Best way to pay yourself with HK Limited company as the sole director & 100% shares

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  1. #1

    Join Date
    Aug 2021
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    1

    Lightbulb Best way to pay yourself with HK Limited company as the sole director & 100% shares

    Hello,

    I have an IT Programming / Consulting business incorporated in France, and I moved to Hong-Kong a year ago on a defendant visa linked to my wife IANG visa (with right to work and incorporate in HK).

    I'm in the process of incorporating a Limited with NEAT and transfers all my activity from the French company → the HK limited company.

    Most of my clients are European and not locally in HK.
    The activity is being held / done in HK trough (mostly at home or in co-working spaces).


    • What would be the best option regarding on how to pay myself with the Limited ? I will be the sole director and own all the shares.
    • I'm trying to have some stable income on the Hong-Kong side to build a credit-score there, since for most banks, my business and income from Europe doesn’t matter if it's not from an HK company payslip. Taking this in consideration, and reading about MPF contribution, is there an optimal way to deal with this ? Maybe pay myself a certain amount as "salary" and the rest in dividend ?
    • Lastly, is there any accounting firm that you would recommend for with the tax and returns of the company ? The excepted company turn-over for the first year would be about 800-900K HKD.


    Thank you very much for your help and inputs.

  2. #2

    Join Date
    Aug 2013
    Location
    The World
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    1,948

    Companies are taxed at a flat 17%. Individuals pay tax on salary (rate depends on amount of income, but will not exceed 15%) and there is zero tax on dividends. So ideally you would want to have a mixture of salary and dividends to minimise the overall tax paid.

    You could also make your wife an employee and pay her some salary to further reduce tax.


  3. #3

    Join Date
    Apr 2017
    Posts
    73

    HK corporate tax rate is 8.25% for first 2 Million. 17.5% is for the balance. Pay yourself dividend from the company - check if you are exposed to global taxation for dividends else pay yourself a salary.

    https://www.gov.hk/en/residents/taxe...ofitsrates.htm


  4. #4

    Join Date
    Aug 2016
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    local fire hydrant
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    39

    HK Pofits Tax is 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000. Note that Profits Tax is based on profits, not turnover.

    With your level of turnover, it's probably most simple to pay yourself via dividends. However, if you are insistent on paying yourself a salary in order to build a credit score, and want to keep your tax expenditure to a minimum, then perhaps you can pay yourself up to the salary tax tier that does not exceed 8.25%.


  5. #5

    Join Date
    Dec 2002
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    薄扶林
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    48,091

    - Pay yourself a regular and minimum salary - this is helpful in many ways - esp when you need credit
    - Sit down with your accountant and figure out what are all the legitimate expenses you can put on the company account. I personally think this is the best way to reduce your &companies tax burden.
    - Retain or distribute profits as dividends


  6. #6

    Join Date
    Aug 2021
    Posts
    148

    NEAT is not even a virtual bank...