A holding company provides the best opportunity for entering into a new country/region to take advantage of its good operational systems. However, many people find it very difficult to select the right country to incorporate a holding company. For decades, Hong Kong remains outstanding for any holding company because it acts as the gateway to mainland China and the entire Far East. Here are the major advantages you will accrue for opening a holding company in Hong Kong.
Great ease of doing business
Most of the companies operating in the Mainland China have been incorporated as holding entities in Hong Kong. Though most operations in Hong Kong are independent, it is still part of China and, therefore, its companies get preferential treatment.
This relationship creates a unique opportunity to enter and do business with other companies in China. Whether you want to import or export products to Mainland China, you will find it easier, cheaper, and more convenient when operating a holding company registered in Hong Kong compared to other regions.
Incorporating a holding company is fast and straight forward
Unlike other countries that have numerous procedures for registering holding companies, Hong Kong has installed policies to make the process easy and fast. To incorporate the company of choice, you only have to follow 3 steps; gather relevant documentation, get a company secretary and office, and present them to the company registry.
Indeed, the law even allows you to register a holding company in Hong Kong without having to travel to Hong Kong. You simply identify an appropriate agency that will complete the entire process smoothly and faster. The company will even get a secretary and could use its offices as the address for your holding company.
The financial system in Hong Kong is very stable
Many investors are very worried about financial systems because of the current instability on most of the western banks. For more than a decade, Hong Kong has established itself as a financial hub, and more than 30 international banks have opened branches there.
The financial system is very stable and your holding company in Hong Kong can get all the funds it requires to operate profitably in Hong Kong and beyond.
You can qualify for 0% tax for the holding company operations
For companies that will base their operations outside Hong Kong, it is possible to qualify for 0% tax. According to IRD (internal revenue department), your company will only be taxed if its operations are carried in Hong Kong. You will only need to provide documentation showing that all transactions were entered and completed outside Hong Kong. However, even for Holding companies with operations in Hong Kong still enjoy low taxes of 17.5% only.
Support from the government
As a business economy, the Hong Kong administration works very hard to encourage investors to come and set up businesses. It is particularly committed to supporting companies in tech and value addition niches.
The government supports companies especially in tech sector through programs such as Design Incubation Programme, Cyberport Incubation Programme, and StartmeupHK Venture Programme. Note that your holding company in Hong Kong will be vetted intensively to be incorporated in the outlined programs.
It is the best way to expand into the Far East
A closer look at most top multinationals operating from the Far East including China reveals one thing; they were incorporated in Hong Kong. Because Hong Kong is a free port and has trading agreements with most neighbours, holding companies prefer it as a launching pad to expand into the Far East.
Hong Kong has continued to redefine its business environment to make it easier for companies to get incorporated and operate. Because of its commitment to making the business environment appropriate, World Bank has consistently ranked Hong Kong among the top on ease of doing business. If you want to venture offshore especially in the Far East, the best idea is registering a holding company in Hong Kong.