Nature of subsidiary companies
What are the benefits of setting up a subsidiary company in Hong Kong?
As mentioned earlier, the subsidiary company in Hong Kong operates as a private limited liability company. Therefore, you will enjoy several benefits just as other companies in addition to the benefits that come with doing business in Hong Kong’s environment. Some of the benefits include:
Incredible Flexibility: The subsidiary is an independent entity and thus its activities are not tied to those of the parent company. Therefore, it has the freedom to perform the business activities as the parent and include others if necessary.
Simple and low taxation rates: As mentioned earlier , a subsidiary operates as a private limited company and thus its taxation rate is the same; the corporate taxation rates of a Hong Kong subsidiary is 16.5%.
Independence: The most essential part of forming a subsidiary company in Hong Kong is the fact that it is independent of the parent company abroad.
Limited liability: A Hong Kong subsidiary has a limited liability which implies that both the founders and the parent company have a limited liability of the obligations and the debts that have been incurred by the subsidiary company.
Distinct management: The management of the subsidiary is distinct from that of the parent company; the Hong Kong subsidiary is expected to handle and manage all its accounts and bookkeeping including transactions independently.
In summary, the expansion of a foreign company to Hong Kong is that simple and straight forward. As mentioned earlier, you will have the option of expanding to Hong Kong through setting a branch office, having a representative office, or incorporating a registered subsidiary company. All these are good, but a subsidiary company is advantageous since it can operate as a separate entity from the parent foreign company.