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Thinking of registering a Hong Kong company

Discussion in 'Business & Tax Advice' started by royserpa, Feb 20, 2015.

  1. royserpa

    royserpa Jr. VIP Jr. VIP Premium Member

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    Hey fellas,

    Im thinking of opening a Hong Kong Company as it seems they have 0% tax on any income generated outside from HK.

    I'm no expert in this matter so please bear with me :)

    I have a few questions guys:

    1) After registering the company and opening the bank account, can I make wire transfers world wide, say Mexico, and pay no taxes on that as it comes from HK? Or am I missing something here as I think I wouldn't pay taxes in HK nor Mexico?

    2) After registering the company, do I have to pay taxes in Mexico even if its based in HK?

    I'm not an expert at this guys, but the accountants I have called before don't have any idea of this lol.

    I appreciate any comments guys!

    Thanks!
     
  2. RosuC

    RosuC Regular Member

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    Hello there, I may be able to answer to your questions:
    1. If you make from an .LTD company from HK a wired transfer to a Mexican account (where you're the owner) you'll be forced to pay the taxes relative to your income from that account to the Mexican state.
    2. If you register your company in HK you have no obligations regarding the Mexican state unless you're getting the money in Mexic.
    The idea of opening an Offshore company is for that - to don't pay taxes for your incomes but not to avoid at 100% the taxes.
    In my case I'm having my Offshore company in HK and I use the income directly from my HK account. I transfer just an amount as monthly salary to keep my balance account in Spain on PLUS.
    I hope that I succeed to give you the answers to your questions, for more you can find me on IRC or Skype
     
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  3. nowakt

    nowakt Newbie

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    So now you pay taxes only for the amount transfered to your account in Spain? Why would you do that? Why you need to keep the balance account on PLUS?
     
  4. Reyone

    Reyone Elite Member

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    HK is definitely a good place to get your taxes sorted, same as HK tons of places.

    You'll be able to avoid corporate tax but you won't be able to avoid income tax (guessing that's what you are trying to do).
    Other than that, you'll have to declare the money you've got in HK depending on your country's regulations.

    Being in Mexico, you've got a ton of other places nearby (several islands in the Caribbean...)that will allow you to play around the game.

    When you get paid to a country where you are residing, you are obliged to comply with the tax legislation and therefore to pay the % that your country falls under. If you live and have permanent residency in Cayman islands for example, you will have a 0% income tax. Not sure what's the percentage in Mexico, but independently of where his company is located, he will have to pay the income tax under the country of residence (shit like perpetual traveler and other things can exempt you).

    Anyways, as I always recommend, talk to an accountant in your country, nobody better :)
     
  5. royserpa

    royserpa Jr. VIP Jr. VIP Premium Member

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    @reyone

    Im actually thinking of lowering as much as i can what i pay for income tax as its 30% down here.

    So what im thinking is getting this HK company and get a salary (say 500 usd a month) from it for the sole reason to pay a lot less income tax even though its 30% atm.

    What do you think?
     
  6. Reyone

    Reyone Elite Member

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    The minute you get paid into a country where you are residing, you are obliged by law to tax that money according to the country's tax legislation.

    This effectively means that if you were paying yourself $500 from HK to your personal bank account in MX, you would still need to pay that 30%. If you don't, you are simply avoiding taxes which is ilegal, therefore if they caught you, you'd most likely be fined.

    Now if you had a PERSONAL account in HK and a business account in HK and you were paying yourself to your HK personal account, that's when you would only need to EITHER: pay HK's income tax - or - do your tax shit and declare yourself as a Mexican, this would mean that you'd be paying Mexico's income tax; since the money never reaches your Mexican account, it is VERY unlikely for them to find out. Now that being said, you should not do this as if your country gives a shit and carries on an investigation, they could technically send your ass to jail for tax avoidance.

    So coming to this point you are probably asking yourself what is the best way forward. There are other LEGAL ways in which you can end up paying nothing without risks (pretty much), HOWEVER, if you are playing with low amounts (less than 10k a month), I would recommend you to focus your efforts onto making that money and forgetting about this tax related shit.

    You are saying Mexico's got a 30%... thats SWEET! Check most countries in Europe have a much higher rate, going up to around 50% and OVER in some cases. Remember this 30% you are paying is from your PERSONAL INCOME! and so if you had a registered company, you would only need to take care of the corporate tax (for as long as you don't pay yourself). This can take the game to another level, specially if you just want to get paid around $500. For example, in the UK you got an allowance of up to £500 (roughly, cant rmb the exact number); this money does not get taxed, however you'd be paying a 20% corporate tax from your profits. Now obviously if you want to get paid £5k, you are going to HAVE to pay your income tax.

    Again, I honestly recommend you arranging a meeting with some accountant in Mexico as there may be specific tax laws that apply there and that you may need to consider.

    Best of luck whatever you choose,
    R
     
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  7. RuthSam

    RuthSam Jr. VIP Jr. VIP Premium Member

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    I wonder why you're are not looking into a country that has low corporate tax and which has signed a double tax treaty with your country! That may be the only legit way to avoid to pay tax in your home country and to avoid any trouble with the tax office.

    A great alternative would be to make so called corporate loans to yourself, so you will avoid to pay personal income tax, the problem can be if the documents are not correct and your offshore setup also lack of structure.

    It's not an easy task to set all this up and obvious a public forum is not the right way to go, it can be good for a beginning to research and get some guidelines or to be pointed in the right direction, but do yourself a favour and consult a local tax adviser. To find someone who can help you to setup something offshore is easy, Google will pull up tons of CSP's. The difficult part is to get the right structure that fit's exactly your situaion, and this you can only find together with someone close to you and locally.

    Just my 2cents.
     
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  8. nakamura

    nakamura Senior Member

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    Recently many people are facing problems in opening bank accounts for their new business in HK. The HSBC and so on just refuse the people nowadays. I heard from many people that they went to HK to open a business bank account without any success. So the whole trip to HK was a waste.

    If you are really serious about that you should get some information about opening the bank account there BEFORE you go there.

    Setting up the company should be no problem if you use a service. Costs depends on the service. Maybe about $400-700.

    You will have to pay the normal income taxes % of your country for the money you will transfer to your local bank account as "salary".
    So you give yourself a salary and have to pay taxes for that. Of course you could buy flight tickets, rent hotel rooms, leasing cars, paying rent etc. with your business bank account as "Business expenses".
     
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    Last edited: Feb 21, 2015
  9. royserpa

    royserpa Jr. VIP Jr. VIP Premium Member

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    I totally understand you guys but i dont want to avoid taxes but rather pay as low as I can.

    @reyone: im doing 10k a month in average so I believe this set up wiuld be really profitable :)

    So i have 2 things in mind i can do:

    1) Make my network pay me the 10k monthly to my MX bank personal account and declare $3k per month as taxes. 3k a month in taxes is quite a lot and I believe I can reduce that amount by making the set up in the next point.

    2) Instead of paying 3k a month in taxes i can register a Company in HK and get all 10k monthly in my business bank account there. Then I would simply transfer $3k as my salary each month from my business bank account in HK to my personal bank account in MX which would allow me to pay just around $900 per month in taxes PLUS everything i can write off!

    I believe the 2nd option would be extremely profitable as i would be saving 2k+ every month in taxes!

    Also Im going to meet a couple of accountants here in Mexico to have their opinions in this set up im thinking of building.

    Any comments are appreciated.
     
  10. Reyone

    Reyone Elite Member

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    Sounds good man. Just do some research, there are TONs of tax havens; HK being famous doesn't mean it necessarily suits everyone. Plus you also need to consider that things in HK are not that stable and they might change in the nearby future, so be careful on where you put you money!
     
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  11. Shiftchrisd

    Shiftchrisd Newbie

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    Hong Kong is expensive to set up and it requires you have a nominated secretary that is a resident of Hong Kong, so there will be ongoing fees associated with that. Additionally, there is yearly compliance and accounting processes you must go through. In order to open a bank account in Hong Kong you must physically visit the bank.

    Why not go with a country like St Vincent? It's cheaper to setup and there are less ongoing requirements. It's also easier to get a bank account in the caribbean as you don't have to physically visit the bank