CentreO Blog

THE BRITISH VIRGIN ISLANDS COMPANIES

The British Virgin Islands (BVI) is one of the most popular places to create an international business company. Since it’s well-known as being a tax haven. Hence, BVI company registration is no doubt practical, making it one of the offshore tax havens. BVI is no corporate income tax, zero tax on capital gains, or value-added tax (VAT) for offshore BVI companies. However, is it still favourable to setup BVI companies nowadays? Or let’s Centre O talk about the pros and cons as reference for you.

Increased Transparency

Global anti-money laundering (AML) and combatting financial crime regulations have become stricter. Jurisdictions like the BVI have faced pressure to enhance corporate transparency, which means more rigorous due diligence requirements and increased reporting obligations for clients.

The British Virgin Islands Country-specific Regulations

Depending on the countries where you operate, governments might be tightening regulations around the use of offshore entities for tax avoidance or evasion purposes. Some jurisdictions may now require additional scrutiny or even discourage the use of BVI companies for legitimate reasons.

Public Perception

The growing awareness about tax havens and their role in facilitating financial secrecy. This may affect the reputation of British Virgin Islands companies, particularly if they are perceived as being used for illicit activities.

The British Virgin Islands Tax Implication

Although the BVI itself does not tax its residents or corporations, changes in tax laws or international tax agreements might impact how their structures are treated by other countries, potentially leading to double taxation concerns.

Complexity

As regulations evolve, maintaining a British Virgin Islands company might become more complex and costly, especially if compliance becomes more burdensome.

Setting up a business in the BVI is not the same as it once was. However, navigating your business in certain ways can make it still a better choice than many continental registration alternatives.

For further information, please contact us.

You may want to read: APPLYING FOR THE OFFSHORE TAX EXEMPTION CLAIM

为什么在香港创业如此容易？

香港创业相对简单快捷，设立成本低，整体环境鼓励企业蓬勃发展。香港是全球最适宜创业的城市之一。星特奥始终致力于为香港和中国的企业提供协助和便利。在香港创业相对容易的原因:

简单的注册流程

香港的企业注册程序简单高效，在业界享有盛誉。此外，负责企业注册的公司注册处提供在线服务，简化了注册程序。实际上，如果备齐所需文件，企业可在3-5天内完成注册。

监管障碍最小化

与许多其他司法管辖区相比，香港的监管环境对企业有利，官僚主义障碍相对较少。香港奉行 “积极不干预 “原则。简而言之，除非必要，政府都是最低限度地干预企业事务。这一政策为创业创造了良好的环境。

低税收和关税

香港对企业征收低税，税制简单透明。例如，公司利得税上限为 16.5%，没有增值税或销售税。此外，还对股息和利息征收资本利得税或预扣税。这些优惠的税收政策吸引了众多投资者在香港创办企业。

战略位置和市场准入

香港位于亚洲的战略要地，毗邻广阔的中国市场和其他亚太市场。发达的基础设施、高效的交通网络和世界一流的物流设施，进一步促进了商业运营和贸易。例如，香港拥有广泛的交通网络，连接中国内地和世界各地。

健全的法律框架

香港拥有以法治为基础的健全法律框架，为企业提供可预测和稳定的运营环境。合同可以强制执行和知识产权受到保护，这些都给企业家和投资者带来了信心。

人才获取

香港拥有一支高技能、多元化的劳动力队伍，精通包括英语和中文在内的多种语言。香港的大学源源不断地培养出合格的毕业生，开放的移民政策使企业能够吸引来自世界各地的人才。

政府的支持性举措

香港政府通过各种措施积极支持创业和创新，包括资助计划、孵化计划和为初创企业提供资源。这些举措帮助创业者了解商业环境，并获得成功所需的支持。

正如您所见，规章制度、政策和环境的完美结合，使香港成为吸引创业者的目的地，让他们能够快速高效地创办和发展企业。

如需了解更多信息，请联系我们。

您可以还想要了解：

THE BUSINESS REGISTRATION FEE AND LEVY 2024-2025

2024-2025 the Business Registration Levy HK$220 will be waived per annum. While the registration fee will no longer be discounted. Starting from 1 April, 2024, the Business Registration fee is HK$2200.

How much you have to pay in 2024-2025?

Checking back, the calculating of 2023-2024, the amount of total business registration fee HK$2000, plus levy HK$150. Total of HK$2150. While in 2024-2025, the update fee is HK$2200 plus levy of HK$0. The total amount is HK$2200. So, if the commencement date of your company is on or after 1^st April. then then you have to pay extra HK$50 when renewal of your registration.

Business Registration Fee and Levy Table

For further information, please contact us.

You may want to read: THE BUSINESS REGISTRATION LEVY RATE REDUCTION

WHY IS IT SO EASY TO SETUP A BUSINESS IN HONG KONG?

Hong Kong is one of the top cities World-wide to set up businesses. Getting started is relatively quick and easy, setup costs are low and the overall environment encourages businesses to thrive. Centre O is here to assist and to facilitate businesses in both Hong Kong and China.

Reasons for being relatively easy to set up businesses in Hong Kong

Simple Registration Process

Hong Kong has a reputation of a straightforward and efficient business registration process. Moreover, the Companies Registry which oversees business registrations, offers online services that streamline the registration process. In fact, if all required document is ready, the business can complete within 3-5 days.

Minimal Regulatory Hurdles

Hong Kong has a business-friendly regulatory environment with relatively few bureaucratic hurdles compared to many other jurisdictions. The city operates under the principle of “positive non-interventionism”. In short, the government intervenes minimally in the affairs of businesses unless necessary. This policy fosters a conducive environment for entrepreneurship.

Low Taxes and Duties

Hong Kong imposes low taxes on businesses with a simple and transparent tax system. For example, corporate profit tax is capped at 16.5% and there is no value-added tax (VAT) or sales tax. Additionally, there are capital gain taxes or withholding taxes on dividends and interest. These favourable tax policies attract investors to set up businesses in Hong Kong.

Strategic Location and Access to markets

Hong Kong’s strategic location in Asia provides businesses with access to the vast Chinese market and other Asia-Pacific markets. Its well-developed infrastructure, efficient transportation networks, and world-class logistics facilities further facilitate business operations and trade. For instance, Hong Kong has extensive traffic networks connected to Mainland China and all over the world.

Strong Legal Framework

Hong Kong has a robust legal framework based on the rule of law, providing businesses with a predictable and stable environment for operations. Contracts are enforceable, and intellectual property rights are protected, giving confidence to entrepreneurs and investors.

Access to Talent

Hong Kong boasts a highly skilled and diverse workforce, with proficiency in multiple languages, including English and Chinese. The city’s universities produce a steady stream of qualified graduates, and its open immigration policies allow businesses to attract talent from around the world.

Supportive Government Initiatives

The Hong Kong government actively supports entrepreneurship and innovation through various initiatives, including funding schemes, incubation programs, and resources for startups. These initiatives help entrepreneurs navigate the business landscape and access the support they need to succeed.

As you can see, the combination of the rules and regulations, policies and environment, all makes Hong Kong as an attractive destination for entrepreneurs to start and grow their businesses quickly and efficiently.

For further information, please contact us.

You may want to read: THE NITTY GRITTY OF SETTING UP A BUSINESS IN HONG KONG

如何计算香港带薪年假？

香港带薪年假是薪酬的一部分

香港带薪年假是薪酬的一部分。一年有 365 天。除了周末休息外，员工还有年假。那么，雇主应该注意些什么呢？

哪些人可以享受带薪假期？

根据《雇佣条例》，按连续性合同受雇满 12 个月的雇员有权享受带薪年假。雇员可享有的带薪年假根据其服务年限由 7 天逐步增加至最多 14 天。

雇主可否以薪代假？

根据《雇佣条例》，无论雇员是否有权享有假期薪酬，雇主都应给予雇员法定假期，或安排 “替代假期 “或 “代替假期”。雇主不得向雇员支付任何形式的款项以代替给予假期。换言之，不允许 “买断 “假期。不过，超过 10 天假期的部分，雇员可以选择接受支付作为替代。

例如：有权享受 12 天香港带薪年假的雇员可以选择只休 10 天带薪年假，并接受雇主支付的 2 天年假补偿。

香港带薪年假折算成工资该如何计算？

年假工资的日工资额相当于雇员在 12 个月期间的日平均工资。

现任员工

就业
12个月以上	前12个月平均日工资 x 年假数
不足12个月	就业期间平均日工资 x 年假数

例如：Ada 在公司工作了一年多。她的工资总额为 200,000 港元（包括工资和佣金等）。总工作日为 240 天。如果艾米休 7 天年假。计算方法是

HK$200,000 / 240 x 7 = HK$5,833.33

终止雇佣合同

工作期限	年假权利
少于3个月	0
3-12个月	工作天数/365 x 本休假年度应享年假
12 个月，在当前休假年不足 3 个月	尚未休年假
12 个月，在当前休假年 3-12 个月	工作日/365 x 年假数 + 未休年假

如果雇主不允许雇员休年假，会有什么后果？

不允许员工休年假的雇主将被起诉。一经定罪，可处以$50,000的罚款。

想要了解更多信息，请联系我们。

HOW TO CALCULATE PAID ANNUAL LEAVE?

Paid Annual Leave is part of the compensation

Everyone knows there are 365 days in a year. Besides the weekend off, an employee does have annual leave. Also, paid annual leave is part of the compensation. Then what should an employer be aware of?

Who can entitle a Paid-Leave?

According to the Employment Ordinance, employees who have been employed under a continuous contract for 12 months are entitled to annual leave with pay. An employee’s entitlement to paid annual leave increases progressively from seven days to a maximum of 14 days according to his length of service.

Can an employer pay in lieu of Leave?

According to the Employment Ordinance, regardless of whether an employee is entitled to holiday pay, an employer should grant his employee a statutory holiday, or arrange an “alternative holiday” or “substituted holiday”. An employer must not make any form of payment to the employee in lieu of granting a holiday. In other words, “buy-out” of a holiday is not allowed. However, an employee may choose to accept payment in lieu of the part of his leave entitlement which exceeds 10 days.

For example: An employee who is entitled to 12 days of paid annual leave may choose to take only 10 days of paid annual leave and accept payment from the employer in lieu of 2 days of annual leave.

How to calculate if paid annual leave is converted into the payment?

The daily rate of annual leave pay is a sum equivalent to the average daily wages earned by an employee in the 12-month period.

Current staff

Employment
More than 12 months	Previous 12 months average daily wage X no. of annual leave
Less than 12 months	Employment period average daily wage x no. of annual leave

For example: Ada worked for your company more than a year. And her total salary is HK$200,000 (Included salary and commission etc). Total work days are 240. If Amy takes 7 days annual leave. The calculation is

HK$200,000 / 240 x 7 = HK$5,833.33

Termination of Employment Contract

Period of Employment	Annual Leave Entitlements
Less than 3 months	0
3-12 months	Work days/365 x Entitled Annual Leave in the current leave year
12 months, less than 3 months in the current leave year	Annual leave not yet taken
12 months, 3-12 months in the current leave year	Work days/365 x No. of Annual leave + Annual leave not yet taken

What is the consequence if an employer denies an employee to take annual leave?

An employer who does not allow employees to take annual leave is liable to prosecution. And, upon conviction, to a fine of $50,000.

For further information, please contact us.

You may want to read: MATERNITY LEAVE REIMBURSEMENT SCHEME IN HONG KONG

HONG KONG LIMITED OFFSHORE TAX EXEMPTION CLAIM

The territorial principle is the fundamental to the taxation of profit tax in Hong Kong. Thus, the profits which arise in or are derived from Hong Kong are liable to profits tax. Otherwise, you can claim of tax exemption on the ground of “Income not sourced in Hong Kong”. That is, may be treated as offshore sourced and non-taxable in Hong Kong.

HK LIMITED APPLY FOR OFFSHOE TAX EXEMPTION CLAIM

Does your company’s income liable to income tax in Hong Kong?

The profits derived by Hong Kong Limited Company may be treated as offshore sourced income and thus exempted from Hong Kong taxation. Here are some examples of various business incomes prepared by Inland Revenue Department (IRD):

Trading Profits

A Hong Kong company negotiates and concludes the terms of the purchase and sale contracts with suppliers and customers outside Hong Kong. And also carries out the relevant operations outside Hong Kong. Then it may be possible to claim that the trading profits so derived are non-taxable in Hong Kong.

Manufacturing Profits

A Hong Kong manufacturing business enters into a contract processing or assembly arrangement with a Mainland entity. And to entity located elsewhere where the arrangement is similar to the one with the Mainland entity. Moreover, the Hong Kong manufacturing business will provide the raw materials, technical know-how, management, training and supervision for the locally recruited labour and so on. Then it may be possible to claim that 50% of the manufacturing profits are not taxable in Hong Kong.

Service Profits

A Hong Kong company provides services partly in Hong Kong and partly outside Hong Kong. It may be possible to claim that part of the service income is attributable to the services rendered outside Hong Kong and therefore not taxable.

Furthermore, if a Hong Kong company appoints overseas agent or service provider to perform services on its behalf outside Hong Kong. It may be possible to claim that the entire service income relating to the services rendered outside Hong Kong is not taxable.

Can you get a green light from IRD?

IRD will examines each case of offshore-sourced income tax exemption claim. So, the samples above we have emphasized the word “possible”. IRD adopts operation test in the matter of facto to determine where the major business profit-making operation take place. That is, the source of profit. Usually, offshore-sourced income must at least fulfill all the following conditions:

Sufficient Proof of profits not derived from Hong Kong.
No business activities which produced the relevant profits held in Hong Kong
No office (no physical office of daily business operation and decision making) in Hong Kong.
The director(s) stay less than 60 days in Hong Kong during the financial year.

For further information, please contact us.

You may want to read: How to proof my income is offshore-sourced?

HOW TO PAY TAX IN HONG KONG?

Tax Payable

You may have heard Provisional Tax during the tax filing process but didn’t know much about it. After the tax assessment, the taxpayer needs to pay two instalments. Sometimes it is only when the tax is paid that it is discovered that the tax is more than the original tax payable. In fact, it is a provisional tax payment.

What is Provisional Tax?

According to the information of the Inland Revenue Department, Provisional Tax is a government requirement. The tax amount is calculated based on the taxpayer’s income in the previous tax year. And then calculated for 12 months and requires prepayment for the next tax. Part of the tax in the tax year.

When assessing the tax in the coming year, the tax will be deducted from the provisional tax of the current year. If there is still a balance, the provisional tax of that year will be used and offset in the next year of assessment.

Since the first-time tax payer does not have the provisional tax deduction for the previous year. So, you may have to bear the provisional tax for the next tax year.

How to settle a tax bill in Hong Kong?

Inland Revenue Department (IRD) will send you a payment vouchers by letter. Or send you an e-alert if you have registered a e-tax account. Then you can settle the bill either in person or electronic payment.

In Person

Post Offices

You can present the payment voucher and pay your IRD bills or purchase Tax Reserve Certificates at Post Offices by cash, cheque or EPS.

Convenience Stores

You can print the payment voucher barcode, then you can present the voucher and pay tax. For example, at any 7-Eleven Convenience Store, Circle K Convenience Store, VanGO Convenience Store and U select in Hong Kong.

By Post

You can send a crossed cheque to the commissioner of Inland Revenue. And make payable to “The Government of the Hong Kong Special Administrative Region”. Then write the reference number on the back of the cheque.

Electronic Payment

Tax payment accepts all kind of electronic means. You can pay your tax by telephone, Internet or bank Automated Teller Machine (ATM).

Last but not the least, Hong Kong have so many simple and easy way to pay tax. And paying tax should be paid on or before the due date. If you denied to pay, IRD will take immediate action.

For further information, please contact us.

You may want to read: Tax Paying Form BIR51/BIR52: Using the same envelope to send correspondence for enquiries/claims and the tax return

https://centreo.hk/tax-paying-form-bir51-bir52-using-the-same-envelope-to-send-correspondence-for-enquiries-claims-and-the-tax-return/

香港银行开户 – 面试常见问题

银行希望更好地了解您的业务，然后为您提供正确的解决方案，支持您的业务增长，保障您免受金融犯罪的影响。因此，在银行面试时，银行会根据以下方面向您提出一系列问题：

身份证明文件
财富来源
资金来源
在香港开立商业理财户口之目的

所需文件

您需要提供的文件取决于您的企业注册所在的国家或地区。此外，还取决于股权分布和董事架构。对于在香港注册成立的有限公司，您需要提供：

公司注册证
公司组织章程
公司实益拥有人、主要管理人、获授权签署人以及代表客户行事的人士的身份证明文件

财富来源

银行需要了解支持企业的资金来源。

对于初创企业来说，资金更有可能来自公司持有人。那么您可以提供的财富证明可能包括：

个人银行结单
收入证明
资产证明
一笔过收入证明

对于已成立一段时间的企业，证明文件可以是：

审计财务报表
公司银行结单

资金来源

为了更多地了解您的银行业务需求。银行需要了解您公司日常运作的现金流，包括资金的来源：

资金金额是多少？
资金是否来自您的买家？
资金来自哪个国家或地区？
相关的收款及付款方法是什么？

在香港开立商业理财户口之目的

如果您是为海外企业开设银行账户，银行需要知道您为什么要在香港开设商业银行账户。

您公司是否海外母公司的供应或采购部门？
您公司是否拓展香港或亚洲区业务的分区办公室？

想要了解更多信息，请联系我们。

HONG KONG TAX RESIDENTS GUIDE

Hong Kong has a reputation of tax-friendly for decades. As Hong Kong is a Free Trade Port. Tax is low, simple and competitive for tax residents in Hong Kong. If you are going to start a new career or business in Hong Kong, here’s a little tax guide for you.

Direct Tax

Hong Kong only imposes 3-type of direct taxes. That is, Profit Tax, Salaries Tax and Property Tax. In the past few years, Government offers generous allowance and deduction to lower your taxable amount.

2023/24: Hong Kong Tax Residents Salaries tax rate

Here are the salaries tax rates for the period from 1 April 2023 to 31 March 2024:

	Net Chargeable Income	Rate
Taxable Income Band	$1-$50,000	2%
Taxable Income Band	$50,000-$100,000	6%
Taxable Income Band	$100,001-$150,000	10%
Taxable Income Band	$150,001-$200,000	14%
Taxable Income Band	$200,000+	17%

Calculation of Tax Payable

Do you need to pay Salaries Tax?

Hong Kong observes a territorial basis of taxation; therefore, the concept of tax residents has no significance in determining tax liability, except in limited circumstances.

Your income will be chargeable as below:

If your income is generated from Hong Kong, including arising in or derived from Hong Kong employment, office and pension.
Your income from services rendered in Hong Kong during visits of more than 60 days in a tax year.

What kinds of income is taxable?

Employment income

An employee is subject to salaries tax if their employment income is sourced in Hong Kong. Even if you are not usually resident in the territory. Thus, cash emoluments including bonuses and gratuities are taxable income. However, benefits are non-taxable. Unless they are converted into cash. Or specifically relate to holiday travel or the education of a child. Moreover, the provision of accommodation by an employer creates a taxable benefit equal to an amount ranging from 4%-10% of the employee’s other taxable income, depending on the type of accommodation.

Self-employment and business income

Anyone carrying on a profession, trade or business in Hong Kong is subject

to profits tax on income arising in or derived from Hong Kong from that

profession, trade or business.

Directors’ fees

Directors fees derived from a company that has its central management and control in Hong Kong are subject to salaries tax in Hong Kong. Otherwise, directors’ fees are not taxable.

Employer-provided stock options

Employer-provided stock options are generally taxable at the time of exercise. However, for an individual who has non-Hong Kong employment and is taxed on a pro rata basis by reference to the number of days of his or her services in Hong Kong only. That is, part or all of the option gain may be excluded from taxable income. The amount excluded depends on various factors including whether the option is granted conditionally or unconditionally. And, if granted conditionally, the number of days on which the individual performed Hong Kong services during the vesting period.

Taxation of employment-related share awards

Employment-related share awards are generally considered to be perquisites from employment and taxed as part of the remuneration. In general, they become taxable when an employee is entitled to the full economic benefit of the shares awarded. If the employee has a non-Hong Kong employment, proration of the income by reference to the number of days of their services in Hong Kong that is similar to the proration applicable to stock option benefits may also be allowed.

For further information, please contact us.

You may want to read: What to do when I receive a Profit Tax Return?