I'm Canadian. Any advice for opening company + bank in Hong Kong?

[TheOutlier]

Hi all,

I am a Canadian that runs an online freelance business. Most of my clients are from the U.S., and so the majority of my payments come from "outside" Canada.

I'm looking to open a company + bank account in Hong Kong. Not sure where to start though. I've done some initial research, but wondering if anybody has any specific advice, tips and/or recommendations on how to proceed?

Should I talk to an accountant in Hong Kong? What things should I be aware of being going down this route?

 

[Sols]

Why HK and not a local Canadian company?

 

[libertycity]

Hi bro,
If you want to avoid tax,HK company maybe let you down if you still with Canadian passport.

 

[LegitBananas]

I'm in the exact same situation as OP (Canadian, online business) however I don't really care if it's HK or Belize, etc. I'm just wondering what the best and safest solution to depositing money.

Why HK and not a local Canadian company?

Doesn't that kind of defeat the whole purpose of offshore banking though? If your funds go from USA -> Hong Kong and you live in Canada, then it would be more favourable, or am i wrong? Canadian business taxes are excruciating, as you probably know.

 

[Bmw850]

I use HK set up ( company+bank ). I m happy with it but take 2 things on mind :
- There is a a public register so except the use of nominees , it will not be "anonymous"
- The banks became difficult to work with , i mean they ask always for supporting documents in front of sales. I guess it s also in front of the amounts.

 

[LegitBananas]

I use HK set up ( company+bank ). I m happy with it but take 2 things on mind :
- There is a a public register so except the use of nominees , it will not be "anonymous"
- The banks became difficult to work with , i mean they ask always for supporting documents in front of sales. I guess it s also in front of the amounts.

I read somewhere that Belize has no registry - wouldn't that be considered a better alternative? Also what are your fees like with your HK setup?

 

[Bmw850]

I read somewhere that Belize has no registry - wouldn't that be considered a better alternative? Also what are your fees like with your HK setup?

Don't take my words for a csp or tax advice, i m not. But for my businesses and i have a lot of different businesses i cannot use banana republic to invoice my customers so belize, nevis etc , not for me. Of course i have those companies in banana republic to put the profit but not to deal.
HK fees : i pay between 2k and 3k usd per set up for the first year including nominees and banks account.
The renewal fees for the second year i m not update, since all my set up as kind of Kleenex and barely stand for more than a year.
Belize for privacy is good or better than hk but you will cry when you will need bank and you will end up with an EMI.
It is my experience, hope some members will bring you more infos

 

[Sols]

Doesn't that kind of defeat the whole purpose of offshore banking though? If your funds go from USA -> Hong Kong and you live in Canada, then it would be more favourable, or am i wrong? Canadian business taxes are excruciating, as you probably know.

Unless you plan to leave Canada, you're still going to be subject to Canadian law. Under Canadian federal and provincial/territorial law, companies are considered tax resident if they are managed from Canada. Your "tax free" Hong Kong company should as such pay corporate tax in Canada. It becomes a different situation if you have actual operations (office, staff) in Hong Kong.

So the question is, what upside do you see of operating under a HK company instead of just forming a Canadian company and opening a Canadian bank account?

With regards to Belize, corporate secrecy is meaningless with CRS, whereby banks all over the world (minus a few places, mostly unsavory ones) will, via their local financial authority, notify Canada of the bank accounts the company has under your control.

 

[Mr Magoo]

Belize has good privacy when it comes to the data regarding your company. Banking in Belize I would not recommend, several banks went into liquidation the last year and just 2 are left if my counting is correct. The banks left have problems finding good corresponding banks and lack good service.

 

[LegitBananas]

Unless you plan to leave Canada, you're still going to be subject to Canadian law. Under Canadian federal and provincial/territorial law, companies are considered tax resident if they are managed from Canada. Your "tax free" Hong Kong company should as such pay corporate tax in Canada. It becomes a different situation if you have actual operations (office, staff) in Hong Kong.

So the question is, what upside do you see of operating under a HK company instead of just forming a Canadian company and opening a Canadian bank account?

With regards to Belize, corporate secrecy is meaningless with CRS, whereby banks all over the world (minus a few places, mostly unsavory ones) will, via their local financial authority, notify Canada of the bank accounts the company has under your control.

I'm reading that a lot of people who have businesses online setup their corps in HK and pay 0% corporate tax on the foreign income and pay themselves a small salary in their home countries and only pay taxes on their little salary of $30k/year.

About the companies being managed from Canada - my *brother* in HK managers it

Don't take my words for a csp or tax advice, i m not. But for my businesses and i have a lot of different businesses i cannot use banana republic to invoice my customers so belize, nevis etc , not for me. Of course i have those companies in banana republic to put the profit but not to deal.
HK fees : i pay between 2k and 3k usd per set up for the first year including nominees and banks account.
The renewal fees for the second year i m not update, since all my set up as kind of Kleenex and barely stand for more than a year.
Belize for privacy is good or better than hk but you will cry when you will need bank and you will end up with an EMI.
It is my experience, hope some members will bring you more infos

Thank you so much for sharing. I think I also want to move my operations through HK, and others have recommended using HSBC for banking which I'll look into.

Would you be able to recommend a service you used for setting up the corp? I've found Register your new Hong Kong company online for $99 USD but it seems to have mixed reviews.

 

[Bmw850]

I'm reading that a lot of people who have businesses online setup their corps in HK and pay 0% corporate tax on the foreign income and pay themselves a small salary in their home countries and only pay taxes on their little salary of $30k/year.

About the companies being managed from Canada - my *brother* in HK managers it




Thank you so much for sharing. I think I also want to move my operations through HK, and others have recommended using HSBC for banking which I'll look into.

Would you be able to recommend a service you used for setting up the corp? I've found Register your new Hong Kong company online for $99 USD but it seems to have mixed reviews.

Sorry mate, i don't share this info. I don't know the one you have mentioned but of course you understood that 99 usd is not the price of an HK corp right?

 

[Sols]

I'm reading that a lot of people who have businesses online setup their corps in HK and pay 0% corporate tax on the foreign income and pay themselves a small salary in their home countries and only pay taxes on their little salary of $30k/year.

About the companies being managed from Canada - my *brother* in HK managers it

I'm not saying it won't work. I'm saying you're probably breaking Canadian law and to weigh the risk and repercussions against the benefits.

Unless your brother is real and is also going to be the sole signatory on the bank account, sole shareholder, and sole director, your name will be involved somewhere (bank, which CRA probably will end up knowing about) and possibly findable in HK public company register.

 

[LegitBananas]

Sorry mate, i don't share this info. I don't know the one you have mentioned but of course you understood that 99 usd is not the price of an HK corp right?

Yes, that is just how the link automatically came out for some reason. I understand that it will cost at least a few thousand, but as it turns out HK is off the table for me since there's no way of opening the account without physically being in HK.

I'm not saying it won't work. I'm saying you're probably breaking Canadian law and to weigh the risk and repercussions against the benefits.

Unless your brother is real and is also going to be the sole signatory on the bank account, sole shareholder, and sole director, your name will be involved somewhere (bank, which CRA probably will end up knowing about) and possibly findable in HK public company register.

How would the CRA find out? I'm not trying to sound rude, I just genuinely don't know - if the company is in HK and the money comes from the USA (not canada), what lead will they follow to eventually find the company? Do they just go randomly searching for Canadian citizens names on HK banks?

 

[Sols]

How would the CRA find out? I'm not trying to sound rude, I just genuinely don't know - if the company is in HK and the money comes from the USA (not canada), what lead will they follow to eventually find the company? Do they just go randomly searching for Canadian citizens names on HK banks?

Look into CRS (Common Reporting Standard) and AEOI (Automatic Exchange of Information). Banks nowadays are required to automatically report information about foreign account holders. The information typically passes (via thefinancial regulators) from the bank to the home country's tax authority.

 

[libertycity]

Yes bro,it is automatically exchanged between HK and CA.

 

[JimBeam]

Thank you so much for sharing. I think I also want to move my operations through HK, and others have recommended using HSBC for banking which I'll look into.

Would you be able to recommend a service you used for setting up the corp? I've found Register your new Hong Kong company online for $99 USD but it seems to have mixed reviews.

I had personal experience with Startupr couple of years ago. We paid for the account setup and bank account opening help. They told us what to prepare for the meeting at the bank and we flew half of the world (from EU to HK) for that meeting just to find out that we were missing some documents, because they (startupr) didn't told us that we even need them. We were supposed to go to bank meeting with startupr guy (called Tomas) but he was busy so we had to go without him. Also, we applied only in one bank (HSBC) and got declined and the bank didn't had to explain why. So we we lost both time and money.

So, be careful with them and try to apply for bank account in minimum two banks (just in case). Also, they are not really a company - more like a single expat guy from Poland or something that operates that website and helps people with opening accounts. No office in HK or anything.

Also, make sure that you understand how 0% tax rate is achieved since that's not that simple and it's a status you have to apply or something if I remember.

 

[LegitBananas]

I had personal experience with Startupr couple of years ago. We paid for the account setup and bank account opening help. They told us what to prepare for the meeting at the bank and we flew half of the world (from EU to HK) for that meeting just to find out that we were missing some documents, because they (startupr) didn't told us that we even need them. We were supposed to go to bank meeting with startupr guy (called Tomas) but he was busy so we had to go without him. Also, we applied only in one bank (HSBC) and got declined and the bank didn't had to explain why. So we we lost both time and money.

So, be careful with them and try to apply for bank account in minimum two banks (just in case). Also, they are not really a company - more like a single expat guy from Poland or something that operates that website and helps people with opening accounts. No office in HK or anything.

Also, make sure that you understand how 0% tax rate is achieved since that's not that simple and it's a status you have to apply or something if I remember.

Hey mate, thanks for the response, looks like I'll be staying away from that guy. Are you still using HK even with this experience or did you switch your incorporation/banking to a different location?

 

[JimBeam]

Don't let what I wrote stop you from contacting Startupr or even try incorporating with them - just have what I wrote you in mind. Maybe we were just unlucky at the time.

About our company - since we had no bank account (and couldn't actually do anything with the company) and we were not happy with the idea of flying to Hong Kong again to try an open another account, we decided to close (dissolve) the company.

The HSBC told us that they will destroy all our application documents and that we can re-apply again. But as I've said it was pain in the a*s for us at the time to fly again there to do that.

Then we decided to setup a company in Cyprus (trough a local agent from our country) and they started a company for us and helped us open a bank account (without traveling there - we had Skype interviews). All works fine for two and the half years now. We face some other issues there (you may read about it in here: Moving from Cyprus to UAE ) but generally it works fine.

 

[oversea]

Unless you plan to leave Canada, you're still going to be subject to Canadian law. Under Canadian federal and provincial/territorial law, companies are considered tax resident if they are managed from Canada. Your "tax free" Hong Kong company should as such pay corporate tax in Canada. It becomes a different situation if you have actual operations (office, staff) in Hong Kong.

So the question is, what upside do you see of operating under a HK company instead of just forming a Canadian company and opening a Canadian bank account?

With regards to Belize, corporate secrecy is meaningless with CRS, whereby banks all over the world (minus a few places, mostly unsavory ones) will, via their local financial authority, notify Canada of the bank accounts the company has under your control.

Also you have to file T1134 as a Canadian if your share in the company is > 1%

 

[myhand]

Is anyone setting up HK companies still? wonder for what purpose?