Hi ,

Issue #88 is dedicated to our Asian friends, colleagues, and clients. We love Hong Kong and feel honored to be associated with such venerable legal, tax, and investment management professionals, in the top IFC.

It is our great honor, to introduce qualified individuals to the Hong Kong regulated Fiduciary and Pension Fund. Plus, it's all the more satisfying when those individuals are from the People's Republic of China (PRC), it's like; east meets west in the best possible circumstance for complete mutual benefit - A true win/win situation.

Common Sense, by definition, is non-existent.

A director of a Family Office for Ultra High Net Worth Clients in Asia told me yesterday that ''because of FATCA we are not investing in anything that is in the USA, of the USA or in US Dollars because we are totally against any type of monetary control''.

So, I asked. What are you going to do in 2017 about the currencies of O.E.C.D. countries which includes China in the exchange of information in the Common Reporting Standard agreements designed with a broad scope across three dimensions:

• The financial information to be reported with respect to reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income) but also account balances and sales proceeds from financial assets.
• The financial institutions that are required to report under the CRS do not only include banks and custodians but also other financial institutions such as brokers, certain collective investment vehicles and certain insurance companies.
• Reportable accounts include accounts held by individuals and entities (which includes trusts and foundations), and the standard includes a requirement to look through passive entities to report on the individuals that ultimately control these entities.

The CRS also describes the due diligence procedures that must be followed by financial institutions to identify reportable accounts. Isn't the Common Reporting Standard the same as FATCA?

His reply is that he knows how to set up trusts to avoid reporting and tax

So, I asked and what is your client going to say to authorities was their common sense reason for setting up your hiding trust?

Request a private consultation.

Pre-Immigration Statutory Asset Protection for EB-5 Visa

This ORSO/IRC 402(b) entity is the only statutory asset protection and tax deferred income solution possible for residents of the People’s Republic of China because it is integrated pension laws that are recognized by the Peoples Republic of China, the Internal Revenue Service, the Department of the Treasury, Double Tax Agreement (”DTA”), Tax Information Exchange Agreement (”TIEA”) and the Foreign Account Tax Compliance Act (”FATCA”).

There are three key issues to investing from PRC into USA with an EB-5 Visa

China exit visa - EB-5 Visa Basic issue: moving money from the PRC these days is straight forward and I will come back to that which is called the retirement plan contribution phase.

Second issue: assuming that AML (anti-money laundering) and Disclosure is done then there must be a pension fund on the receiving end for PRC people. There must be this government regulated, registered and recognized Hong Kong pension fund law or it will not work. It is not a legal trick.

Third issue: what has the U.S. or the U.S. Dollar have to do with it? You need a strategy that lays out the U.S. laws that provide the asset protection, exemptions from reporting and tax deferred benefits to those entering the U.S. Investment Immigration Program (EB-5 visa).

We can discuss all of those benefits; there are many. But first, the functionally for moving PRC client’s money outbound from the PRC there are three different aspects:

• is it a corporation, a business moving money-probably not
• is it an individual wishing to invest internationally-probably not
• is it a professional investor wishing to move money-probably

On the basis of a professional investor moving money is simple these days because there is a through train from Shanghai to Hong Kong, for investment purposes. There is no magic in this; it is a very straight forward and recognized legal process.

The individual or business opens an investment account with this Shanghai broker to buy investments for his account with a Hong Kong pension fund. For outbound investment from the PRC the basic steps are:

• the AML disclosure is done.
• the Shanghai Broker must be a China Regulatory Securities Commission regulated broker to accept RMB or any other currency
• the investments made must be for the account of the Hong Kong pension fund.

When investments are held in Hong Kong it is for the account of the pension fund, meaning that the individual investing belongs as a member of the pension fund in the first place.

Where money is invested or how it is invested is not a tax or exchange control issue it is a matter for that member’s good judgment. It is not a manipulation of exchange control law. It is purely an investment program where the individual is subscribing via a Shanghai broker to a Hong Kong pension. This legal through train, established quite recently, facilitates outbound investments as a legal matter.

In summary, after the client’s AML passes the test they open an account with this Shanghai broker and give instruction to execute a trade. The investment, which is their own pre planned choice, is booked in Hong Kong where an account has been open in the name of this pension fund member. The member instructs the Hong Kong trustee to execute the trade as a formal matter. That is the best way to do it because it checks all the boxes.

Under the new regulatory regime brought to you by the Foreign Account Tax Compliance Act (FATCA), all but one type of existing foreign financial framework used to invest capital outside the U.S. is noncompliant or non-functional with U.S. reporting. Allow us to introduce the one true solution.

Request the PRC to USA EB-5 Visa White paper.

Occupational retirement plans are registered as FATCA exempt on reporting and withholding and IRS Recognized Tax Deferred

Individual tax reporting is streamlined and simplified making for a DIY (do it yourself) filing.

By government and governance recognized

• FATCA
• DTAs
• TIEAs
• GATCA
• O.E.C.D.
• Common Reporting Standard

Off the Shelf Domestic plans just don’t work, also they have built-in participation requirements and Funding limits.

We achieve tax compliance at both the institutional and individual level and most importantly Pension law overrides tax law and securities law.

Request a private presentation.

Hong Kong is a former British Dependent Territory which became a Special Administrative Region (SAR) of the People's Republic of China from 1 July 1997. Hong Kong continues to enjoy high autonomy in the running of its affairs under the ‘one country, two systems’ concept.

Hong Kong continues to be a major powerhouse in world trade. Despite its comparatively small population of more than 7 million, it is one of the top twenty trading economies; the world's third largest financial centre; and vies with Singapore as the largest container port by volume. Hong Kong remains the most significant gateway into Southern China.

Hong Kong Law & Taxation

Hong Kong's corporate law is largely based on British common law. Local businesses are regulated and Hong Kong regards itself as a low tax centre rather than a tax haven. Taxes are levied on profits, salaries and property at varying rates.

Estate duty was abolished on 11 February 2006. Only profits derived in Hong Kong are assessed for tax and genuine offshore transactions are not subject to Hong Kong tax, although the Inland Revenue Department (IRD) is extremely diligent in determining what qualifies as onshore or offshore profits.

Due to Hong Kong's role as a major trading and entry point to mainland China and Asia, the bulk of companies formed in Hong Kong are for trading purposes.

Corporate Requirements

Chinese character names are permitted and can be included in a company's Certificate of Incorporation. Each Hong Kong company must have a local secretary and a local registered office which must be a physical address and not just a Post Office box.

Each company must have at least one director and corporate directors are permitted for companies that are not subsidiaries of public listed corporations. Every private company is required to have at least one director who is a natural person.

The company should have at least one shareholder. Details of the company's directors, shareholders and secretary must be filed with the Companies Registry and are on public record.

Each year the company must submit an annual return with penalties imposed for late filings and there is ever increasing vigilance by the Companies Registry for this purpose.

All companies must obtain a Business Registration Certificate from the IRD and are required to file a set of audited accounts with the IRD annually.

Company names may be expressed in both English and Chinese characters

Please contact us for more information.

There are in excess of 1 million companies incorporated in Hong Kong. With the implementation of the Integrated Companies Registry Information System (ICRIS) on 28 February 2005, the new Companies Registry Electronic Search Services became available for checking company information. Numerous banks, stockbrokers and finance houses as well as all the major international legal and accounting firms are present in Hong Kong.

Hong Kong is also well-served by local secretarial, corporate management and trust companies, while there is an efficient, modern and dynamic banking system to assist the international business community.

How We Can Help You

We can incorporate a company with your choice of name and can also check the availability of names in advance. All companies are provided with a complete company kit that includes share certificates, 4 copies of the Articles of Association, statutory registers, common seal, company chop and a certificate of guarantee of quality.

Request more information about Hong Kong Corporate services.

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