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Holding Company in China

Holding Company in China

Holding companies in China have a straight purpose and that is to handle the operations and the management of other enterprises established in this country. Because holding companies in China comes with several benefits, numerous foreign investors decide on such type of business. Setting up a holding company in China is subject to varied requirements, and to ease the registration process, it is advisable to speak to our team of company formation agents in China.

Why should I open a holding company in China?

A holding company in China is created in a special way, meaning that foreigners can buy assets like mutual funds, real estate, investments, or business licenses for which there is no corporate tax. Such an advantage makes entrepreneurs think of setting up a holding company in China. Here is an infographic that explains how a holding company can be registered in China:

What are the benefits of a holding company in China?

 Among the advantages of a holding company in China, the following are important:

  • foreigners can enlarge their portfolio and profits with a holding company in China;
  • a holding company is a legal entity which has an easy incorporation procedure;
  • the foreigner’s assets are completely protected through such business form;
  • the double taxation treaties signed by China are also available for such types of companies.

Knowing the business field and the advantages in certain sectors and climates can help the foreign entrepreneur decide on the proper business structure which in many cases can be the holding company that needs approval from the State Administration for Industry and Commerce, also known as SAIC. If you want to start a company in China and express an interest in holding companies, our Chinese team of specialists in company incorporation can offer in-depth information in this matter.

Choosing the city for setting up a holding company in China

It is good to know that holding companies are subject to different benefits, depending on the chosen city for such an entity. A foreign entrepreneur should know complete details about the financial system, the economic stability, whether the risks are high or low and if the city offers complete supportive administration for holding companies in China. One should also observe the taxation of holding companies in China. If you need support for VAT registration in China, feel free to talk to our specialists.

International entrepreneurs can open a company in China and benefit from the development opportunities offered in this country. The whole process can take up to 3 months, depending on the formalities and procedures. But in this direction, you can request the services of our local representatives. You will thus benefit from the necessary support to start the activities as soon as possible.

Main reasons to open a holding company in Hong Kong

Hong Kong has always been a great business destination and many foreign entrepreneurs find this special administrative zone of China quite attractive from this point of view. Hong Kong is unique and presents a multitude of advantages in the business climate, including for those who opt for a holding company. Here are some interesting aspects in this regard:

  • 5% is the withholding tax rate imposed on distributed dividends to tax residents in Hong Kong.
  • Two-tier profit tax applies in Hong Kong. As such, 8.25% is the tax imposed for the first USD 2 million income, while the remaining is levied at a 16.5% tax rate.
  • There is no general sales and no capital gains tax in Hong Kong.

These are some of the advantages of a business in Hong Kong. For more information about how to open a holding company in China, particularly in Hong Kong, please feel free to contact us. We can also tell you more about the formalities for opening a WOFE in China.

Business flexibility in Hong Kong allows simple holding company formation

Hong Kong is a territory administered by China, but it offers great flexibility for entrepreneurs interested in structuring investments. For example, there is no need for approvals for share issuance, as is required in China. The same thing is available in the case of the transfer of shares because the procedures are much simplified, and, compared to China, no special approvals are needed. A professional service provider is sufficient to deal with the transfer process, as the case may be.

Location benefits for holding companies in Hong Kong

Another aspect that is taken into account when opening a holding company in Hong Kong is the location itself. It is known that Hong Kong is an appreciated financial hub and connects with Asian countries, plus other states quite easily. Hong Kong supports free-market policies and companies are free to expand on the market, without worrying about anti-competitive practices. Quality infrastructure is another business advantage for those interested in owning a holding company and expanding their operations. The Great Bay Area and the Hong Kong-Zhuhai-Macao Bridge help with various business connections with varied financial hubs.

Extra business benefits in Hong Kong – Holding company in China

Hong Kong is an ideal business destination for international investors. Those interested in company incorporation in China can choose this financial hub taking into account other important aspects:

  • excellent transportation,
  • great public health system,
  • no security issues,
  • great living conditions.

Having pro-business policies and easy ways to set up a company in China, Hong Kong is an excellent destination for foreign entrepreneurs, and these things were also emphasized by the World Bank. If you want to open a holding company in China, you can opt for Hong Kong and benefit from diversity, stability, and a special business climate.

The purpose of holding companies in China

The single purpose of a holding company in China refers to the management and control of the shareholdings in other companies with activities in China. Among the general rules of holding companies in China, we remember the obligation of having at least 10% company share in order to have and control a holding company and also to obtain voting rights. The formalities for opening a holding company in China are not that complex, however, the support and guidance of an experienced team of company formation agents in China will prove extremely helpful. Also, if you would like to establish a subsidiary or a branch in China, do not hesitate to solicit our complete support.

Our accountants in China can offer you the services you need for your company, registered in this country. You can thus benefit from bookkeeping services, payroll, audits, tax registration, financial planning, detailed financial reports, and many more. We can also help you with the preparation and submission of annual financial statements, as required by law. Do not hesitate to call us and find out all the information that interests you.

Taxation of holding companies in China

It is good to know that there is no income tax imposed on holding companies in China. In the case of non-resident foreign holding companies, the dividends paid by parent companies in China are subject to the withholding tax. We also remind that China signed several double taxation agreements through which the company profits are protected from double taxation and fiscal evasion. The provisions of the double taxation treaties signed by China are also applicable to holding companies. Even tax minimization methods can be successfully applied to holding companies in China, in order to legally reduce the amount of taxes. For a better understanding of the tax structure in China, you can talk to our specialists. Also, if you are looking for accounting services for your firm, feel free to get in touch with us.

Other important advantages of holding companies in China

Besides the above-mentioned benefits of holding companies, investors should also pay attention to the protection against financial and operational risks. In terms of investments, holding companies in China are the right tools for entrepreneurs looking to expand their business direction and portfolio because they can implicate large and consistent projects that can involve domestic or foreign investments. Among the protected assets of a holding company in China, we remind you that intellectual property and company equipment are on the list. The control and management of a holding company in China can be appealing to foreign entrepreneurs interested in a new business direction in this country.

Making investments in China

China is one of the most important business markets in the world and a top destination for a large number of investments of any kind. Big companies from all over the world have branches and subsidiaries in China and benefit from a stable business environment and a series of tax advantages and encouragements. The available free trade zones of China come with a series of tax exemptions and the possibility of developing all sorts of businesses in a protected and respected environment. The Wholly Foreign-Owned Enterprise or WFOE in China is the proper structure for the business that can be adopted by foreign investors in China, allowing them complete control of the firm. The proficient and respected workforce in China represents a solid business advantage for foreigners in China, no matter if they start a company from scratch or relocate their operations in this country. Manufacturing, tourism, engineering, research and development, real estate, logistics, and transportation are among the prolific sectors preferred by foreign investors in China. Here are some interesting facts and statistics about China’s economy:

  1. Around CNY 126,058.2 billion was the total GDP in China in 2023.
  2. About CNY 47,149.5 billion was the total value of retail sales of consumer goods in China in 2023.
  3. The retail sales in China’s urban areas registered a total value of around CNY 40.749 billion in the same year.
  4. Japan, South Korea, the US, Singapore, Germany, and the Netherlands are among the big investors in China.

If you consider that a holding company suits your business needs in China, you can contact our company formation agents in China for comprehensive information and support in this matter.