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Hong Kong VS Dubai for e-Commerce 0% Tax?

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banafinfodafuggiano

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Jun 18, 2020
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#1
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I run a multi 6x figs Ecom multi brand and currently residing in Canada as a Canadian citizen.

I am planning of moving out within the next 30 days and setting up a company and residence elsewhere to minimise my taxes.


Dubai problems I see are mostly the banking and the payment gateways available (I use Shopify payments)

Hong Kong seems easier to set up and more straightforward for banking partners BUT it seems like not every company
gets approved to pay zero tax on foreign sourced income?


Can anyone clarify?

100% of sales from the ecom stores obviously come from outside the UAE and also from outside HK.
 
#2
UAE : corporate tax is new...Very confusing information available everywhere ...even in Freezone tax seminar expert are not able to give the proper answer of this type of setup...For UAE better to wait and watch ....Register company when everything is clear

Hong Kong: Hong Kong has a territorial tax system, which means that you are only taxed on your income that is generated in Hong Kong. This means that if your e-commerce business generates all of its sales from outside of Hong Kong, you will not be subject to any corporate tax in Hong Kong. biggest headache is getting the zero tax certificate ..too many paper work involved ...

other country you can consider
  • Bulgaria: Bulgaria has a zero corporate tax rate on profits generated from foreign sources. It also has a well-developed banking and financial services sector, with a number of international banks and payment processors operating in the country.
  • Cyprus: Cyprus has a zero corporate tax rate on profits generated from foreign sources. It also has a favorable tax regime for individuals, with a maximum income tax rate of 20%.
  • Estonia: Estonia has a flat corporate tax rate of 20%, which applies to both domestic and foreign-sourced income. It also has a well-developed e-commerce infrastructure, with a number of international e-commerce companies operating in the country.
  • Georgia: Georgia has a zero corporate tax rate on profits generated from foreign sources. It also has a favorable tax regime for individuals, with a maximum income tax rate of 20%.
  • Malta: Malta has a zero corporate tax rate on profits generated from foreign sources. It also has a well-developed e-commerce infrastructure, with a number of international e-commerce companies operating in the country.
P.S. I am not expert...consult the lawyer before taking any steps...Hope this helps
 
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#3
Bulgaria. Non-residents are taxed on their income from Bulgarian sources only. Corporate tax is 10% as is their personal tax. Dividend WHT: 5%. Interest & Royalty WHT: 10%
Annual returns based on self-assessment . Tax audit each 4 to 5 years.
 
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#7
The source of the income is usually where you live, not where your customers are located. Very typical misunderstanding.
And the UAE is no longer tax free, there's 9% corporate tax. Hope this helps.
 
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#9
thomasparra said:
Do you need to live in HK? Can you live in another juridiction; and cash out the profits/dividends when it makes sense?
Click to expand...

You can live elsewhere and not pay tax in HK. But then you and your HK company will both have to pay tax where you live.
And if you live in HK, then the company probably has to pay tax in HK (since it's local income - not sure about the exact rules).
 
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#10
thomasparra said:
Do you need to live in HK? Can you live in another juridiction; and cash out the profits/dividends when it makes sense?
Click to expand...
To take advantage of the territorial tax rates you should not be managing it from HK, you should not have HK clients nor should you or your HK staff sign contracts with clients in HK. It helps if entire management is non resident of HK.
 
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#11
Thanks for your responses @JustAnotherNomad @Cryptohodler

I am asking as I lived in HK for a couple years, and had a work visa that expired a few months ago. Still debating between starting a company in HK or France. Some of my clients would be in HK, others in Europe. Likely no employees in HK - just myself but I might want to hire/contract in the near future. The territorial tax rates is for offshore generated revenue? The income tax rate is still rather low so not a dealbreaker if it's taxable.
 
#12
thomasparra said:
Thanks for your responses @JustAnotherNomad @Cryptohodler

I am asking as I lived in HK for a couple years, and had a work visa that expired a few months ago. Still debating between starting a company in HK or France. Some of my clients would be in HK, others in Europe. Likely no employees in HK - just myself but I might want to hire/contract in the near future. The territorial tax rates is for offshore generated revenue? The income tax rate is still rather low so not a dealbreaker if it's taxable.
Click to expand...
If even a single client is from HK, you won't get the certificate of exemption.you will pay full corporate tax on all revenue both offshore and local. If possible, preferably live outside HK, and create a separate company for HK clients and another for purely European clients.request for exemption certificate for the company serving only European clients.
 
#14
Mercury said:
As you know well both, choice should be obvious.
If it's not clear enough: Do not start a company in France. You will be crushed by bureaucracy, tax and more future taxes.
Click to expand...
But I do not live in HK anymore (even though I am happy to go back - my partner lives there and I have a relationship with the tax office and HSBC as a retail customer). It will be more trouble to live in France, and have a company in HK even if I don't pay myself dividends or a salary. Also I do not have a visa for HK, so not sure what countries would make sense for me to live in and operate a company from HK as a non resident.
 
#15
thomasparra said:
But I do not live in HK anymore (even though I am happy to go back - my partner lives there and I have a relationship with the tax office and HSBC as a retail customer). It will be more trouble to live in France, and have a company in HK even if I don't pay myself dividends or a salary. Also I do not have a visa for HK, so not sure what countries would make sense for me to live in and operate a company from HK as a non resident.
Click to expand...
Countries for residence could be territorial tax ones like Thailand Paraguay uruguay etc

For Thailand pay yourself after one year though I think the local tax authorities don't enforce it strictly.
 
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#20
Hong Kong is interesting however,

how hard is to open actual real Business and Individual bank accounts? (I can fly there for a short visit if required).
 
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