I’m getting a lot of heated debates lately about should an entrepreneur choose Belize or Hong Kong for their global business.
Today we’ll break this up a bit and see what is best for your situation. Again, please ask an expert for your specific case and situation.
What’s Your Nationality?
The first is what passport do you hold? It’s easy to incorporate a new company almost anywhere in the world, the challenge always comes up at the bank account opening process.
If you’re a USA passport holder, you can apply for a bank account in America without a problem. So what people are doing is opening offshore companies and then via this offshore company opening a US bank account. Seems pretty wild right? Open a company overseas as an American, and then go back to America to open the bank account.
I’m not a tax specialist, but I have heard that this is a great tax shelter setup. And Belize is the most common company structure to have when applying for a USA bank account.
So the reason this section of the guide is asking you which passport you have, if you open a Belize company as a European, for example, it won’t be that easy for you to get a USA bank via this Belize structure. But if you’re American, I’m told this is pretty straightforward process.
How Can A Belize Company Work For Americans?
You may be wondering, I thought America is cracking down on Americans hiding their money overseas. It is crazy to me to hear this can work, but the answer I have heard is this.
High profile American politicians and rich executives in America have this exact same structure. So they won’t make laws that go against their own corporate structure.
So by having a company setup the same as the “big boys” in USA, man feel safe this can work for the long term. Or at least the longest out of the other options.
Hong Kong Case For Your Business
Hong Kong is great if you don’t want to setup this Belize structure with a USA bank account. Maybe you’re not sure how long that will work for. In Hong Kong you will be 100% operating in Hong Kong with a Hong Kong bank account and all your reporting and operations.
Hong Kong isn’t like these offshore island companies that don’t have established banking in their own jurisdiction. HK is a financial center of Asia and the world and has plenty of banking options.
Yes, I have been talking a lot on the Global From Asia blog about how it is getting harder to open a bank account. That is happening all around the world, and you need to have more reasons and cases for relevancy in that region. More enforcement by governments to make sure banks KYC (know your customer) but also report back to the USA government who has accounts there (FATCA) has caused these headaches for legitimate business owners.
What I’ve noticed is that while a Belize company may work for Americans, the hard part for everyone else is to get a USA bank account. This has then re-directed a lot of Europeans to talk to me about setting up shop in Hong Kong.
So Really – It’s About Where You Want to Bank
When it boils down between Hong Kong or Belize, you need to think about where you want to bank. Belize means you’ll apply to a USA bank, with a Hong Kong company you’ll apply for a Hong Kong bank. I have had other people get a bank in Europe via their Hong Kong company for tax reasons, which is pretty interesting and a future topic for the blog.
At any rate, a company in itself isn’t the critical factor – it’s about the banking.
Americans can get USA banks without a hitch. I am told (disclosure, I do not have this structure) that it is pretty straightforward to get a Belize company setup and a USA bank.
But if you’re not American, then you can open the Belize company but will have issues with a USA bank account. Then you may look at other company structures.
It Seems Risky For Me To Bank in USA to Avoid Taxes?
I’m not a tax guru, I’m a business owner. And yes, I’m American (I should put the scarlet letter on my forehead!). While no one likes taxes, I think it is part of life. The tax avoidance game will probably never stop and next year there will be some new way to get around paying your taxes.
Yet I know this is such a hot topic, and heck, may as well have a couple blogs on the site to see what comments we get.
I think it is kinda crazy, as an American, to open a USA bank account in an offshore company to avoid paying USA taxes. Sure, there are really smart people that say this works – but it seems so counter-intuitive. Maybe really wealthy American people do it, but those people probably have really smart lawyers watching over the laws. As soon as there is a policy update, they’ll immediately react and move to another complex structure.
So to me, you need to do what is right for your business. Not just about avoiding taxes.
Does Hong Kong Help For Your Asia Business?
What I’m more excited about when I write up these blogs is doing business in Asia. A lot of readers are buying from Chinese factories, or have development shops in Vietnam. In these cases, it helps a lot to have a Hong Kong company. Sure, taxes are also lower than other places in the world, but that isn’t my focus to recommend it.
You want to do business in Hong Kong because you can headquarter your global business here. Pay your suppliers in China, your outsourcing team in Philippines and Vietnam. And yes, receive your sales income from clients around the world.
You can also open subsidiary companies in China and even in Western companies to do sales and operate locally there.
So those wondering Belize or Hong Kong, try to step back and think where are you going to be operating your business ?
Think Long Term – Play To Win
Make long term decisions. For your competitive advantage as a business owner. Where will life be the most simple? Where can you go to stay on top of the trends in global business?
I’ve been witnessing Asia grow as a global player for almost a decade now. Do you think that will continue? Will you be raising money from investors? If so, where are those investors located? Where are they comfortable investing?
What Are Your Thoughts? Belize or Hong Kong?
I hope I helped you out. You’ll have a lot of other consultants and business experts talking to you about where is best to set up. Full disclosure, I am a consultant and agency to help you set up shop in Hong Kong, so I have my natural bias. Yet I tried my best to give the pros and cons of both sides.
I’m not sure what the yearly upkeep fees for a Belize company are. But in Hong Kong, we have a guide covering the yearly fees you can check out.
Please, leave me a comment below. Am I missing something? I am completely ignorant! Let’s all share and learn together.