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: [email protected] Email: [email protected]
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