Setting up business in Hong Kong. Tritas Consulting Olivier Dubois Berchem, February 16, 2017

Transcription

1 Setting up business in Hong Kong Tritas Consulting Olivier Dubois Berchem, February 16, 2017

2 Hong Kong fast facts (1) One country, Two systems Strong independent legal and political system Free flow of information Intellectual property protection Low tax rates: 15 % salaries tax, 16,5 % profits tax No VAT, sales tax or capital gains tax

3 Hong Kong fast facts (2) Excellent Infrastructure Highly educated workforce and entrepreneurial culture Asia s international financial Centre Location in the heart of Asia

4 Invest in China: Don t forget Hong Hong

5 3 different types of Foreign Investment in China Wholly Foreign Owned Enterprise ( WFOE ) Joint Venture ( JV ) Sino- Foreign Equity Joint Venture Sino-Foreign Cooperation Joint Venture Representative Office ( RO )

6 Representative Office Easy China entry, no capital contribution Liaison office, market research, sourcing, marketing, QC No legal identity no invoicing no income Hiring staff through Fesco Taxation on cost-plus basis (+/- 10 %) BUT

7 Recent Developments More complicated set up procedures recently: Increased taxation ( 8.7 % to 11 % cost plus basis) Limitation of employment of foreign staff by Rep Office (max 4) More strict control on activities (no trading allowed, high penalties)

8 Wholly Foreign Owned Enterprise Legal entity 100 % owned by foreign investor (Hong Kong mother holding is also considered foreign ) 3 types: Manufacturing WFOE (manufacturing, assembling) Trading WFOE (FICE) (sourcing, distribute, retail, import, export) Service WFOE (providing expertise and services) Focus on: Business scope!

9 Hong Kong bridge into China > 25% of China s foreign trade passes through HK Unrivalled experience in doing business with China Extensive rail, road and sea links Hong Kong = bridge to China s strongest economic regio: Pearl River Delta

10 The advantages of structuring PRC investments through Hong Kong Legal System benefits Rule of Law Enforcement of judgments Restructuring benefits Liability Issues Financing in Hong Kong

11 Hong Kong company ( HK LTD ) Transparent and fast incorporation procedure One man company minimum 1 shareholder and 1 director Corporate or individual directors / shareholders (minimum one individual director required) Minimum issued capital - HK$1 General description of business scope Yearly accounting and audit

12 Hong Kong tax system Territorial basis of taxation Onshore: 16,5% Offshore: 0% For a person to be subject to profits tax, following conditions must be respected: The person must carry on a trade, profession or business in Hong Kong The profits to be charged must be from such trade, profession or business carried on by the person in Hong Kong The profits must be profits arising in or are derived from Hong Kong No tax on dividends (incoming + outgoing) No VAT No capital gains tax Low import and export taxes

13 Belgium - Hong Kong Tax Treaty Transfer of dividends Participation of at least 25 % Participation exists minimum 1 year No tax on dividends (incoming or outgoing) in HK 95 % exemption from taxation in Belgium Effective taxation: 1,67 % HK LTD Dividend transfer 95% exemption BEL CO 25% participatie

14 Hong Kong HK trading LTD profits $ HK Trading Company OFFSHORE Dividend transfer 95% taxation exemption HK profits tax - $ 0.00 TOTAL $ HK withholding tax 0% $ HK LTD BEL CO Belgium 95 % taxation exemption ( deelnemingsvrijstelling ) 25% participation 5% (= 5,00 $) taxed at 33,9 % = effective taxaction in Belgium = ( 5,00 x 33,9) / 100 = 1,69 USD $ $ 1.69 TOTAL $ 98.31

15 Hong Kong HK trading LTD profits $ HK Trading Company ONSHORE Dividend transfer 95% taxation exemption HK profits tax - $ TOTAL $ HK withholding tax 0% $ HK LTD BEL CO Belgium 95 % taxation exemption ( deelnemingsvrijstelling ) 25% participation 5% (= 4,17 $) taxed at 33,9 % = effective taxaction in Belgium = ( 4,17 x 33,9) / 100 = 1,41 USD $ $ 1.41 TOTAL $ 82.09

16 Case study: Hong Kong as Asian trading hub Dividend No withholding tax in HK Dividend Reduced withholding tax 10% -> 5% (China HK tax treaty) Belgian Parent Company 100% HK Company Profits tax: 16,5% 100% HK + Asian market Participation exemption 95 % exempted from taxation in Belgium Effective taxation : 1,67 % China WFOE Profits tax: 25% China

17 BUT Substance! Office, staff? Administration done in Hong Kong Invoicing, re-invoicing Execution of payments Accounting and reporting Shipping organization and administration Transfer pricing

18 Our services

19 Tritas Consulting Expand with Confidence Hong Kong Office Room 2004,20/F.,Centre Point Gloucester Road Wanchai, Hong Kong Phone Fax Shanghai Office Room 1596, 15/F, CTSHK Building 868 Changshou Road Putuo District, Shanghai, P. R China, Phone Fax info@tritasconsulting.com