Hong Kong Offshore Company Setup

Unlike classic “offshore” islands, Hong Kong applies a territorial profits tax. Profits sourced entirely outside Hong Kong may be exempt if you file and substantiate an offshore claim with the IRD (Inland Revenue Department). 

This guide focuses on the practical setup and maintenance of an offshore position: registering a private company, structuring operations without a Hong Kong permanent establishment, and keeping evidence of foreign source and proper records. 

For general jurisdictional advantages (legal system, “gateway to Asia”, rankings), see our separate article on Hong Kong Company Formation with Bank Account. Here, we concentrate on offshore tax treatment, step-by-step registration, banking considerations, and compliance timelines. 

What Is an Offshore Company Based in Hong Kong? 

In Hong Kong, a company registered under Hong Kong law but conducting its business outside Hong Kong is often referred to as an offshore company. Offshore businesses are legitimate and fully registered with the Hong Kong government. In practice, “offshore” is a profits-tax position (not a separate legal type) based on foreign source and the absence of a Hong Kong permanent establishment, evidenced to the IRD via an offshore claim. 

Key points: 

• Offshore profits and territorial tax: Hong Kong applies a territorial profits tax, so profits sourced outside Hong Kong may be non-taxable if you can substantiate a foreign source and that core income-generating activities occur outside Hong Kong. The two-tier profits tax for corporations taxes the first HK$2,000,000 at 8.25% and the remainder at 16.5%. Only one entity within a group can elect the two-tiered rates for a given year of assessment. 
• Royalty income: Taxable only if Hong Kong-sourced. Foreign-sourced royalties received by in-scope multinational entities may be taxed under the FSIE (Foreign-Sourced Income Exemption) regime unless nexus/economic-substance conditions are met. Outbound royalties can trigger deemed withholding in Hong Kong if the intellectual property is used in Hong Kong.
• Dividends: Generally not taxable in Hong Kong. For in-scope multinational recipients of foreign-sourced dividends, FSIE may apply unless participation-exemption and substance requirements are satisfied. 
• Stamp duty: Applies mainly to transfers of Hong Kong stock and Hong Kong real property; it is not specific to “offshore” status. 
• Evidence and documentation: Keep contracts, invoices, bank statements, board minutes, and proof that operations were performed wholly outside Hong Kong to support an IRD offshore claim. 
• Robust Legal System: Hong Kong’s legal system is another compelling reason for businesses to consider setting up offshore operations in the region. Based on English common law, the legal system provides a high degree of certainty and protection for businesses. The well-established framework for commercial dispute resolution ensures that companies can operate with confidence, knowing that their legal rights are safeguarded. This robust legal environment contributes to Hong Kong’s reputation as a reliable and stable business destination. Here, we focus on offshore tax treatment and IRD practice. 
• Ease of doing business: We intentionally avoid generic rankings (e.g., EODB) to prevent overlap with the other article. For practical steps and timing, refer to the “Registration Process” section of this guide; our focus here is on obtaining and maintaining an offshore profits position. 
• Strategic Location: For “gateway to Mainland China/Asia” benefits, please refer to our separate jurisdictional overview linked above. 

Who is qualified to establish an Offshore Company in Hong Kong? 

Incorporation in Hong Kong is available to non-residents aged 18+. However, “offshore company” is not a separate legal type – it’s a profits-tax position based on foreign-source income and the absence of a Hong Kong permanent establishment, evidenced to the IRD via an offshore claim. 

Minimum roles: at least one director who must be a natural person (additional corporate directors are allowed), at least one shareholder (the same person can be both director and shareholder). For a full overview of general corporate requirements, compare subsidiary vs. branch vs. representative office in Hong Kong: read the guide. 
Company secretary: must be a Hong Kong-resident individual or a Hong Kong-registered corporate services provider. The secretary handles statutory records and filings; this role is not about “leading” the company. 

To qualify for an offshore position: 

• Operations and contracts for the relevant income executed outside Hong Kong. 
• No Hong Kong permanent establishment or staff performing core income-generating activities in Hong Kong. 
• Documentary evidence (contracts, invoices, emails, shipping docs, board minutes, bank statements) to substantiate foreign source. 
• Banking location may be considered by the IRD, but is not determinative on its own. 

For in-scope multinational groups, check FSIE (foreign-sourced income) rules and substance/nexus requirements. 

Documents needed to establish an offshore business 

It should be mentioned that there is a unique set of important considerations specific to the formation of offshore companies in Hong Kong. Document collecting is one of the main duties, and it’s important since proper documentation is needed for a smooth and effective registration process. The following are the necessary documents that you must prepare: 

• The Articles of Association are the formal manual that the company’s administration follows. It describes the business plan, the responsibilities of the directors, the kinds of ventures to be made, and the workings of the shareholders’ control over the board. The Registration Form serves the goal of informing companies of the key provisions. It must be enclosed with the registration documents;  
• NNC1 form for a company limited by shares, or NNC1G form for a company limited by guarantee; 
• Notice to business registration office (IRBR1); 
• All proposed directors must approve the Articles of Association for your offshore business and give written approval to serve in this role. The document states that the individual is accepting a position as a director and that they are aware of the obligations that come with it; 
• All expected directors and shareholders of your offshore company, as well as your personal identifying information, should be posted. A passport or other form of ID, along with documentation proving the resident’s address (such as a utility bill or bank account), is typically scanned in order to verify identity.  

If you’re choosing the legal form first, see our guide to foreign company options. 

30-Minute Express Consultation: Hong Kong Offshore
Quickly assess whether an offshore profits position fits your model—and what you need for a successful IRD offshore claim. 

• Eligibility check: foreign source, CIGA outside HK, no PE in HK 

• Evidence checklist and a basic documentation plan 
• Timeline overview: incorporation → first PTR → IRD interaction 

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Step-by-Step Registration Process 

To set up an offshore company in Hong Kong, businesses need to follow a series of steps:  

1. Choose a unique company name that complies with the Companies Registry’s guidelines. 

2. Determine the company structure, typically opting for a private limited company, which involves appointing at least one director and one company secretary.  

3. Prepare the necessary incorporation documents, including the Articles of Association and the Incorporation Form (NNC1), and submit them to the Companies Registry along with the requisite registration fee. 

4. Send your documents to the Companies Registry for registration in Hong Kong. 

5. Open a business bank account 

6. Make sure your company is in full compliance with all local regulations set up, including obtaining the required business licenses and permits. 

7. Design your operating model outside Hong Kong (where contracts are negotiated/signed; where staff perform CIGA (Core Income-Generating Activities); where servers/ops sit). 

8. Prepare an IRD offshore claim evidence pack (contract trails, invoices, logs of negotiations, board minutes, delivery/shipping proofs, banking trails).  

We can handle the process end-to-end — Hong Kong company formation service. 

Costs of Registration and Maintenance for a Hong Kong Company 

Every business owner who wishes to run a business in Hong Kong is required by law to register their incorporation with the Inland Revenue Department and make payment for the Hong Kong Business Registration Fee. The proof of payment of the business registration fee is the business registration certificate, which can be 1-year or 3-year valid.  

Ongoing Compliance 

Ongoing compliance is vital for maintaining the company’s good standing. To ensure the success of your offshore company, you must file tax returns on a yearly basis and renew your business registration as necessary. Key offshore maintenance items include:  

• timely Profits Tax Return filing with audited accounts;  
• Business Registration renewal;  
• continuous evidence keeping supporting foreign source;  
• readiness to respond to IRD enquiries on offshore claims;  
• if part of an in-scope MNE group, yearly FSIE/substance checks. All financial data, including after-tax filing, should be handled by a licensed accountant to ensure the business maintains compliance in Hong Kong. The first part of operating costs is transparent accounting and auditing. 

FAQ: Hong Kong Offshore Company 

General corporate forms and requirements: see our guide to foreign company options in Hong Kong. 

Is Hong Kong considered offshore? 

Not in the classic “offshore island” sense. Hong Kong is a major financial centre with a territorial profits tax. “Offshore” in Hong Kong means profits sourced outside Hong Kong may be out of scope for Hong Kong profits tax when properly evidenced. 

What is an offshore company in Hong Kong? 

There is no separate legal type called an “offshore company.” It’s an ordinary Hong Kong limited company that can claim offshore profits tax exemption if its profits are wholly foreign-sourced and supported by documentation. 

What are the benefits of a Hong Kong offshore company? 

• Potential non-taxation of foreign-sourced active profits (case-by-case). 
• Reputable common-law jurisdiction; widely recognized by banks/PSPs. 
• No VAT/GST; no tax on dividends received; no capital gains tax (general). (IP/royalty and certain passive income have special) 

What is the offshore regime in Hong Kong?  

HK taxes source, not residency. To be treated as offshore, you typically show: core income-generating activities occur outside Hong Kong, no permanent establishment in Hong Kong for that income, and consistent evidence (contracts, emails, invoices, delivery/service records, banking trails, board minutes). The IRD reviews claims case-by-case. 

What are the disadvantages of offshore companies? 

• Higher IRD scrutiny and documentation burden. 
• Banking/PSP onboarding can be tougher without clear substance. 
• FSIE rules may tax foreign-sourced passive income for in-scope MNEs unless conditions are met. 
• Ongoing compliance and audit are still required in Hong Kong. 

Is HK tax-free for foreigners? 

No. Tax is not passport-based. It depends on whether profits are Hong Kong-sourced; foreigners and locals are treated the same under the source principle. 

Is Hong Kong still a tax haven? 

No. It’s a mainstream, regulated jurisdiction with BEPS-aligned rules, CRS reporting, AML/KYC, and modernized FSIE provisions. The appeal is territorial taxation, not secrecy. 

What is the offshore tax exemption in Hong Kong? 

It’s the non-taxation of foreign-sourced profits when you can prove that the income was generated entirely outside Hong Kong. Typically established through an offshore claim and supporting evidence during/after filing the Profits Tax Return. 

What is the foreign income exclusion in Hong Kong? 

Active foreign-sourced business profits are generally outside Hong Kong tax if the business is not carried on in Hong Kong. However, under FSIE, certain foreign-sourced passive income (e.g., dividends, interest, IP income, certain disposal gains) received by in-scope multinational entities may be taxable unless economic-substance (or nexus for IP) conditions are met. 

What qualifies as an offshore? 

Indicators include: negotiations and contract signing outside Hong Kong; CIGA performed abroad; no Hong Kong PE/staff generating the profit; performance/delivery outside Hong Kong; and a robust paper trail. Bank account location alone is not decisive.  

Conclusion 

In conclusion, establishing an offshore company in Hong Kong presents numerous advantages for businesses seeking a stable and advantageous business environment. The unique point here is territorial taxation: if your profits are entirely foreign-sourced and properly evidenced, an offshore profits exemption may be available. Success depends on how you structure operations outside Hong Kong and maintain documentation for your IRD offshore claim.   

Hong Kong Company Formation — End-to-End
We move fast: select the optimal structure, prepare NNC1/Articles, obtain Business Registration, provide a company secretary and registered address, and outline a practical banking/PSP strategy. From day one, we shape operations with a potential offshore profits position in mind and assemble a starter evidence pack for a future IRD offshore claim. 

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