The main uses of a company in Hong Kong
A company in Hong Kong can legally engage in many activities. Three uses are particularly prominent: import-export or trading, consulting and service provision, and holding or acquiring equity interests.
Three common uses
Import-export and trading
Trading is the primary use of companies registered in Hong Kong.
The company can invoice clients located anywhere in the world and purchase products or services from international suppliers. Hong Kong is at the heart of a particularly dynamic economic region.
If the goods merely pass through Hong Kong, or do not pass through Hong Kong, no tax is due in Hong Kong on this activity.
Consulting, services and e-commerce
Hong Kong is a jurisdiction suited to consultants, service companies, and e-commerce.
In Hong Kong, e-commerce activities are expected to amount to US$70 billion, placing the territory among the approximately ten most favorable environments for e-commerce, according to the London-based Economist Intelligence Unit, as cited by the OECD.
If the company's services are performed outside Hong Kong, they are not taxed in Hong Kong.
Holding company and equity investments
A holding company is a parent company that takes stakes in subsidiary companies or affiliates. Hong Kong can host a parent company holding subsidiaries worldwide, or a subsidiary consolidating a group’s overseas operations.
Hong Kong taxes neither dividends nor capital gains and has a network of tax treaties that can help limit certain instances of double taxation.
Important consideration for holding companies: tax authorities pay close attention to the concept of economic substance. The benefits of tax treaties are not intended for mere “letterbox” companies.
A holding company in Hong Kong is not appropriate if no staff, office, or commercial lease is planned there.
You must also take into account the concept of a permanent establishment when the business is conducted from another country, as well as worldwide taxation rules that may apply in certain countries of residence. These matters should be reviewed with a tax lawyer based on the specific situation.
For each of these uses - trading, consulting, or holding - it is recommended to verify that the structure genuinely corresponds to the company's activities and objectives before proceeding with registration.