Advice for relocating to HK

I hope someone can assist with my predicament as my extensive internet research is confusing to say the least.


My long term partner is likely to be relocated to HK with her company. It is my understanding that HK does not recognize defacto relationships and therefore, her company will include me on her visa application. I am a UK national so I think I can visit on a tourist visa for 180 days at a time. however, my understanding is that I couldn't work on this visa. Whilst this might sound appealing to some of you, I actually would want to work! (some hours a week anyway).


I am a finance professional but work for myself at the moment. I had then thought of starting a company in HK and benefitting form the low tax rates. However, I cannot seam to find what the restrictions are regarding residing in HK in this instance! Can anyone provide any advise regarding starting ones own small company in HK (the one off and onging costs involved) (the immigration issues) (the tax rates) (whether a portion of the rent/rates my partner and I will pay can be used as a tax deductible expense in my accounts (for home use as office))?


Any assistance is hugely appreciated.

setting up a company in HK is v easy. you need to choose if you are going for a Limited co or a sole prop/partnership. The 1st option takes about 2-4 weeks and the second one takes 1 day. the accountant forming the co can be the nominee share holder. many people coming to hk from overseas on tourist visa's have businesses here. However if you want this co to SPONSOR you , that is a separate issue. You then need to get involved with HK IMMIGRATION. I have not heard of them saying NO. They simply ask for more and more papers and will eventually give you a conditional visa. You may need to show some seed capital as well. Instead of your 180 day tourist visa you may get a 180 day work visa that is renewed after showing your co papers when the visa is up. Not as bad as it sounds. I know a few people who have done it. With regards to dependants WOrking, the rules were reversed about 2-3 yrs ago if I am right. good luck.

re your other queries. Cost of setting up a Limited co is about 10000 HKD and then you have an annual cost of about 7000 to 10000 for audit fees and 2600 for Business reg. COst of a sole prop business is only the b reg fee of 2600/yr. While a limited co does have limited liability you will still have to sign guarantee papers for co loans etc so the selection of which co to form depends on your long term goals and risk. rent etc is deductible for full value as a cost if for office rent however there is a diff formula if for residence. They deduct the total expenses from your profit and then add 10% rent value (of the yearly) rent to your total salary as a perk. Taxes a v straightforward with 100000 hkd free per person. Even if you file an incorrect return they are pretty good here. The IRD will send you a corrected letter with revised options where you pay the least tax. BEsides this you have v lucrative depreciation allowances. You get 75% writeoff for a new car for instance in yr one for tax purposes with only 20% depreciation shown in the balance sheet. HK is one of the most business friendly places in the world and you should not be scared of getting bogged down with red tape. suggest you get hold of an accountant for more advise and they will even fast track your visa papers.

thanks for the replies - most helpful. I will be giving opinions on financial reports with the majority of my work being overseas (on European companies) so I guess limited liability is a preference for co set up.


Regarding tax deductions, apart from traveling costs and the home rental (home as office), my salary, and entertaining, I will not have many costs. The comments regarding rental, I asume this deduction will be taken by my partner in her tax return and therefore, I couldnt claim this on my personal tax return as well? Also I am guessing that no apportionment would be allowed to reduce the companies taxable profits? Can any one clarify the situation? Finally, are entertaining expenses permitted deductions on the company taxable profits?


Lastly and this may complicate matters, I read something today about territorial tax. Since the profits of the company are largely derived from overseas projects, are these even taxable in HK?

down side of a ltd co is that you can not simply walk away from it like you could a few years ago. its complicated to close one down and sometimes expensive in case you have complicated transactions. takes about 3-4 months and about hkd 20k to shut an operating ltd co down. The govt wants to be sure you do not owe people money so they have put some systems in place now???.

Tax. you will be given a choice for joint assessment for you and your partner (dont know if the option goes for de facto as well). in case of jt assessment your incomes are pooled. so you will have 3 returns . Your partner, you and your company. yes entertainment is fully deductible and so are your travels overseas. you could go on a 2 week holiday overseas on co acct and have one meeting and claim it all as an expense. In general the auditors do not hassel you too much. you also get 100k per yr tax deduction on interest for your 1st home in HK. SO all in HK has a v generous tax system.


Yes income derived from overseas is tax free but again v complicated to prove. secondly you can not have it both ways.

if you do not pay any taxes here how do you expect the govt to sponsor your immigration?? The immig dept would like to see you contributing to HK in some way , be it employing local staff or paying local taxes. It wont be right or ethical to set up a shelf co save on taxes but still go to the immig dept to ask for sponsorship.

However there is a provision for businesses who solely rely on overseas work or income . There are accountants who will set up BVI companies for you.


In any case the tax issues will not even kick in till 12-18 momths of you starting things here. You will have plenty of time to fish around for the best options for your business.

It is relatively simple to open up a Ltd. company in HK, if you dun want any hassle, simply just pay small fee to small accountancy firm that they will file all the papers for you. To get round of immigration about working in HK, I suggest you can register as shareholder and director of the HK company, you enter HK for business purpose, so you do allow to work in HK (but the hassle is that you need to go out of HK whenever your visa (tourist??) expire, the best is to go to Macau (near HK) and re-enter to renew your visa.


Any profits derived from your HK company will be subject to HK profit tax 16.5%, unless your revenue can be proved that your contracts (sales & purchases) are concluded and negotiated outside HK, but unlikely in your case you can arrange that I believe.


The director fee (or your salary) getting from your HK company will be subject to HK salary tax 15% or under progessive rate (whatever which one is lower), so is very low compared to foreign countries; the entertainment fee are fully deductible (do hire a more easy accountant to audit your account :) )


http://www.ird.gov.hk/eng/tax/index.htm

I'm not sure that I could pay myself a salary form the HK company as I would be on a tourist visa! Can anyone confirm?

It's fine to receive a salary under tourist visa, I came to HK on tourist visa from time to time to collect my direct fee from my HK company, as long as you pay HK salary tax.


But for long term solution, you need to apply either an investment visa (http://www.goinglobal.com/hot_topics/hongkong_spaxman_businessvisa.asp) or dependent visa (married), as frequent travel for re-enter HK to renew the tourist visa will not work after two or three times, the Immigration will get suspicious of your actual purpose to remain as HK resident.

To get the accurate up-dated info instead of from hearsay, you can visit websites www.info.gov.hk or GovHK and pick up Inland Revenue Department, Immigration Department and Company Registry for details. As for the formation of companies(limited or unlimited or partnerships), go for secretarial companies is more economical than employing accounting firms who charge much more than the former. I can recommend such firms as www.conson.com.hk ,victon,and the like. I am using Conson for my own companies. They even offer you registered addressed, company name display, secretarial and telephone answering and if you like hire rooms for 2 to 10 pesons and share the common office facilities , of course at some costs. I am in busineses in Hong Kong for many years. If you want to get assisatance from me, please leave a message on the column.