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[ FAQ - Frequently Asked Questions ]

Hong Kong Company
Offshore Company

What is "bank account opening kit" ?

"Bank account opening kit" is a set of documents certified by Hong Kong Certified Public Accountant. Most banks in Hong Kong ask for these documents to open bank account for a limited company. The documents include:

  1. Certificate of Incorporation

  2. Business Registration Certificate

  3. Memorandum & Articles

  4. Company Registry forms D1, D2, D3, R1 and R2 whenever applicable

  5. Appointment of Directors and Consent of Acting as Directors

  6. First Directors' Meeting Minutes

  7. Directors' Minute approving bank account opening

Please refer to "Other services" for further information. [ Back to top ]

How can I move the money in my bank a/c, when I'm not in Hong Kong ?

Most banks in Hong Kong provide services under this situation:

Moving fund to another bank account in Hong Kong

  1. Take cash from bank account first by ATM card. However, banks may not issue ATM card for company bank account if none of the authorized signatures can sign singly.

  2. Use signed instruction form and you have to confirm whether the bank accepts fax. Otherwise, you have to send the signed original to the bank by mail or courier. Moreover, please don't forget to take spare copy of those instruction form.

  3. Use telephone and internet banking. For most banks, this is free-of-charge service but 3rd party bank account has to be registered before you can transfer money to him. Some banks may not accept such registration over the phone and internet.

Moving fund to another bank account NOT in Hong Kong

As remittance of money is involved, remittance fee will be charged in most of the case:

  1. Use signed instruction form and you have to confirm whether the bank accepts fax. Otherwise, you have to send the signed original to the bank by mail or courier. Moreover, please don't forget to take spare copy of those instruction form.

  2. Use advanced features of telephone and internet banking and this is not free-of-charge. Approximately, the annual fee is HK$500 and varies according to bank and services provided.

As banks always update their service, please refer to our staff for detail information. [ Back to top ]

I have a HK company formed. What should I do every year ?

There are basically 2 government departments that you have to account for: tax department (Inland Revenue Department) and company registry department (Company Registry):

Inland Revenue Department (IRD)

  1. Renew business registration (BR) every year. No matter you actually do business or not (dormant), it is necessary to renew BR. If for any reason, you omitted any year of renewal, you still have to pay them up even you want to close the company.

  2. File Profits Tax Return. The first thing to do is select a year end. If no other reason, we suggest 31st March. As your company starts not on 1st April, your first year will not has exactly 12 months of record. The first set of Profits Tax Return will arrive around 18 months after your incorporation. However, please don't delay in doing accounting, auditing and report proactively to the IRD. Legally it is tax payer's duty and late report may lead to penalty, especially when IRD finds you're delaying government revenue. There is mis-understanding that a non-active company doesn't need an audit report. This is incorrect. Only a "dormant" company meets certain criteria can be exempted.

  3. File Employer's Return for your employees. This is to report to IRD how much salary you paid to your staff in the past year. The year end is always 31st March.

  4. To fulfill above, you need an accountant to prepare the financial statements, an auditor to issue an Auditor's Report and to file the tax returns. (Please refer to "Accounting, Tax & Audit" section for further information.)

Company Registry (CR)

  1. File Annual Return and pay the filing fee accordingly on every year's anniversary date. The fee is around HK$105. However, the penalty for late filing may be up to thousands and counting day by day.

  2. During the year, file to CR any change in company constitution and matters required by the Company Ordinance. Those information filed will be available for public search. You can regard this as a criteria for your company to enjoy the status of "limited liability". Any undue compliance of CR requirement may make a contract not enforceable.

  3. Keep proper record of company minutes and information in a Statutory Record Book. This is performed by the post of Company Secretary.

[ Back to top ]

I have a HK company but all business is carried out not in HK. Should I pay tax in HK ?

Basically Hong Kong charges tax on any profits "arising in and derived from Hong Kong". This sounds technical and difficult to understand. However, if you have such a clear cut situation of doing all your business out of Hong Kong, then very probably, the income is not subject to Hong Kong tax. You still have to prepare financial statement and auditing for all income as they're under the name of the company. But, in tax filing, you have to claim for tax exemption for those income and provide proof. The more obvious that there is no activity in Hong Kong relating to the earning of the income, the bigger the chance you'll have.

The consideration of tax exempt or not is on "totality of fact". No one single factor will dominate. Therefore, planning in advance is very important. Otherwise, you may have difficulty in getting enough proof to support the tax exempt claim. Those proof include:

  1. the contract is not signed in Hong Kong;

  2. the contract is not executed in Hong Kong;

  3. goods is not supplied via Hong Kong;

  4. business is conducted by staff outside of Hong Kong; etc.

Finally, we have to remind that tax exempt in Hong Kong means nothing when you're challenging by another country for tax chargeability. Advance tax planning is always advised to minimize overall tax.

You are welcome to discuss for a proper tax planning to minimize your tax liability in a legal way. [ Back to top ]

Offshore company can be used freely in Hong Kong for all kind of transaction without reporting to Hong Kong government ?
This is a very common mistake of using offshore company. Company law of Hong Kong requests all offshore company to be registered in Hong Kong when the company is carrying on business there. The tax system of Hong Kong is also not on that of registration location. Tax liability of a company (no matter it is offshore or not) is determined on whether it is carrying on business in and deriving income from Hong Kong.

Using offshore company in tax planning is not as simple as registering a company. The daily operation of the company has to be designed and implemented so as to avoid capture of tax law.

[ Back to top ]

Why using offshore company than using Hong Kong company ?
A quick and simple guideline would be:

Using offshore company when

  • the company is using for holding of bank account, property, share, investment etc. but not as trading company.
  • the company is using for trading but the trading activity is out of Hong Kong. It has no office in the territory and hire the service of agency to handle the trading work.
[ Back to top ]

Identity of shareholder and director of offshore company really hidden ?
From a point of view, the identity is totally hidden because the registration detail is not subject to public search. However from practical point of view, it is not.

For example, when banks are considering open a bank account for an offshore company, it is very common to ask for identity and banker's reference of shareholder (beneficiary) and director. This makes voluntary disclosure of identity necessary when you need a bank account for the company.

[ Back to top ]

What is the requirement of bank account opening for offshore company ?
It is global trend for banks to be very serious in opening bank account for offshore company. Banks need to know who is really owning the account and who is operating the account. Following documents are required :
  • Certificate of Incumbency - showing identity of shareholder and director.
  • Certificate of Good Standing - showing the company license is still valid.
  • Passport copy of shareholder and director.
  • Banker's reference letter of each director.
  • Business plan - introducing reason and purpose of having such bank account, together with background of company.
[ Back to top ]

As there is no accounting, tax and annual return filing of most offshore company, why there is optional charge of Company Secretary fee ?
Optional Company Secretary service is provided in order to help the offshore company to keep proper record. The reason is:
  • First of all, no statutory requirement for filing does not mean there is no practical reason of keeping proper record.  The company registry department just leave this to the decision of company owner. There will be no penalty as there is no legal requirement. However, the result of mis-management is totally on the shoulder of the owner.
  • Moreover, after the formation of an offshore company, there is a statutory record kit that need to be maintained. The company owner can decide to keep the kit himself without selecting the company secretary service.
  • A corresponding address is included which is essential for registration record and better keep track of communication with the registry. 
[ Back to top ]