Background
- European company (E Ltd) is buying from China and selling to Europe;
- A China company (C Ltd) is setup for the sourcing function;
- Frequent payment to China suppliers are required;
- Money transfer from E Ltd to supplier takes time and complicate in procedure;
- Money transferred into China (to C Ltd) is difficult to remit out of China again, and is subject to usage restriction.
- A HK company (H Ltd) is setup with HK bank account (such as HSBC);
- Role of H Ltd is to handle money matters for group companies – receive money and transfer money;
- HK bank account can be operated by internet banking;
- H Ltd has no income.
- Money control is centralized and earns higher opportunity gain (such as interest rate, exchange rate etc.);
- Money flow into and out of HK enjoys high level of freedom (no supporting document required to convince reason of money movement);
- Money to China can be done when required and can be done swiftly;
- No profits tax effect to H Ltd as there is no income.