Hong Kong has stood out as a paradise for investors. Many people from the west especially the US have been knocking doors in Hong Kong to enjoy the thrills of this great economy. Hong Kong Special Administrative Region of China operates independently except in political and military outsets.
This means that decisions on core things such as immigration, economic growth, and tourism are made independent of the mainland China. Whether you simply want to visit Hong Kong for holiday or investment, you have numerous benefits to enjoy. This is a detailed post that shows why you should visit and invest in Hong Kong.
Important info about the US
The US is a federal republic that comprises of 50 states. 48 of these states are located between Mexico and Canada while the other two sit some distance away. The state of Alaska is located on the Northwestern corner of North America while Hawaii is an archipelago at the heart of the Pacific Ocean.
The US has a total area of 3.8 square miles and has a population of more than 324 million. This makes it the 4th largest nation by total area and 3rd most populous after China and India respectively.
The US is highly developed and the largest nation by nominal GDP. It ranks top in most social-economic performance including PPP (productivity per person), per capita GDP, Human Development, and average wage. According to 2016 estimates, the total GDP was $18.588 trillion and a per capita of $57,220. While its population is approximately 4.3% of the global total, it accounts for about 25% of the GDP. This makes it one of the foremost global economies.
The CPI inflation by August 2016 stood at 1.1% while employment rate was 59.7%. However, unemployment levels were 4.9% with labor force participation rate being 62.8%. Notably, the number of employees in various government agencies outstripped the numbers in private sector with 1.7:1. This shows a significant decline in the unemployment levels and steady recovery from the recession of 2017.
Why you should come and invest in Hong Kong
The perils of the western administration, political, and banking systems
For decades, investors from the US have been looking for perfect investment regions to diversify or exploit greater potential away from home. What exactly are the qualities of a perfect investment destination? For US citizens, the issues of the western systems of politics and banking appear to be systemic and pushing them to the wall.
Just like many western countries, the banking system lacks full independence. After depositing your money, there is no assurance that you can draw it at once when the need arises. Most of the banks in the US only keep a very small amount of what clients need and lend the rest. This makes it very difficult to get your cash on time in case of financial stress.
Because of direct control, the interest rates on your deposits are very low. In most of the cases, the rates are lower compared to those offered by top offshore banks. However, what is more worrying is the emerging trend and risk of getting your deposit drained. In countries such as Cypress, Iceland, Portugal and Argentina, and Hungary, the focus is levying taxes on deposits and nationalization of different retirement savings. You can never know when you will be a target in the US.
Every year, about 15 million lawsuits are filed in the US. With one in every 12 adults getting involved in court cases, you are no exception. Without notice, you can get embroiled in a court case with attorneys targeting your money. With the stroke of a pen, what you have saved or profits from a business can get frozen because a court case from a neighbor, a business competitor, of even from social media has dragged you into the courts. It is this risky.
The advantages of coming to Hong Kong
- Enjoying highly stable political system
- Very supportive administration that incubates and sees businesses grow rapidly
- A stable financial system with over 200 top global banks having branches there
- Straightforward tax regimes that make it easy to operate, file returns, and keep bulk of the profits
- Hong Kong is the gateway to the mainland China and the entire Far East
- The process of opening a limited liability company is simple and fast
- The business environment is very easy to understand, penetrate, and grow in Hong Kong and beyond
- You can benefit from funding support from the Hong Kong administration especially if your venture is in the technology niche.
- The high mobile penetration that makes it easy to penetrate the market and market your brand. The system is particularly good for companies that are in applications productions.
Incorporating a company and opening bank accounts in Hong Kong
To open a company in Hong Kong, the recognized business entity is a limited liability company. You can achieve this in two ways.
Opening a company on your own
This method involves traveling to Hong Kong to make the application. It will take about 14 days after presenting the required documentation to the Hong Kong Companies Registry. Here are the main documents and other requirements to get the company registered in Hong Kong.
- Passport copies of the new company’s directors and shareholders
- Directors and shareholders proof of residence
- Article of Association
- Minutes authorizing the company formation and operation
- Company structure
- Company structure
- The company address
- The company secretary
- The required fees
Using an agency to incorporate the company
In many instances, flying to Hong Kong to register a company which takes about 14 days is too much for most people. Instead, you should consider working with an agency. Agencies are authorized organizations that help people to register their companies in Hong Kong without flying there.
- The selected agency will assist you to craft the right documents in line with Hong Kong requirements.
- The agency will get you a secretary or serve your company secretary
- If you opt to use the company as your secretary, its office will also serve as the company’s main address. This is very helpful for US citizens who are seeking to enter Hong Kong for the first time.
- The agency will further help you to understand Hong Kong regulatory environment such as tax regime and ensure the business operates within the precincts of the law.
- To enjoy lower tax rates and preferential treatment by companies that have entered into special agreements with Hong Kong, the agency will assist you to demonstrate tax substance.
Note that it is very important to select the agency of choice well for better services. You should review the past success of the agency in helping people opening companies in Hong Kong and getting bank accounts. You should also review how effective the agency has been in acting as company secretary for other offshore companies. If it has been highly effective in its operations, do not hesitate to contract it.
Opening a bank account
To open a bank account in Hong-Kong, you have first to get the certificate of incorporation. However, it is still not easy because banks are still asking a lot of details that you have to craft carefully. In particular, you will need to present details of all the shareholders and directors of the bank. These should include their passports, proof of residence, and direct contacts.
The bank will also want to get contacts and details of the company secretary because he remains the contact entity between the government and the business. It is, therefore, critical to have a professional who understands the tax regime, business environment, and nature of the company operations.
Unlike in the past, the banks in Hong Kong are interested in understanding more about the business, its operations, clients, and general structure. The target is ensuring that they only deal with companies that are not involved in fraud, laundering, or drug trade. Note that even dealing with entities that have tainted images can compromise your ability to get a bank account.
Recently, Hong Kong passed the framework for implementing the Common Reporting Standards for financial and tax information. This means that all bank clients are required to ensure they demonstrate their tax resident status before they can be allowed to get a bank account. This means that you will be required to provide additional information on the shareholder’s places of birth and tax identification numbers.
The process of incorporating companies and opening bank account is rather complex especially for those operating from far. It can get complicated when you are asked to supply additional information for the company registration or bank account. Well, do you board a flight back home to collect the additional documents? This can be very distressful.
The most convenient method of registering a company in Hong Kong and getting a bank account is working with experts based in Hong Kong. They understand the regulatory environment and have been doing the same process for some time. Contact us for a smooth registration process and a perfect start in Hong Kong.