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Starting company in HK, working elsewhere

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  1. #1

    Join Date
    Feb 2011
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    9

    Starting company in HK, working elsewhere

    Hello
    I've understood that its easy for foreigners to start a company in HK, but hard to get a visa to work there.
    So I wonder if there's anything stopping me from going to HK to start a company, then leaving and go to China and work there? I might also be doing work from Sweden(my home country).

    I want to work as a freelancer from China. It would be good if I can start a company in HK and work through that company. No work would be done in HK.
    When I want money paid as salary from my company, I would pay tax in China or Sweden. The employees part of the tax that is. My company would of course pay tax in HK.
    Is this allowed? Are there any problems I might encounter?

    Last edited by niklas; 18-03-2011 at 06:55 AM.

  2. #2

    Join Date
    Jan 2008
    Posts
    1,966

    Yes, you can own and operate a company in Hong Kong. No income tax will be payable if the income earned by the company is earned out of Hong Kong. There is no need for you to pay salary to yourself and pay tax in Hong Kong. You take the profit as a dividend in Hong Kong. No tax is due in China. I am not familiar with tax laws of Sweden. If Sweden taxes dividend income then you pay tax.


  3. #3

    Join Date
    Mar 2010
    Posts
    238

    Opening a company in HK is very easy. The authorities do not care what you do with your company as long as everything is legal and you pay your taxes.

    As a foreigner, you can be a director of the HK company but you are not necessarily employed in HK, merely an officer of the company.

    With income in China, you probably would not need to pay HK tax either.


  4. #4

    Errr..company residence is not necessarily where the company is incorporated.

    You also look at centre of management and control.

    If you set up a HK co but you are 100% director and shareholder based outside of HK (and in China), the company will be likely China resident, potentially taxable on the profits.

    If HK wishes to claim it is resident, you would look at the HK/China tax treaty to determine where the company is resident and how to tax the profits from the company.

    Even if the company is found to be HK resident, you will be an employee of the company (I assume) generating income in China- therefore you may generate PE issues for the company in China. The profits allocatable to this PE (I assume 100%) would probably be taxable in China.

    If you are resident in China, I would think you would be taxed on the salary/any dividends in China (assuming there is tax on dividends there).

    PRC tax is complex; having cross-border tax issues is even more complex and a specialist area. The above are just basic things to think about.

    Last edited by heartproblem; 18-03-2011 at 11:21 AM.

  5. #5

    Join Date
    Jun 2005
    Location
    Hong Kong
    Posts
    23,205

    I think perhaps you meant to post that under your other alias?


  6. #6

    Drat. Foiled. You are the all seeing eyes of this forum...

    I couldn't be bothered to switch back. I set up a second account as I was embarrassed to be asking about another medical problem.

    Oh well. Guess that's out the closet then.

    No more advice from me.


  7. #7

    Join Date
    Feb 2011
    Posts
    9

    Thank you all for the help! Really helpful.
    So as I understand it I'm not required to have a business visa to go to HK and set up a company, am I right?

    You take the profit as a dividend in Hong Kong. No tax is due in China
    Does this mean I can transfer all the profit to myself as dividend instead of as salary? Or is there some dividend-salary ratio?
    I won't have to do any paper work outside of HK then? If no tax needs to be paid elsewhere...

  8. #8

    Join Date
    May 2010
    Posts
    4,713

    All true if you are going to get paid in rmb cash in china. Other than that, it is very difficult for Chinese companies to pay you in hkd/usd in hong kong from china.


  9. #9

    Join Date
    Feb 2011
    Posts
    9
    Quote Originally Posted by dumbdonkey:
    All true if you are going to get paid in rmb cash in china. Other than that, it is very difficult for Chinese companies to pay you in hkd/usd in hong kong from china.
    I will be sending invoices to customers in Sweden

  10. #10

    Join Date
    Jun 2005
    Location
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    Then as I see it you will need a visa that allows you to reside in China, and you would be liable for taxes there.

    Football16 likes this.

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