[Godling]

Hi,

Right, HK as a Tax Haven.

For the next few years I'll be doing business in the UK and then I'll move to HK. Now I've heard that HK can act as a Tax Haven due to no taxation on overseas income.

I'm wondering at the possibility and legallity of what I propose. I have 3 different businesses, an Online Business, an Internet Cafe and a Chinese Restaurant, strange mix I know

1. The Online Business seems to be the most straight forward, all the servers and customers are based in the US, so basically all payments could be made to the HK company and it should all be Tax Free?

2. The Internet Cafe, I could sell to the company a piece of software to help run the Cafe and then charge a yearly License and Maintennace fee from the HK company, say something like ?5k-?10k p/a. This way, the Cafe earns less and therefore is taxed less and the HK company gets revenue that is again Tax Free?

3. The Restaurant I would deal with in the same way, sell it a Electronic Billing and Reporting software and charge a license fee.

So, assuming the above can be done, and I can't see why not, is it legal? Am I actually barking up the totally wrong tree? Are there any other implications on the UK side. I'm not trying to escape tax completely (would be good if we could), just minimize my taxation in the UK =/

Anyone know the answers please advise, or if you know where I can find the answers (someplace, someone) then I would also be very grateful =)

Thanks loads

[KnowItAll]

Talk to a local offshoring specialist.... the last thing you need is the tax man not accepting your reason for fraud "but MrHotShotBanker on GeoExpat said it was legal".

[clip_my_wings]

if you company is legally registered in hong kong and your providing a legitimate service to your uk companies it could perhaps be feasible ..

however to me its sounds like bogus invoicing which if caught your face a nice little fine and a little stint at her majestys pleasure ..

however im not an expert

[clip_my_wings]

Originally Posted by Godling

Hi,

Right, HK as a Tax Haven.

For the next few years I'll be doing business in the UK and then I'll move to HK. Now I've heard that HK can act as a Tax Haven due to no taxation on overseas income.

I'm wondering at the possibility and legallity of what I propose. I have 3 different businesses, an Online Business, an Internet Cafe and a Chinese Restaurant, strange mix I know

1. The Online Business seems to be the most straight forward, all the servers and customers are based in the US, so basically all payments could be made to the HK company and it should all be Tax Free?

2. The Internet Cafe, I could sell to the company a piece of software to help run the Cafe and then charge a yearly License and Maintennace fee from the HK company, say something like ?5k-?10k p/a. This way, the Cafe earns less and therefore is taxed less and the HK company gets revenue that is again Tax Free?

3. The Restaurant I would deal with in the same way, sell it a Electronic Billing and Reporting software and charge a license fee.

So, assuming the above can be done, and I can't see why not, is it legal? Am I actually barking up the totally wrong tree? Are there any other implications on the UK side. I'm not trying to escape tax completely (would be good if we could), just minimize my taxation in the UK =/

Anyone know the answers please advise, or if you know where I can find the answers (someplace, someone) then I would also be very grateful =)

Thanks loads

and i might be wrong here but if your making payments to a hong kong registered company you'd be liable for hong kong company taxation about 17% ... it would not be a tax haven ...

[Dodgy One]

Sounds a bit dodgy to me!

In the past few years I've had work in the UK, Singapore and HK. I've done my research and the result is that I've had to pay tax separately in each of the three countries for the amounts that I've earned in those countries - 20% in Singapore, the stepped levels for the UK and a nice small amount (about 5%) in HK.

Check the Inland Revenue websites for details.

[Boris]

Speaking from personal experiance. Moved my business to HK FROM UK in a perfectly legit sort of way. The Revenue tried to tie me up in knots for over a year. Maybe their way of saying goodbye !
HM Revenue is very hot on seeing a UK resident moving capital outside their clutches.

There is no reason at all not to able to do what you want to do BUT you will have spend a LOT of time proving its legit. Your accountant will have to be S**t Hot and prepare for 18 months minimum of corresponance. Also Items 2 and 3 WILL be seen as a very obvious way of tax avoidance and you would have to prove EXTENSIVELY that the service you offered was at a fair market price. If you did that , the revenue would come back and question why the business was unable to operate at a normal commercial profit. You could write tomes of resposes on this but their final assement would be " Business is expected to make reasonable profit and we expect - BLAH BLAH. Your appeal is rejected." In other words - takes us to court and prove it, unless your tax speacialist barrister ( loads of money ) can provide us with an Law Lords exact exemption rulling in your favour.
If not have you the money to take it that far to prove your point ? - No - I didn't think so and so do the revenue.

This side ( HK ) is much easier. You register your company with a local based Company Sec that would also be your accountant. They can handle ( for a price ) all you need.

I would judge from your words , your income would put you in the HK company tax bracket , based on a net profit being high due to what might be extremely low expenses. So you again have to judge what you save.

For the HK your income ( I think ) will not be counted as coming outside HK. Your registered business will be raising invoices from HK ? Therefore HK Revenue would not accept income derived from outside. You are offering a service from a soveriegn state and must be taxable under those states laws.

I dont wish to appear harsh, BUT -- everyone has a great and simple idea of what they want to do. Revenue has heard it and seen it all. They spend shed loads of dosh on tax avoidance and it is only the VERY WEALTHY that can get some benefit as saving 1% of a Billion is more advantageous than 1% of 100 K.

I wish you luck and hope you can balance what you are going to need to pay , with what you feel you may save. I think there are much better ways of paying a " fair " rate of tax rather than going through all the hoops that you have thought of.
Get a good accountant !

FYI - all the BIG companies here that earn lots of dosh don't register in HK. They are Bermuda or Caymans.