Monthly surge in Hong Kong company formations
Statistics released by the Hong Kong Companies Registry shows that there has been a steady rise in the number of Hong Kong company formations this year.
According to the Hong Kong Company Registry’s statistics, there has been a sharp rise in the number of Hong Kong company incorporations during H1 2010. On an average, close to 11,300 companies were registered on a monthly basis during the first half of 2010. There has been a total of 67,669 new Hong Kong company formations this year – a 17.7% increase as compared to the second half of the previous year. There has also been a steady rise in the total number of foreign company registrations in Hong Kong. There were a total of 350 new foreign company registrations in Hong Kong during H1, 2010 – a 24.5% increase as compared to the corresponding period in 2009. The Hong Kong Companies Registry confirms that 7,959 new foreign company formations were recorded from January 2010 until June 2010.
The surge in Hong Kong company setup and foreign company registrations in Hong Kong are indicative of Hong Kong’s attractiveness as a regional business hub. Factors such as low taxes, a free economy, a stable government, excellent infrastructure, proximity to mainland China, an efficient legal system, and availability of financial services contribute to Hong Kong’s success in attracting entrepreneurs and business professionals to set up and do business in Hong Kong.
The biggest advantage of Hong Kong company set up is that the jurisdiction is unrivalled in terms of taxes. Hong Kong’s corporate tax rate of 16.5% is the lowest in the region. Moreover, there is no capital gains tax, no VAT, no taxation of foreign income, and no dividend tax. Secondly, Hong Kong is perfectly positioned for businesses wanting to enter the China market. Businesses that set up a Hong Kong company can gain preferential access to the China market under the China-Hong Kong free trade agreement, CEPA. Finally, the ease of Hong Kong company registration makes it an attractive place to establish and run a business. At present, it takes around 4-7 working days to incorporate a company in Hong Kong. However, the Hong Kong government plans to expedite the Hong Kong company incorporation process to less than a day, which is the current practice in Singapore. According to Registrar of Companies, Ms. Ada Chung, “We anticipate the launching of the electronic incorporation of companies and a one-stop service for company incorporation and business registration in early 2011.” Furthermore, in order to make Hong Kong company law more business-friendly, the government has launched a comprehensive effort to rewrite the Companies Ordinance.
According to the IMF, Asia’s economy will make up more than a third of world output and will be 50% larger in five years time. To quote Mr. Dominique Strauss- Kahn, Managing Director of IMF, “Asia’s time has come. No one can doubt that Asia’s economic performance will continue to grow in importance.” Given that Asia could very well become the world’s largest economic region in due course, businesses are flocking to Asia especially to business friendly jurisdictions such as Hong Kong. All in all, we can reasonably expect a continued demand for company registration in Hong Kong in the years to come.
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