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Five Misunderstandings of a Hong Kong Company

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Many foreign investors start to register companies in Hong Kong because Hongkong has a convenient location, developed economic foundation, good financial environment, simple financing and lower tax. But many of them do not have a full understanding of the Hong Kong company registration. Today, Business China will help you to tackle the most tricking five misunderstandings for you.

Five Misunderstandings of a Hong Kong Company

First, the more the registered capital of the Hongkong company, the better.

Many entrepreneurs feel that the company's registered capital should be large enough to show that the company has great strength, so it is better to be set up the company with a large sum of capital. Many businessmen register Limited by Share Ltd, so the company has to bear responsibility for foreign capital with registered capital. The larger the share capital, the more responsibility it will take. Once a company has problems, the company should be responsible for it and shareholders will subscribe for the shares. Even they don’t inject enough money, they will also need to pay by then.

Second, Hong Kong company can operate on the ground in the China mainland.

The Industry and Commerce Bureau of the China mainland stipulates that the registered Hong Kong company is not allowed to operate in the mainland entities. It must use a mainland company or register a China mainland company.

Third, as long as the Hongkong company registered and did not do business in Hongkong, it would be able to have zero deceleration.

Although Hong Kong adopts tax levied on the region principle, if the company has business outside Hong Kong, the company will also apply to Hong Kong for overseas tax exemption. It cannot declare zero tax directly.

Fourth, the Hong Kong company can write an invoice.

Many businessmen think that the registered Hong Kong companies have value-added tax invoices, which is just a common mistake. Hong Kong doesn’t unify invoice, so the company can only have the company receipt. If you want to have an invoice interiorly, you need to apply for temporary tax in the Inland Revenue Department.

Fifth, we can just leave the company there if we don’t need it anymore.

Many entrepreneurs think that registered Hong Kong company cannot be ignored if the Hongkong company is not needed. But if so, please find the agency to write off, or transfer to others; otherwise, it will be fined by the Hongkong government for overdue and even be listed in the blacklist, resulting in the inability to enter Hongkong.

What are the advantages of registering a Hongkong company?

A, tax incentives.
Local revenue directly determines the company's income. The enterprises' income tax in the mainland is 25%. For entrepreneurs, the tax is quite heavy. However, Hong Kong only has 16.5% profit tax. Only the profits obtained in Hongkong need to pay the salary tax of Hongkong and the standard tax rate is 15%. Only the employees in Hong Kong and the employees with the Hongkong work card need to pay.

B, foreign exchange account.
The opening of an account by the Hongkong company is not restricted by foreign exchange transactions. Compared with the restriction of USD 50,000 per year in China, Hong Kong account has great attraction.

C, the registration is simple and the later management is convenient.
Hongkong company has limited registered business scope and freedom of name. The registration of Hongkong company can be completed in a week. The later maintenance of Hongkong company is also very convenient.

D, the company registered in Hongkong can enhance brand image.

E, financial advantage.
Hongkong is the third largest financial center in Asia, being an important international financial, trade and shipping center. Together with New York and London, it is known as the "Nylonkong". It is one of the world's freest economies and one of the most competitive cities. Superior investment and financing environment are the major advantages of Hongkong company.

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