Holding Jurisdictions for Investments in China

In conjunction with the STEP Benelux

By Kristina Koehler-Coluccia, Director of Klako Group

October 2013

Questions to ask yourself when planning your China InvestmentWho, What, Where, Why & When

1. Who am I going to employ to manage my China business?• Start with a distributor or agent?• Will I have a department responsible in my home jurisdiction?• Will I second an expatriate to China? If yes, where is he from?• Will I localize my business and only hire local employees?• Will I have a mix of cultures to foster both the philosophy of the company and the culture of the

local market?

2. What am I actually going to be doing in China – what is my business strategy?• Sourcing, Sales, Service• Do I have important IP which needs to be protected?

3. Where is my business in China going to be in the short and long-term? • Where is my short-term strategy focused on?• Where do I want my business to be in 5-10 years time?

4. Why am I really going to China?• Have you done a market research study?• Have you made a business plan putting in black and white your goals and strategies for market

penetration?

5. When am I planning my entry? • Laws and regulations change daily – your business plan needs to be updated regularly!

Singapore versus Hong Kong versus China Comparison Chart

Hong Kong Singapore China General

Basis of Legal System Common Common PRC

Type of Company Ltd Ltd Ltd

Tax on Offshore Profits Nil Nil (if funds not remitted onshore) 25%

Exchange Controls No No Yes

Timeframe for Establishment 4-5 Days 1 Day min. 183 days

Shelf Companies Available Yes No No

Corporate Requirements

Minimum Shareholders 1 1 1

Minimum Directors 1 1 1

Corporate Administration

Bearer Shares Permitted No No No

Location of Board Meetings Anywhere Anywhere Anywhere

Corporate Directors Permitted Yes No No

Administration Hong Kong Singapore China - local city

Local Requirements

Paid-Up Capital 1 HKD 1 SGD 30,000 RMB

Registered Office Yes Yes Yes

Company Secretary Yes Yes No

Director No Yes No

Singapore versus Hong Kong versus China Comparison Chart

 

Hong Kong Singapore China Public Filings

Directors Yes Yes Yes

Shareholders Yes Yes Yes

Beneficial Owners No No Yes

Annual Filing Requirements

Annual Return Yes Yes Yes

Audited Accounts Yes Yes, unless revenue is under 5 million SGD (must do unaudited accounts & submit to ACRA)Yes

Government Costs

Min. Annual Statutory 555 HKD 20 SGD (125 HKD) 0

Tax

Profits Tax Rate 16.50% 17% 25%

Individual Income Tax Rate 15% 20% 45%

Value Added Tax No 7% 17%

Withholding Tax No Yes Yes

Dividends Tax No No 20%

Tax Exemption Applications Yes Yes, BUT income cannot be generated or remitted to Singapore No

Singapore versus Hong Kong versus China Comparison Chart

 

Hong Kong Singapore China Annual Maintenance Work

Company Secretary Yes Yes No

Registered Office Address Yes Yes Yes

Local Director No Yes No

Filing of the Annual Return & AGM Yes Yes Yes / No

Annual Audit Yes Yes Yes

Directors Report Yes Yes No

XBRL Filing No Yes No

Annual Filing of Tax Return Yes Yes Yes

Annual Filing of Employers Tax Return Yes Yes Yes

Singapore versus Hong Kong versus China Comparison Chart

 

Hong Kong Singapore China Double Taxation Agreements

Number 27 69 97

With China Yes Yes

China Withholding Tax on Interest 7% 10%

China Withholding Tax on Royalties 7% 6%

China Withholding Tax on Dividends Tax - Holding more than 25% of China Shares5% 5%

RMB Offshore Center

 

VERSUS

Other Common Holding Jurisdictions

  LuxembourgUnited Kingdom

Ireland

Netherlands

Switzerland Offshore Locations

•BVI•Seychelles•Cayman Isl.•Mauritius•Anguilla•Etc

Trends for Inbound Investment to China

 1. Tax Planning Always forgotten and focus is only ever placed on Short-Term Results Talk to advisors in each link of the chain to understand what is most beneficial for your business model

2. Market Research Never a concern Make sure you know why you are entering the market before actually entering

3. Singapore is used to enter the following South-East Asian countries: India, Malaysia, Thailand, Vietnam, Bangladesh and Indonesia

4. Hong Kong is used to enter the East Asian countries: China, Mongolia, Japan, Korea, Philippines, Australia

5. China is used for establishing operational entities

Trends for Outbound Investment from China

 1. Tax Planning No need – Never had to do it in China so why now?

2. Market Research Surprisingly thorough 3. Singapore is used for Family Trusts and Private Banking – particularly as a vehicle for Purchasing Assets

4. Hong Kong is used to go IPO

5. China needs MAJOR restructuring in order to become transparent

Klako Group - Our Services

Klako Group is an international accounting and management consulting firm established in 1979.

Klako Group provides a wide range of market entry consulting, incorporation, tax, audit, accounting, trade and human resource services to organizations interested in entering and expanding throughout China, Hong Kong, Singapore.

Klako Group is managed by an international and local team of over 120 consultants, accountants and legal professionals who work in our ten offices in China, Hong Kong and Singapore.

From our offices in Beijing, Chengdu, Dalian, Guangzhou, Hangzhou, Hong Kong, Shanghai, Shenzhen, Singapore and Tianjin, we offer the following services:

•Market Entry Consulting•Incorporation•Corporate Compliance•Accounting & Administration•Tax Advisory•Audit & Assurance•Trade & Supply Chain•Recruitment

Our typical clients are small-to-medium sized privately owned companies as well multinational corporations. We recognize that each customer has individual requirements and our objective is to provide an efficient and cost effective service tailored to their specific needs. Our goal is to develop a lasting partnership with our customers with a focus on protecting their investments and maximizing their returns from their activities throughout China and Hong Kong.

Our International Desks speak English, German, Spanish, French, Italian, Portuguese, Russian and Japanese.

Klako Group – Our Team

Our founder, Mr. Klaus Koehler, has lived in Hong Kong since 1970. After many years of international trading activities with Hong Kong and China, he established Klako Group Holdings and its associated entities in 1979. Since then, Mr. Koehler has built up an experienced international team of accountants, legal and professional consultants (European, American, Chinese).

The members of our team are multilingual and combine many years of expertise in accounting, tax, manufacturing, international trade, consulting, recruitment, etc. Our cultural and professional diversity gives us the flexibility and knowledge required to understand our clients' needs and offer integrated service packages. Sharing our understanding and knowledge of both the West and China is one of our major principles for success.

Main Contacts:

Group Headquarters - Hong Kong China Headquarters - ShanghaiMr. Sven Koehler Ms. Kristina Koehler-ColucciaGroup Managing Director & Director - Hong Kong & Singapore Director - China 10A Seapower Ind. Centre 15/F Cross Tower177 Hoi Bun Road, Kwun Tong 318 Fuzhou Road,Kowloon, Hong Kong Shanghai, 200001, China Tel: +852 2345 7555 Tel: +86 21 6391 3188Fax: +852 2357 5452 Fax: +86 21 6391 2032Email: info@klako.com Email: info@klako.com

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