One of Hong Kong offshore incorporation services’ significant benefits is that businesses formed there are not viewed as tax avoidance vehicles since Hong Kong is a particular trading area. Companies that incorporate in this city are neither public nor private limited liability companies. There is no capital gains tax and exchange control required. There are no corporate taxes at all!
The term offshore company was first used in the United Kingdom in the early 1970s. Since then, it has become trendy in international business circles to use Hong Kong incorporation services. By incorporating it in a foreign jurisdiction, the business owners believe that they will take advantage of some or all trade benefits. They can do this by establishing an offshore company in the place where they have their business operations.
It allows them to choose to have their money invested in countries like Italy or Singapore, for instance, then have it invested in a country like the UK where there are no growth prospects. However, Hong Kong incorporation services when a business decides to incorporate in Hong Kong, there are some drawbacks involved. One of them is the need to appoint a local supervisor and register all the business activities in an office. A licensed offshore company formation can do these things in Hong Kong.
Another drawback of company formation in Hong Kong is that there are no restrictions on the ownership of the shares themselves. It means that any person can buy up large numbers of shares from the company and then sell them off at a profit. He can also choose to use just a part of the shares and leave the rest in the company’s hands. While a corporation is restricted in what it can do with its claims, an offshore company formation in Hong Kong allows any entity, even a company incorporated in a foreign country, to trade in the stock market as they wish. It gives them the advantage of doing whatever they want with their investments, including selling them to make a profit.
The next disadvantage of Hong Kong offshore company formation is that it does not benefit the local economy. There are many reasons why this is the case. First, the financial rules in Hong Kong are different from that of the rest of the world. Companies in Hong Kong must follow a specific set of rules, which makes them a low-risk investment. They also have relatively loose rules on capital formation, and they must follow these rules constantly.
The formation of an offshore company can also take a long time. Companies must follow the jurisdiction rules where they set up their company or have to pay high taxes. It has led to a trend towards offshore company formation in low-income countries, like Hong Kong and Panama. In the past, only wealthy people could afford to establish an offshore company, but that has changed now.
The next disadvantage of Hong Kong offshore company formation is that it is tough to start a company there. Getting a business license in Hong Kong is very difficult, and the process of incorporating a company there is said to be twice if it is in the US or the UK. You need to have your nominee sign the document that will make you owners of the company, and then you need to have one of your employees or a qualified officer of your choice act as the company director. If you do not want to do it yourself, you can hire an accountant from the company you are forming to act as the director. The whole process can take two months, if not longer, and you might have to spend at least a thousand dollars on hiring a lawyer and the attorney’s fees if you do not want to go through the hassle of hiring an offshore company formation firm.
Another disadvantage of Hong Kong offshore company formation is that most of the firms offering the service charge high rates for their services. They charge so much because most Hong Kong people do not have a lot of experience when it comes to setting up a company. Most companies cannot provide support after the formation process is done unless you pay an additional amount. And the rates they charge are not cheap. The average company registration fee is about two thousand dollars, and this can run into several tens of thousands of dollars depending on how complex the company is.