heard of PayPal asking for residency proof from people with offshore companies at︇ these "nicer" jurisdictions, and ended up getting their accounts limited. I'm not sure if there︈ is a better alternative to HK for someone who absolutely needs PayPal?
 
It really does depend on what you need for your business. Hong Kong has a‌ great reputation as a trading center and a reasonably trusted jurisdiction down here in New‍ Zealand. Whereas Belize...not so much. However, I also balked at the costs of running the⁠ HK corp...especially for a startup...as the audit/accounting/et.al fees will absolutely kill you in the early⁤ days.

It all comes down to what you are looking to achieve offshore.
 
agree with︆ @jryan54 . As mentioned earlier there are situations where HK is extremely beneficial. But for︇ many on this forum it isn't the case. HK has a reputation and attracts a︈ lot of offshore business because of this but many who haven't done their research find︉ out the hard way HK isn't for them. Paypal / stripe etc can be used︊ with many jurisdictions and achieve similar results if structured correctly.
 
I totally agree with you. The costs to establish and operate a⁢ HK corp will kill any startup, you only want to consider HK if you have︀ a running business doing a great amount of turnover each month.
 
After losing quite a lot of money, my time, my patience, my calm, I've decided‌ to say screw it and close my HK company directly. I'm sorry but unless you‍ have enough sales to justify it, HK is going to cost you a lot more⁠ than you think. For me, HK feels like a beautiful girl that's going to drive⁤ you insane. For some people it is worth it (high turn-over) but unless you're earning⁣ enough money, I find the bureaucracy, fees and everything in between a pain in the⁢ a*s. This was my $3000 lesson.
 
Hong Kong has been a no go for me since I read the replies in‌ this thread. However, I'm considering to jump into it anyway because of the option to‍ get banking (by personal visit) and paypal account for this entity.

Does someone know what⁠ happen if the company does not pay the tax that may be applicable?
 
Hi,

I thought this might be of interest as I just got this in my‌ email:

"8.25% Profits Tax Rate Proposed in 2017 Policy Address!"

"Profits tax rate for the‍ first $2 million of profits will be lowered from 16.5% to 8.25% (lowered HALF), and⁠ standard tax rate at 16.5% will be kept for profits exceeding that amount. "

More about New Taxation Measures: The Chief Executive's 2017 Policy Address - Policy Address
 
@ ForexSignals I was really watching these news.

HK has a new Governor since a‌ few months ago (Carrie Lam).

During her campaign she said (if elected) she would have‍ lowered corporate taxes at 10% for the first 2m HK$ profit (~US$256k+ or ~€217k+ at⁠ today exchange).
Over that the corporate tax will stay 16.5% (on the part exceeding 2m⁤ HK$)

Good news they are planning to start it even lower.
If that's the case,⁣ that will the time HK becomes attractive again (despite having mandatory audit filing = fixed⁢ money to spend)
I guess bigger news would be if they plan to make audit︀ mandatory only for companies with profits over 2m HK$.
That way HK will destroy any︁ Caribbean, Pacific or wahtever country in terms of incorporating a new business.
Any business, manufacturers︂ and their dogs would much more prefer to deal with an Hong Kong company than︃ a BVI, Marshall I., Cayman I., Name-any-island company. That's a fact. Coming from somebody who︄ literally abandoned it's Cayman Islands company due to being unuseful to say the least.

They probably realise finally that HK, while badly wanting to create a start-up culture (it's at︅ least 2 or 3 years they want to give that image), can't do that if︆ SME have a relatively high tax rate, considering it's 2017, countries must compete with a︇ worldwide of offerings.
 
That would be great‍ and a great move in the right direction!
 
I think the OP is a interesting guy that share good things...somebody know why he‌ get banned? we are many here that want him come back again because this discussion‍ probably helped MANY people to not get scammed when they try start up a new⁠ business in Hong Kong
 
In this video this guy talks about taxes, but nothing in⁠ specific. What kind of taxes should be declared "somewhere else"?
Does he mean the income⁤ tax or any other kind of tax?
 
I use his company⁢ Athenasia for my Hong Kong Company set up and virtual office etc. Not sure how︀ they compare price wise etc with others but I can't fault their services.
 
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