Tax

At HKWJ Group, we don’t just assist clients with one-off projects—we build long-term partnerships, offering continuous tax and legal support to help businesses thrive.

Case Study: Helping a Global Lighting & Electronics Company Expand into Mainland China

One of our multinational clients, a leading company specializing in lighting products, electronic equipment, and related components, has business operations across the Netherlands, the US, Mainland China, and Hong Kong. As their trusted partner, HKWJ Group has been providing them with a full suite of corporate services, including accounting, audit, tax and legal advisory, and economic substance compliance.

When the client sought to expand into Mainland China by investing in a joint venture (JV) for product procurement, they needed expert guidance on structuring the investment efficiently. We stepped in to assist them at every stage of the process, from evaluating the best entry strategy to handling legal and tax implications in both Hong Kong and Mainland China.

To optimize their investment structure, we advised the client to set up a Hong Kong holding company as part of the expansion plan. Our team provided step-by-step support in incorporating the entity and ensuring it was fully compliant with local regulations. Additionally, we assisted in preparing all required documentation, ensuring a smooth and efficient setup.

We also assisted in structuring a tax efficient remuneration package for the management personnel from both Hong Kong and Dutch tax perspectives.

Thanks to our comprehensive support, the JV company was successfully established and is now operating seamlessly as the client’s procurement hub in Mainland China. By leveraging our expertise, the client was able to navigate complex regulatory and tax requirements with ease, enabling them to focus on growing their business in the region.

Case study: Securing Tax Benefits for a Hong Kong Holding Company Under the HK-China Double Tax Treaty

For the company mentioned above, we provided further taxation advise.

After a few years of successful operations, the JV company had accumulated substantial profits, which the client wanted to distribute. To minimize tax costs, they aimed to apply the reduced withholding tax rate under the double tax treaty between Hong Kong and Mainland China—from 10% down to 5%.

To achieve this, the client needed to obtain a Certificate of Tax Resident Status (CoR) from the Hong Kong Inland Revenue Department (IRD). However, securing a CoR in early years can be challenging, especially for investment holding companies, as they are not required to have the same level of business substance as trading or service companies. The IRD often scrutinizes such applications closely, making approval difficult.

Despite these hurdles, our team successfully guided the client through the complex application process. We engaged in extensive correspondence with the IRD, provided detailed justifications, and submitted comprehensive supporting documents to substantiate our claim.

Furthermore, we also assisted the client in addressing the enquires from the Mainland Chinese tax authorities as well as completion of the relevant forms for the purpose of enjoying the preferential withholding tax rate on dividends in Mainland China.

Thanks to our expertise and persistence, the CoR was granted, allowing the client to benefit from the reduced withholding tax rate. This not only resulted in significant tax savings but also reinforced Hong Kong as a strategic base for their international business operations.

Case Study: Optimizing Investment Structure & Tax Efficiency for a High-Potential IPO Opportunity

When a long-term client of ours was presented with an investment opportunity in a Mainland Chinese entity with IPO potential, they needed expert guidance on structuring their investment in the most efficient way. Given the complex holding structure and involvement of multiple investors—both foreign and domestic—they had several concerns regarding taxation, legal implications, and overall investment strategy.

Key questions included:

• Should the investment be made through a limited partnership in Mainland China, or would another structure be more beneficial?
• What are the tax and legal implications at each stage—from acquisition and lock-up period to long-term holding and future exit?

Our team at HKWJ Group worked closely with the client to evaluate all possible investment structures. We conducted a detailed analysis of the legal and tax implications associated with each option, providing strategic recommendations to minimize risk, optimize tax efficiency, and ensure compliance with both Mainland China and Hong Kong regulations.

With our guidance, the client was able to move forward with a well-structured, tax-efficient investment strategy, positioning themselves for long-term success while maximizing returns.