Guidance for setting up a software company in HK

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  1. #1

    Join Date
    Nov 2008
    Posts
    1

    Guidance for setting up a software company in HK

    I have business interests in India and US. I have customers in Asia Pac, and this is an area of growth for us.

    I am interested in setting a company in HK to address the larger Asia Pac market. I am attracted by the central nature of HK as well as its attractive corporate tax rate.

    The business is a software services business. Many of the customers are in Australia and Singapore. Much of the work will be outsourced to vendors or sister concerns (but distinct companies) in India, Vietnam and some will be done locally in HK. We may have some admin staff in HK so the actual local operation will be small to start.

    Given this set up, what are the taxation implications for this business as majority of customers and suppliers will be not in HK ? What part of the income be treated as HK source income ? If we generate income, and pay them out to investors in US or India - are there any local HK tax issues at that time ? Are there different tax rates for dividend payments for HK source income vs. non-taxed foreign source income ( US and India will also tax these as appropriate ofcourse)

    Finally, what is the least expensive way to set up such a company in HK ? What would be the expected one time costs. What would be the legal/tax cost of preparing the annual tax returns etc ( not counting the book keeping cost). I am trying to get a rough idea of the overhead costs of running this services trading company.

    Is it still the case that some of the shareholders/directors must be HK residents ?

    Thanks so much for your help


  2. #2

    Join Date
    Apr 2003
    Posts
    12,383

    >> What part of the income be treated as HK source income?

    Income that is not generated due to activities or processes in HK. So for example, if your sales person is in HK, you're sending faxes, invoices etc from HK, it will be considered HK income.

    I could be wrong, this is the gist of the advice I got a few years ago (and I don't take notes in meetings).

    >> Is it still the case that some of the shareholders/directors must be HK
    >> residents ?

    Not the case right now, again my info could be outdated.

    I'd not rely on forum advice for such matters. Cheaper in the long run to talk to an accountant who has experience in this matter.


  3. #3

    Join Date
    May 2005
    Location
    Hong Kong, from UK
    Posts
    3,784
    Quote Originally Posted by KnowItAll:
    I'd not rely on forum advice for such matters. Cheaper in the long run to talk to an accountant who has experience in this matter.
    Probably also worth getting in touch with people like InvestHK to ask business-startup questions - it's what they're there for...