Incorporate New Hong Kong Company
The setup of a Hong Kong company without considering its tax substance could be a dangerous move for an international entrepreneur.
By opting for an offshore status, not paying taxes in Hong Kong, an entrepreneur would see his ownership in such offshore structure automatically reported to his country of residence because of the Common Reporting Standard.
Such reporting will arise from the bank (with information about the funds held in the company account) and be communicated from the tax authorities of the bank account jurisdiction to the tax authorities in the country of residence of the ultimate beneficial owner(s).
Paying corporate profit taxes in Hong Kong, 8.25 % till HKD 2 millions then 16.5 %, isn’t a guarantee to benefit from a Double Tax Agreement. Obtaining the Hong Kong Tax Residence Certificate could be quite challenging.
The second option is more secure on the long term as transparency becoming the new norm an entrepreneur should be ready to explain and to document his decision.