affpartner Posted June 23, 2011 Author Share Posted June 23, 2011 I have not yet decided what to do, but before I do anything, I want to know exactly what I will get myself into, hence the questions. If I decide to start a HKG company, it will not carry on business in Hong Kong. What about the "fact" that all HKG companies are guilty-until-proven-otherwise with regards to tax liability, meaning that I have read on basically every website, including the official ones, that every company has to PROOF that none of the transactions involve Hong Kong in order to not be taxed on profit and if such proof cannot be given, the profits are taxed at 16.5%. That is also incorrect according to you? It would also be nice if you can supply a link to the specific part of the HKG IRD website where it states that no bookkeeping/auditing is required for HKG companies who don't do any business in Hong Kong, or any other kind of proof. Thanks. Link to comment Share on other sites More sharing options...
Naam Posted June 23, 2011 Share Posted June 23, 2011 sorry mate, you have asked me for advice and i gave you correct advice. however, i have no intention to carry out time consuming homework for you especially as you don't even know how you want to proceed and change your mind every now and then (mostly based on wrong assumptions). :jap: Link to comment Share on other sites More sharing options...
affpartner Posted June 23, 2011 Author Share Posted June 23, 2011 Then I will take the words of all websites on the internet including the official ones and the official statements from the IRD as truth. Link to comment Share on other sites More sharing options...
Nawtier Posted June 23, 2011 Share Posted June 23, 2011 Come on Naam.....all is needed is a linky and you would not look like a goose anymore !!!! Link to comment Share on other sites More sharing options...
beammeup Posted June 23, 2011 Share Posted June 23, 2011 I think it states quite clearly even in the letter from the HK IRD "Every person carrying on a trade, profession or business in Hong Kong must keep sufficient records". He will be doing business in BVI. The HK IRD isnt going to waist time and money chasing after you unless they can get a return. If it was me i'd sell the house in NL. If not then id just go with Naams suggestion of HK account in wifes name. Its almost tax avoidance or it will be when you saves up enough for a years living expenses. If the Thai revenue dept finds out about it(highly unlikely)then just pay the tax bill. Link to comment Share on other sites More sharing options...
affpartner Posted June 23, 2011 Author Share Posted June 23, 2011 Thanks for the contribution beammeup, but we are talking about Hong Kong incorporated Limited Companies, not the ones on BVI. Even though the IRD begins with "Every person carrying on a trade, profession or business in Hong Kong must keep sufficient records...", which can be explained as in my case not applicable, although "business in Hong Kong" can also be explained as incorporated under Hong Kong law, there is the profit tax, for which you have to proof that no transaction found place in Hong Kong in order to be eligible for the 0% rate otherwise it will be taxed at 16.5%, which of course can only be done if you keep everything in your books. It clearly states: "For your information, all newly registered businesses are issued with Profits Tax Returns some 18 months after registration / commencement of business." and that if it is issued, it is the taxpayers obligation to file such a report, irrespective of whether or not it is doing business. And since nobody can know if newly registered businesses do or do not do business in Hong Kong (and it already states the irrespective part, which should be enough information), it means that all companies have to file that report regardless of anything else, and you cannot file a report without documents. Or is the suggestion to simply say you don't do business, have no profits and hope they won't check further into the business and bank account? As for me selling the house in NL, that is not necessary anymore, as Khun Jean pointed out and me looking into it more. Since I have property there, which is taxable in Holland and live in Thailand, the Dutch government is giving me a choice as to whether I will be considered living in the Netherlands and therefore supply my worldwide income and pay tax on it in the Netherlands (binnenlands belastingplichtig) or that I will be taxable in Thailand on my worldwide income (buitenlands belastingplichtig). I used to choose that I was binnenlands belastingplichtig, but if I simply choose for buitenlands belastingplicht, then Thailand is the place where I have to pay tax. Which is now of course what I am doing. Link to comment Share on other sites More sharing options...
beammeup Posted June 23, 2011 Share Posted June 23, 2011 Thanks for the contribution beammeup, but we are talking about Hong Kong incorporated Limited Companies, not the ones on BVI. Even though the IRD begins with "Every person carrying on a trade, profession or business in Hong Kong must keep sufficient records...", which can be explained as in my case not applicable, although "business in Hong Kong" can also be explained as incorporated under Hong Kong law, there is the profit tax, for which you have to proof that no transaction found place in Hong Kong in order to be eligible for the 0% rate otherwise it will be taxed at 16.5%, which of course can only be done if you keep everything in your books. It clearly states: "For your information, all newly registered businesses are issued with Profits Tax Returns some 18 months after registration / commencement of business." and that if it is issued, it is the taxpayers obligation to file such a report, irrespective of whether or not it is doing business. And since nobody can know if newly registered businesses do or do not do business in Hong Kong (and it already states the irrespective part, which should be enough information), it means that all companies have to file that report regardless of anything else, and you cannot file a report without documents. Or is the suggestion to simply say you don't do business, have no profits and hope they won't check further into the business and bank account? As for me selling the house in NL, that is not necessary anymore, as Khun Jean pointed out and me looking into it more. Since I have property there, which is taxable in Holland and live in Thailand, the Dutch government is giving me a choice as to whether I will be considered living in the Netherlands and therefore supply my worldwide income and pay tax on it in the Netherlands (binnenlands belastingplichtig) or that I will be taxable in Thailand on my worldwide income (buitenlands belastingplichtig). I used to choose that I was binnenlands belastingplichtig, but if I simply choose for buitenlands belastingplicht, then Thailand is the place where I have to pay tax. Which is now of course what I am doing. OK well I thought as on an earlier post you were going to use a HK bank to create a BVI company?? If you are not doing business in HK then what is there for them to look into?? Thailand is the place were you are tax liable. Tax liable and paying tax are 2 different things. As long as you are tax liable the NL gov is happy! Link to comment Share on other sites More sharing options...
affpartner Posted June 23, 2011 Author Share Posted June 23, 2011 Not really, basically I listened to Naam and tried to adjust the structure of the company according to the half suggestions he gave, but too many things just didn't add up, so I am back to square one. Indeed the Dutch government probably doesn't care anymore what I do, now I only just read that the Thai government is starting to actively check foreigners for tax returns... Link to comment Share on other sites More sharing options...
beammeup Posted June 23, 2011 Share Posted June 23, 2011 Not really, basically I listened to Naam and tried to adjust the structure of the company according to the half suggestions he gave, but too many things just didn't add up, so I am back to square one. Indeed the Dutch government probably doesn't care anymore what I do, now I only just read that the Thai government is starting to actively check foreigners for tax returns... Well if your back to square one why don't you do what Naam suggested and just open an Offshore account in the wifes name and if The Thai gov finds out (yah right) then just pay the bill. Link to comment Share on other sites More sharing options...
affpartner Posted June 23, 2011 Author Share Posted June 23, 2011 Because the entire purpose of the thread was to avoid paying too much tax in a legally correct way, I thought that was clear by reading my opening sentence and I expected every answer thereafter to be in that spirit, unless specifically noted otherwise. I was/am not interested in tax evasion, but it seems that most replies here are based on the assumption that I was/am. It took me a bit of time to realize this, as I have asked about the legal status several times with no replies and that together with subject of the question, made me believe that all information given was legally correct. Now I know better, so am back at square one. Link to comment Share on other sites More sharing options...
Naam Posted June 23, 2011 Share Posted June 23, 2011 OVERVIEW OF KEY FEATURES There is no "offshore" legislation in Hong Kong. All companies are incorporated under the same legislation, whether they are doing business locally or "offshore". (HK Company Ordinance, 1997 version, as amended 2004). What makes Hong Kong companies similar to offshore companies, such as those incorporated in the British Virgin Islands (BVI) is the tax free status of such companies, under certain circumstances. If a Hong Kong company does NO business in Hong Kong and derives no income from Hong Kong sources, then it is not taxable in Hong Kong. So as long as a Hong Kong company does business anywhere else in the world, it is in effect, an offshore company, similar to BVI IBC's. A Hong Kong company can even set up and staff a Hong Kong office as a COST CENTER and pay no taxes. For example, a company outside of Hong Kong could set up a Finance Management Center for its company or group, and pay no tax, so long as it receives no income, only expenses. Similarly one could set up a tax free document processing company in Hong Kong as a Cost Center. If a company does no business in Hong Kong, there is generally no requirement to file financial statements and no audit is required. It is only necessary to file a Declaration of "No business activity in HK." Hong Kong companies are advantageous because they are not perceived as "tax havens"; the legal system is based on British common law; the political environment is stable; finance and banking is excellent, and there are no exchange controls. A Hong Kong company may do business anywhere in the world and there is no requirement for the Directors and Shareholders to be resident in Hong Kong. Google provides a zillion links. but case now indeed closed for me. if i want to spend time entertaining other parties i'll do that entertaining my dogs who prove every day to me that they are able of logical thinking (unlike some entrepreneurs posting in Thaivisa). Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 Again you pretend to know something, while in reality it is a copy/paste from a website, without you fully understanding the scope. That is a nice copy/paste from a website, for example this one http://www.milonline.com/companies/hong-kong-offshore-company.html But of course you haven't read the entire document.... See http://www.milonline.com/window/hong-kong-details.html#13 IMPORTANT: A Hong Kong registered company is required to maintain proper records of income and expenses. While filing statements is generally not required, the Hong Kong government does reserve the right to request the filing of a tax return and audited statements. Generally, notice is short and therefore it is important to maintain up to date accounts. If requested by the Hong Kong government such a filing does not require the payment of tax if no business has been done in Hong Kong, but the records provided must confirm that. Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 For people who still have trouble understanding the above and will likely argue that HKG IRD does not request the filing of a tax return, I want to remind them about the answer from the HKG IRD: For your information, all newly registered businesses are issued with Profits Tax Returns some 18 months after registration / commencement of business. Meaning that any and all companies WILL be required to file the profits tax return in any and all cases. Link to comment Share on other sites More sharing options...
muratremix Posted June 24, 2011 Share Posted June 24, 2011 Anybody use services from this milonline.com ? HK Offshore seems to good to be true on paper. Link to comment Share on other sites More sharing options...
Nawtier Posted June 24, 2011 Share Posted June 24, 2011 Ask the question directly to a HK accountant.......they would know for sure. The problem with Naam's quotes and recommendations is that it says 'generally'.....meaning usually not, but not for sure not. I have a dog that thinks logically....but she still chases her own tail. Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 It is very easy, bookkeeping is always required and filing tax returns only if HKG IRD so requests and the senior officer of that specific HKG IRD department stated that all companies will be issued such a tax filing requests after 18 months. Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 (edited) A few days ago I also send an email to a Hong Kong accountant and I just received the reply, see correspondence below: - Because my business doesn't involve Hong Kong in any way, is there still a need to do bookkeeping, file keeping and auditing? I heard that any corporation incorporated in Hong Kong under Hong Kong law which does not do any business in Hong Kong, does not need to file reports or do bookkeeping. Is that correct? Accounting record No matter how tax filing is to be done, and whether there is any tax payable or not, keeping proper accounting record is required . Under HK tax ordinance , Limited company is mandatory required to file audit account , pls kindly be noted that HK IRD reserves the right to request client to provide audit account . Hope this + the answer of the official senior officer of the HKG IRD department + the fact that Naam's own copy/paste contradicts his own perception of the text, is finally enough proof for all. Edited June 24, 2011 by affpartner Link to comment Share on other sites More sharing options...
muratremix Posted June 24, 2011 Share Posted June 24, 2011 So what does this mean? Does it mean HK offshore company cost will increase slightly? MILONLINE offers $300 to $600 accounting (not including yearly audit I guess) Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 Definitely more costs then most expected and IMHO less of an option if you want to do illegal tax evasion, but if you are interested in legal tax avoidance, then basically nothing has changed. This is probably also the reason why Hong Kong companies are seen as reputable companies, as they need to do everything by the book anyway, in contrast to incorporated companies in other jurisdictions. Link to comment Share on other sites More sharing options...
Naam Posted June 24, 2011 Share Posted June 24, 2011 Again you pretend to know something, while in reality it is a copy/paste from a website, without you fully understanding the scope. enough of your bullshit little boy. i clearly mentioned at the end of my copy and paste "Google provides a zillion links". Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 Such a bitter, grumpy old man who cannot admit he is wrong... Really, at first I had respect for you, a lot even, which became less when you were being rude and became zero when it also became clear you really don't have any knowledge about the matter. Link to comment Share on other sites More sharing options...
Nawtier Posted June 24, 2011 Share Posted June 24, 2011 From what I gather you may have to file the required yearly documents....but you may only have to state that 'you are not applicable' or whatever as you have no income. I think I will be doing the HK route shortly myself.....but I like the BVI better.....can do that later though. Lotsa good info gathered AFF....nice. Link to comment Share on other sites More sharing options...
affpartner Posted June 24, 2011 Author Share Posted June 24, 2011 Please let us know how it works out Nawtier! Link to comment Share on other sites More sharing options...
muratremix Posted June 24, 2011 Share Posted June 24, 2011 Which Agency you are planning to use on this route? Please share your experiences during and after. Link to comment Share on other sites More sharing options...
Nawtier Posted June 25, 2011 Share Posted June 25, 2011 I am not a guinea pig...... Which company....not sure yet, I have another that I had dealt with....but shall look into the one described above somewhere as being priced right before final decision. Link to comment Share on other sites More sharing options...
thaitero Posted June 25, 2011 Share Posted June 25, 2011 Good info I am interested as well who is reccommened to use to open BVI company or similar? + I quess it would be good if this agent will handle the renewal fees etc also.. Bank account, i think i will figure out myself, Prefer SEPA-account, since most my potential customers are in Europe..Considering http://www.seb.ee/en at the moment because i know they have very good internet banking facilities.. Privacy does not matter so much because i am living in Thailand now and i am not taxresident of my homecountry in EU anymore. Link to comment Share on other sites More sharing options...
manarak Posted June 25, 2011 Share Posted June 25, 2011 Good info I am interested as well who is reccommened to use to open BVI company or similar? + I quess it would be good if this agent will handle the renewal fees etc also.. Bank account, i think i will figure out myself, Prefer SEPA-account, since most my potential customers are in Europe..Considering http://www.seb.ee/en at the moment because i know they have very good internet banking facilities.. Privacy does not matter so much because i am living in Thailand now and i am not taxresident of my homecountry in EU anymore. You taxability in Europe can change anytime, depending on the whim of your national parliament. The US steal from their citienzen living abroad, so given the current financial difficulties of the EU, I wouldn't be too surprised to see the EU introduce such a tax. I would avoid EU Banks altogether, it is much safer to be completely "off the radarscreen" than to be a target waiting to be acquired. As for an agent, I can recommend mine. As for affpartner, I can only advise you to send my your email address by PM with a rough outline of activities planned for the company, and I will forward it to my agent. Link to comment Share on other sites More sharing options...
affpartner Posted June 26, 2011 Author Share Posted June 26, 2011 Thanks manarak, your agent actually already contacted me, but I am on a short holiday now, so I will look into it all when I am back home. Link to comment Share on other sites More sharing options...
vlietje Posted June 26, 2011 Share Posted June 26, 2011 - Own a house in the Netherlands and am therefore liable to pay tax there and supply my worldwide income to them and pay tax on it Do you have a reference for this, i never heard of this rule. According to Dutch tax law, if you own a house in the Netherlands you have to pay tax on it. However, since he says he lives full time in Thailand, he should qualify for paying less tax and should not be liable for income in Thailand. There is a double taxation avoidance rule in NL. You have to prove you are tax resident in another country. If you pay tax on your income in another country, Thailand or HK, you can declare that to the Dutch authorities and apply for "Tax equalization". I did something similar. When I was on assignments in other countries, I got paid locally. OP should get a tax attorney in NL and explain the situation. On second thought, why would have to pay tax on his world income if he is not resident any more in NL. affpartner, ben je nog ingeschreven in het GBA? Well, I am a dutchy, have a house and I pay nothing to the dutch taxman... I can't deduct the interest I pay on my morgage as well but if you do the math it works out way cheaper... I opened a Dubai freezone company, from that company I send invoices the clients in Holland , all totally legal, no tax and anomynous.. Link to comment Share on other sites More sharing options...
Nawtier Posted June 26, 2011 Share Posted June 26, 2011 and anomynous.. Until now.....we know who you are. Manarak....can you send me your agents details....or I send you and they send me.......get your people to contact my people etc. Link to comment Share on other sites More sharing options...
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