China Market Entry: Offshoring in Hong Kong

Oct. 30, 2008 - PRLog -- Now that industries and markets have all merged together into one massive force known as the global economy, the competition between corporations has become fiercer than ever. Due to this demand for only the best and highest of quality resources and services, available at the most economical of costs, Offshoring has taken center stage as one of most efficient ways for companies to take the lead.


Setting up an offshore company is the transfer of business or services from one country to another, usually done, in order to gain what is called a comparative advantage between two countries that share a surplus and a deficit. Not just a few of the major multinational corporations practice offshoring. In fact, many Asian countries such as China, India and the Philippines have benefited from this recent boom of companies that are joining in.


What exactly is it that makes companies relocate away from their home? Well, there are several known benefits that can be gained through Offshoring; however one of its main selling points is Hong Kong tax relief and tax exemptions. As profits are usually subject to local taxes, several offshore countries offer low or limited taxations, which in effect lure companies to relocate their businesses there. In such a low tax environment, companies are able to maximize their profits without fearing a lofty tax requirement at the end of the year while enjoying the benefits of Hong Kong tax relief .


One good example of an offshore country is Hong Kong, even referred to by some as the “World’s Freest Economy”. Here although not truly absent, tax is significantly low. They offer a market where there is no sales tax, no capital tax and no VAT. In addition, Salary/ Income tax reaches its ceiling at 20%, while profit tax maximum is at a low rate of 16%. With this near to the ground level of taxation, not only companies but individuals from nations all over the world strive to shift their business and lives to Hong Kong.


Aside from Lower taxes, there are other advantages setting up an offshore company . Some of these include increased production, lower costs and ease of sale. Albeit the fact that some governments criticize the practice of offshoring as simply a means of escaping one’s tax duties to one country, from a business point of view, Offshoring seems to be one of the greatest ideas come to man.

# # #

A.F. PRIVATE LIMITED
AFP Corporate Services
HONG KONG
28th Floor, Tesbury Centre
28 Queen’s Road East
Wanchai
Hong Kong