Hong Kong Ltd VS US Ltd VS UK Ltd
- Thread starter banafinfodafuggiano
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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 should︀ be able to reduce your tax burden substantially.
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 should︀ be able to reduce your tax burden substantially.
Do you know if that︀ 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 in︂ your country of residence adds up and eats up profits very quickly.
Paying corporate tax in hong kong and then also paying again a dividend tax in︂ your country of residence adds up and eats up profits very quickly.
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 prove︀ it is offshore sourced. Otherwise, there will be HK Tax liabilities again. Eventually, you have︁ to face the same questions. This will not work. Otherwise, no corporate has to pay︂ tax in Hong Kong."
I am writing all these posts on Offshorecorp talk after talking︃ to several tax advisors across the globe, and they make me way more confused each︄ time.
" 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 prove︀ it is offshore sourced. Otherwise, there will be HK Tax liabilities again. Eventually, you have︁ to face the same questions. This will not work. Otherwise, no corporate has to pay︂ tax in Hong Kong."
I am writing all these posts on Offshorecorp talk after talking︃ to several tax advisors across the globe, and they make me way more confused each︄ time.
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:
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 start︂ getting real.
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:
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 start︂ getting real.
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 have︀ solid evidence. (I know that even for SG, you may probably be exempt.)
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 have︀ solid evidence. (I know that even for SG, you may probably be exempt.)
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 is︀ no Hong Kong tax due in any case.
The main issue with both HK and︁ SG is that the purpose of opening them (for bananafugio, Roo, and tnt500) is that︂ they are flying under the radar or travelling extensively and thus won't be paying taxes︃ anywhere. As mentioned by people before HK is dangerous in that extent. Singapore may be︄ better, if you believe Sovereign. An alternative would be Guernsey or Gibraltar.
But in the case here, your company is not tax resident and the recipient of the salary neither. Hence, there is︀ no Hong Kong tax due in any case.
The main issue with both HK and︁ SG is that the purpose of opening them (for bananafugio, Roo, and tnt500) is that︂ they are flying under the radar or travelling extensively and thus won't be paying taxes︃ anywhere. As mentioned by people before HK is dangerous in that extent. Singapore may be︄ better, if you believe Sovereign. An alternative would be Guernsey or Gibraltar.
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 back︅ but I'm pretty sure about that from what I read online.
Why is HK more︆ dangerous and Singapore better?
I have a call with a Singapore Tax advisor next week and I'll report back︅ but I'm pretty sure about that from what I read online.
Why is HK more︆ dangerous and Singapore better?
Directors fee︃ are taxable if the company is tax resident from HK, even if the director is︄ non resident.
https://www.ird.gov.hk/eng/pdf/dipn10.pdf
https://www.ird.gov.hk/eng/pdf/dipn10.pdf
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 Bulgaria︁ where are are not declaring it.
Hence the advise of @GPT not to be the︂ director but a normal contractor.
Alternatively you may consider a company in Bulgaria and pay︃ all in salary to yourself.
Hong Kong is known for not allowing the offshore exemption if they︅ find you you have not paid tax anywhere else.
When you have the call with︆ the guys:
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 the︍ rate or rates specified hereinafter for each year of assessment upon the income of any︎ person accruing in or derived from Singapore or received in Singapore from outside Singapore in️ 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:
Yes, you cannot have customers from Singapore and you cannot use Singaporean banks and EMIs.︂
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 Bulgaria︁ where are are not declaring it.
Hence the advise of @GPT not to be the︂ director but a normal contractor.
Alternatively you may consider a company in Bulgaria and pay︃ all in salary to yourself.
Hong Kong is known for not allowing the offshore exemption if they︅ find you you have not paid tax anywhere else.
When you have the call with︆ the guys:
- Which company it it?
- Do they think that Singapore will not ask where︇ your company is paying taxes?
- Will they consider the company not tax resident automatically if︈ 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 the︍ rate or rates specified hereinafter for each year of assessment upon the income of any︎ person accruing in or derived from Singapore or received in Singapore from outside Singapore in️ 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 from︀ 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.︂
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 to︀ EMIs, and EMIs like Wise or Airw-allex use SGD local bank details so the tax︁ department may argue that the money was received into Singapore to a singaporean bank, even︂ tho the EMI is registered elsewhere (e.g: Europe). Right?
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 to︀ EMIs, and EMIs like Wise or Airw-allex use SGD local bank details so the tax︁ department may argue that the money was received into Singapore to a singaporean bank, even︂ tho the EMI is registered elsewhere (e.g: Europe). Right?
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?
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 old︀ Canadian company and then I send the funds into the Singaporean company EMI in CAD︁ currency, but that sounds like trouble (?).
I need a real bank account, that possibly︂ supports SGD but not in Singapore, this is tough I presume.
But let's say for︃ a moment the only currency for overseas bank account is EURO in the Eurozone, do︄ you reckon a European country will allow the Singaporean company to open a bank account︅ 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.
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 old︀ Canadian company and then I send the funds into the Singaporean company EMI in CAD︁ currency, but that sounds like trouble (?).
I need a real bank account, that possibly︂ supports SGD but not in Singapore, this is tough I presume.
But let's say for︃ a moment the only currency for overseas bank account is EURO in the Eurozone, do︄ you reckon a European country will allow the Singaporean company to open a bank account︅ 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.
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 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?
I am checking that. I normally use a︊ US acquirer for US payments and then another one for the rest. There are several︋ that allow disbursement in the original currency, I am confident that we will find a︌ solution here. But paying out all in SGD of course does not make sense. For︍ bank accounts, AU and CA is not possible. US, HK, is possible with some effort.︎ UK should be doable, but have never tried.
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?
I am checking that. I normally use a︊ US acquirer for US payments and then another one for the rest. There are several︋ that allow disbursement in the original currency, I am confident that we will find a︌ solution here. But paying out all in SGD of course does not make sense. For︍ bank accounts, AU and CA is not possible. US, HK, is possible with some effort.︎ UK should be doable, but have never tried.
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