A lot of people do not realize that Hong Kong has the option of filing offshore status.

Corporate tax on profits is 16.5%, and the big advantage of being an offshore entity is that the company is then not subject to any. To obtain this tax exemption, you need to prove that you don’t have any physical or business presence in Hong Kong.

The word to call this is Offshore Claim. 

To qualify for the status of offshore company in Hong Kong, the following criteria must be met:

• Have no clients in Hong Kong;

• Have no operations in Hong Kong, either offices or staff;

• Have no web hosting in Hong Kong;

• Have no sales or other business activity taking place in Hong Kong;

• Have no warehousing and fulfillment happening in Hong Kong.

These criteria aim at checking that the company does not benefit from any of the local services.

Documents to provide for application

To apply for the status of offshore company, consultants would usually ask to provide them the Company Name and Business Registration Number, as well as the following information:

• The business nature;

• If there is any stock or warehouse in Hong Kong;

• All the business contracts signed;

• Where the management lives.

How long does it take to obtain the status of Offshore Company?

The amount of time requested is not fixed, but to be realistic, it will not be less than 6 months. This is because there will be some back and forth from the IRD if questions arise.

The offshore status is subject to renewal?

Filing for the offshore status is a one-time thing. After the third year though, a statement is requested to verify that the business activity has not changed. If they are the same, then no further actions are required. At last, the company will still have to do the yearly audit, as the CPA will need to see if the company is still truly offshore or not. So the audit report and the auditor signature on the books is required to prove that the company is still offshore.