What are the advantages and disadvantages of registering a Hong Kong company?

The advantages of registering Hong Kong companies are significant. There are also risks. How to better understand the advantages and disadvantages of Hong Kong companies, and make rational use of the advantages of Hong Kong companies while avoiding the disadvantages of Hong Kong companies?

Advantages of registering Hong Kong company :

1. The business scope of the Hong Kong company is less restricted. Apart from illegal business, the Hong Kong limited company can conduct any business in Hong Kong.

2. The tax system for the establishment of companies in Hong Kong is simple and the tax rate is low. Generally, only two kinds of taxes need to be paid: profits tax, the tax rate is 16.5%. Salaries tax, tax exemption for single (120,000HKD) married (240,000 HKD). There is no import and export tax except for alcohol, tobacco or special business.

2. Many enterprises have registered shell companies in Hong Kong to promote their brands, use the popularity of Hong Kong to create Hong Kong brands, so as to have certain competitive advantages in the international market.

3. Hong Kong company registration procedure is simple and fast, only needs to provide the valid identification document, the registered address and the legal secretary to be able to apply, moreover the Hong Kong limited liability company only needs 8 working days to complete the registration, the establishment branch company only needs 4 days, purchases the ready-made company only needs 3 days.

4. Every year, the Hong Kong government invests a considerable sum of money to support and encourage enterprises to conduct scientific and technological training or to apply for patents.

Disadvantages of Hong Kong company registration and solutions:

· LC,D/P negotiation is prone to discrepancies

The Hong Kong company cannot provide FORMA,C/O, the most commonly used negotiation documents for LC certified by the embassy. In this way, it is easy to appear unnecessary risks in LC, D/P and other documents with strict requirements.

Solution: letter of credit is to accept the above documents of the third party can solve the problem.

· verification sheet cannot be provided

After registering Hong Kong company, you should know above all, your company is overseas the buyer, and not home place sells the home, acting is entreover role, so Hong Kong company cannot offer cancel after verification sheet.

Solution :(1) find an agent agent export; (2) paying for exports

· the rapid capital flow of Hong Kong companies is limited

The bank account that Hong Kong company opens no matter be in mainland still be abroad, its monetary form can be foreign currency form operation only, the money for goods that is to say in Hong Kong account forever is foreign currency, and cannot be RMB.

Solutions:

After receiving the payment for goods from overseas customers with the account of the Hong Kong company, transfer the purchase cost to the company with import and export right in the mainland, and let the mainland company handle the verification and tax refund.

· Hong Kong companies cannot directly operate in the mainland

Any company operating in the mainland must register with the mainland's industry and Commerce Department. Hong Kong's sovereignty is Chinese, but its governance is the same as abroad.

Solution: establish sole proprietorship or joint venture in mainland China.

It is a rigorous business practice to register a Hong Kong company. Looking for experienced and responsible HongKong corporate service provider can better understand the advantages and disadvantages of setting up a company and provide a better reference for the choice.

For more information about the advantages of ‘What are the advantages and disadvantages of registering a Hong Kong company?’, please visit JV Consultants Limited (http://www.jvchk.com).