1. International Tax & Business Advisory Services Firm
Why Hong Kong is the ideal place for investment?
Affilica International Seminar
Shanghai, China
23rd Oct, 2015

2. AGENDA
 Basic facts about Hong Kong
 The advantages of Hong Kong
 Our case examples
 Our services and strength
 Q&A
2015 Masson de Morfontaine Limited. All rights reserved.
Hong Kong: The Pearl of East
For the purpose of Affilica International Shanghai Seminar 2015

3. Basic facts about Hong Kong
 Geographic and demographic facts
 Southern part of China
 Special Administrative Region of China
 1,092 square kilometres
 Subtropical weather
 7.8 million population
 Speaks English, Cantonese and Mandarin
12015 Masson de Morfontaine Limited. All rights reserved.
Hong Kong: The International Business Hub with Strategic Location
 Economic and financial facts
 International financial centre
 International shipping centre
 GDP growth rate 2.1%
 GDP per capita USD34,000
 Inflation rate 3%
 Free market economy for Mainland China’s economic
interactions with the world
- International business hub
- Banking
- Trade
- Tourism

4. The advantages of Hong Kong
 Legal and infrastructural advantages
 Well-established legal systems
 World class infrastructure and facilities to do business
 Excellent transport and top class harbour port
 Free market advantages
 Free market economy
 No foreign exchange control
 No labour restrictions
 100% foreign ownership possible
 Fully repatriable profits
 Taxation advantages
 Simple tax system
 No customs duty
 Low tax rate 16.5% / offshore profit exemption
 Favourable tax treaties
22015 Masson de Morfontaine Limited. All rights reserved.
Hong Kong: The International Financial Centre

5. The advantages of Hong Kong
 The Unique Economic Relationship with Mainland China
 Testing ground for Mainland China’s financial reforms
 Closer Economic Partnership Agreement (CEPA)
 Largest offshore RMB liquidity pool
 Largest RMB funding and trade settlement centre
 Largest offshore RMB bond market and capital market
 The RMB qualified foreign institutional investors scheme (QFII)
 Premier asset management hub for Chinese HNWIs
 International capital formation centre (HKEX IPOs)
 Shanghai - Hong Kong Stock Connect
 Shenzhen - Hong Kong Stock Connect
 Exchange Traded Funds (ETFs)
32015 Masson de Morfontaine Limited. All rights reserved.
Hong Kong: The Offshore Renminbi Centre

6. Our case examples
42015 Masson de Morfontaine Limited. All rights reserved.
Enjoying largest benefit – using a Hong Kong company as
stepping stone
Background
1. Mr. A is from Italy with Italy company “ITA Ltd”;
2. Business nature is about consumer products retail;
3. His business activity with China include:
o invest in China to setup Wholly Foreign Owned
Enterprise (WFOE);
o also lend money to the WFOE for business operation in
China.
New arrangement
1. Mr. A forms a Hong Kong company “H Ltd”;
2. Using H Ltd as investor in China to setup the WFOE;
3. Also using H Ltd to advance shareholder loan for the
WFOE’s business in China.
Benefits
1. Setting up WFOE
o disclosing less information to China government
- originally, need to provide information of ITA Ltd to China government;
- now, just need to provide information of H Ltd.
o time to arrange document is shorter
- ITA Ltd documents need to be translated into Chinese and be certified by China Embassy;
- documents from H Ltd is more ready for China use, and the certification process is more
standardized in Hong Kong – time and cost more under control.
2. Dividend from WFOE
o when China company earns profit and need to pay back to investor, withholding tax in
China applies;
o if paying to ITA Ltd, the rate is 10%;
o if paying to H Ltd, the rate is 5%.
3. Interests from WFOE
o when WFOE needs to pay interests to ITA Ltd, withholding tax of 10% applies;
o when WFOE needs to pay interests to H Ltd, withholding tax of 7% applies.
Example: Break-even
1. Cost of setting up HK company = around HKD10,000;
2. Cost of annual maintenance of HK company = around HKD20,000 (including accounting
and audit fee);
3. If dividend is HKD30,000 and interest is HKD167,000
o saving 5% of withholding tax on dividend = HKD15,000
o saving 3% of withholding tax on interest = HKD5,010
o the total tax savings break-even the maintenance of the Hong Kong company.
Case 1: European making inbound investments in China via Hong Kong
Investments Investments

7. Our case examples
52015 Masson de Morfontaine Limited. All rights reserved.
Case 2: No tax in Hong Kong – Offshore operation tax exemption – Trading business
Background
1. Mr. B is a Cameroonian who originally buying from China and selling to
Cameroon using his own Cameroon company as the middle trading firm (C
Ltd);
2. Trading profit of USD100,000 (XAF60M) is subject to Cameroon tax rate –
can be as high as 38.5%;
3. Mr. B controls the business remotely – no need to maintain operation based
in China or Cameroon.
New arrangement
1. Mr. B setup a Hong Kong company, H Ltd;
2. H Ltd becomes the middle trading company – buying from China and selling
to Cameroon;
3. Goods still shipping directly from China to Cameroon;
4. Selling and purchase at same price as before;
5. Location of operation – Mr. B still operating the business – without
maintaining operating office in Hong Kong, China and Cameroon.
Benefits
1. Profit of USD100,000 will be profit of H Ltd;
2. As H Ltd maintains only registered address in Hong Kong, but not
operating office. And also fulfilling offshore operation test, Hong Kong
Inland Revenue Department approves the “non-HK source” application;
3. There is saving of 38.5% in profits tax.
Overall tax position
Mr. B still needs to fulfill personal income tax filing to Cameroon government
– in order to assess overall tax saving scenario.
H Ltd should fulfill operation test, which includes the following:
1. No operation office maintaining in HK (this is different from registered address);
2. No staff hired and working in HK;
3. No customers / clients from HK;
4. No suppliers from HK;
5. Income contract not negotiated or concluded in HK;
6. Goods not entering HK
 Trans-shipment;
× Maintaining continuous cargo stock in HK.
Goods Goods

8. Our case examples
62015 Masson de Morfontaine Limited. All rights reserved.
Case 3: No tax in Hong Kong – Offshore operation tax exemption – Service providing business
Background
1. Mr. C is an Indian who knows many businessmen doing jewellery
business all over the world;
2. These businessmen will pay Mr. C service fee every time when Mr. C
refers them the customers;
3. Mr. C originally using his own Indian company to act as the middle man to
link up these businessmen with the customers he found;
4. Mr. C controls the business remotely – no need to maintain operation
based in India;
5. Profit of USD50,000 is subject to Indian tax rate – can be as high as 43%.
New arrangement
1. Mr. C setup a Hong Kong company, H Ltd;
2. H Ltd becomes the middle company – to link up customers he found with
the jewellery businessmen all over the world;
3. Referral service is delivered to the jewellery businessmen like before;
4. Location of operation – Mr. C still operating the business – without
maintaining operating office in Hong Kong and India.
Benefits
1. Profit of USD50,000 will be profit of H Ltd;
2. As H Ltd maintains only registered address in Hong Kong, but not
operating office. And also fulfilling offshore operation test, Hong Kong
Inland Revenue Department approves the “non-HK source” application;
3. There is saving of 43% in profits tax.
Overall tax position
Mr. C still needs to fulfill personal income tax filing to Indian government – in
order to assess overall tax saving scenario.
H Ltd should fulfill operation test, which includes the following:
1. No operation office maintaining in HK (this is different from registered
address);
2. No staff hired and working in HK;
3. No customers / clients from HK;
4. The service which gives rise to the service income is not performed in HK.
Services Services

9. Our case examples
72015 Masson de Morfontaine Limited. All rights reserved.
Case 4: No tax in Hong Kong – Royalty income
Background
1. Mr. D owns intellectual property or technology that can be licensed to other
company for commercial use.
New arrangement
1. Mr. D setup a Hong Kong company, H Ltd, and register H Ltd as the owner
of the intellectual property (IP);
2. H Ltd licensed use of the IP to a USA company for production use;
3. H Ltd received royalty income based on the use of the IP in USA.
Benefits
1. The royalty income received by H Ltd is not subject to Hong Kong
profits tax;
2. Such income will be taxable if the use of IP is located in Hong Kong.
Intellectual property

10. Our case examples
82015 Masson de Morfontaine Limited. All rights reserved.
Case 5: Investing in European market – enjoying Double Tax Agreement (DTA)
Background
1. Mr. E is a Mainland Chinese who invests in German market by forming a
German company (G Ltd);
2. G Ltd performs well and remits different types of payment to Mr. E every
year, including dividend, interest and royalty, etc.
New arrangement
1. Mr. E forms a Hong Kong company (H Ltd) as 100% shareholder;
2. H Ltd is 100% shareholder of a Luxembourg company (L Ltd);
3. L Ltd is 100% shareholder of a German company (G Ltd);
4. Payment from G Ltd reaches Mr. E via L Ltd and H Ltd.
Benefits
1. H Ltd and L Ltd are regarded as “Twin-Company” – there are DTAs between
Germany and Luxembourg; Luxembourg and Hong Kong as well as Hong
Kong and China;
2. Luxembourg company also enjoys local tax benefit in Europe;
3.
4. The income received by L Ltd and H Ltd is tax free – by virtue of their
respective local tax law.
Withholding tax payable
by German company
If no Twin-
Company structure
If used Twin-
Company structure
Dividend 10% 0%
Interest 25% 0%
Royalty 10% 0%

11. Our services and strength
 Our services
 International Tax Services
- Corporate tax planning and transactional work
- High net worth investors tax planning
- Resolution of tax disputes
- Transfer pricing
 International Business Advisory Services
- Business advisory / Strategic support / M&A
- Company formation / Company secretarial service
- Trademark registration
- HNWI services / Trust / Immigration / Real estates
- Global mobility / Labour law
92015 Masson de Morfontaine Limited. All rights reserved.
Our official website: www.masson-de-morfontaine.com Our brochure
Our recent publications

12. Our services and strength
 Our strength
 Knowledge
- Our advisers have detailed and intimate knowledge of
domestic rules in Africa, Asia, Europe and Middle East,
international rules as well as Islamic finance
 Determination
- Our determination and drive to ensure complexities are
simplified and tax & commercial issues are clarified
 Track record
- We have a track record of pragmatic and integrated tax &
business advice to individual, corporates and governments
within the regions
 Solution
- We deliver creative and innovative solutions to what is
otherwise perceived as insurmountable tax & commercial
and regulatory issues
 Network
- Our uniquely strong local touch with professional firms,
enterprises and industrial bodies in various jurisdictions
across the regions
2015 Masson de Morfontaine Limited. All rights reserved.
Our people: We are a team of experienced tax experts and
business advisers from multinational background
Our office: Lippo Centre in Admiralty, Hong Kong
Our Main Partner: Ms. Catherine LE BOURGEOIS,
Qualified Lawyer, M&A, legal and tax expert
10

13. 112015 Masson de Morfontaine Limited. All rights reserved.
 Let’s talk, your questions are most welcome
For the purpose of Affilica International Shanghai Seminar 2015

14. CONTACT LANGUAGES
Phone: +852.3953.4804 (Direct line) - English
Email: wilson@masson-de-morfontaine.com - Mandarin
Skype/WeChat: wyeu002 - Cantonese
PROFESSIONAL & ACADEMIC QUALIFICATIONS PROFESSIONAL MEMBERSHIPS
CTA(HK), CMA(Aust.), MIPA(Aust.), MCom(NZ), BCom(NZ) TIHK, ICMA(Aust.), IPA(Aust.), AITC, ISFIN
SPEAKER PROFILE: Wilson YEUNG - International Tax Director
A qualified accountant and certified tax adviser with over 18 years of practical experience gained from Big Four CPA firm and multinational listed corporations.
Possesses comprehensive knowledge and experience in telecom, manufacturing, real estates, financial institution and tourism industries, with broad exposure
to China, APAC, EU, CIS, MENA, Americas and Australasia markets, advising MNC, SME and HNWI clients in the area of M&A, corporate restructuring,
transfer pricing, offshore structure, global mobility, SOX compliance and FATCA. Expertise in group tax efficient structure, cross border transaction, indirect
taxes, customs, particularly DTA, TP and PE issues.
Wealth of successful cases in respect of tax incentive application, tax audit mitigation, contractual review and negotiation of infrastructure projects for China
enterprises going global. Keen on offshore tax structuring and implementation for HNWIs especially from China, Russia and Europe making investments in
both developed and developing countries. Leveraging on a strong international network, striving to offer technically robust, industry specific, pragmatic and
seamless solutions to clients on their international tax issues.
122015 Masson de Morfontaine Limited. All rights reserved. For the purpose of Affilica International Shanghai Seminar 2015

15. Unit 3401, Level 34, Tower One, Lippo Centre,
No. 89 Queensway, Admiralty, Hong Kong
Tel: +852.3953.4880 Fax: +852.3953.4818
Website: http://www.masson-de-morfontaine.com
Thank you