Why do business in Hong Kong?

Hong Kong is a leading international finance centre and trading hub with all the specialist professional services in place to support it.

Its key features are:

• Flexible legal system based on English Common law
• Experienced and skilled network of professional services providers
• Access to capital from the fifth largest stock market in the world
• World-class telecommunication infrastructure
• Taxes only on Hong Kong sourced income
• Strong network of Double Taxation Agreements.

Hong Kong is a cornerstone of the Greater Bay Area (GBA) – in addition to Hong Kong and Macau it includes a cluster of nine cities in the Pearl River Delta of south China. The GBA is subject to a raft of sweeping preferential policies to encourage growth, innovation and technology aiming to encourage the flow of goods, people and capital within the region.

The potential for the GBA is phenomenal - it is now the largest urban area in the world with a combined population of 73 million people. Taking up less than one percent of China's land space it currently contributes around 11 per cent of China's economy.

An ambitious network of highways, railway links and bridges – including the 55-km world class Hong Kong-Zhuhai-Macao Bridge, is cutting travel time between Hong Kong and GBA cities creating the opportunity for Hong Kong residents to continue living in the city, but work throughout the GBA, or vice versa. There is also access to land and labour, addressing the two key challenges for most start-ups in the jurisdiction.

Hong Kong is an established platform for capital to flow in and out of China – it is a natural gateway and a conduit into the GBA. It has freeport status and straightforward customs clearing. Duty is only paid on limited products such as tobacco, however, imported wine and beer is duty free.

Major business cities like Beijing, Shanghai, Singapore, Taipei, Manila, Kuala Lumpur and Perth are in the same time zone whilst Bangkok, Jakarta, Seoul and Tokyo have an hour's difference. In 2019 more than 100 airlines operate flights from Hong Kong International Airport to more than 180 destinations.

Hong Kong's stock market, the third largest in Asia after Japan and Shanghai, is considerably more liquid and familiar to investors. Since China opened its doors to the world in the 1970s, Hong Kong companies have invested more time, money and resources than any other tapping into the potential of the Chinese market.

Hong Kong's competitive advantage comes from:

Company formation
A relatively low cost, quick and easy process. There are no restrictions on inbound or outbound investment and there are no nationality restrictions on company ownership. Foreigners can invest in almost any business and own up to 100 per cent of the equity.

Tax system
Businesses and individuals benefit from a straightforward tax system. There are three direct taxes and there are generous allowances and deductions.

• Two-tiered profits tax – For corporations, the rate is 8.25% for the first HK$2 million of assessable profits, rising to 16.5% for profits above that amount. For unincorporated businesses (partnerships and sole owners), the tax rates are correspondingly set at 7.5% and 15%.
• Salaries tax with a progressive tax rate starting at 2% and ending at 17%; or at a standard rate of 15%.
• Property tax of 15%.

There is no sales tax or VAT, no withholding tax on dividends and interest, no capital gains tax, no tax on dividends and no inheritance tax.

Legal system
Hong Kong is the only common law jurisdiction within China and has built well-established commercial case law valued by the international business community and foreign investors.

Hong Kong's infrastructure is seamless with advanced land, sea and air transport and communications system. Sophisticated port and air cargo facilities has ensured Hong Kong's place as one of the largest trading entities in the world.

The development of innovation and technology has been a top priority for the Hong Kong Government with policies to promote innovation, research and development, artificial intelligence, robotics, biotechnology and financial technologies.

International financial platform
With its strengths in banking, capital markets and asset management, Hong Kong provides a high-quality financial platform for investors, financiers, asset managers, funds and financial institutions. Hong Kong is also a preferred location for corporate treasury centres. It is Asia's largest banking hub with 200 authorised banking institutions.

Why ILS World?

Our professional and highly qualified team in Hong Kong is fluent in English, Cantonese and Mandarin. We assist private clients, investors and entrepreneurs on appropriate structures, company formation, bank account opening, compliance, administration, book-keeping, accountancy, pensions and payroll.

ILS World can provide a Hong Kong company for a one-off payment which includes first business registration fees and government filing fees.

The team has gained a great deal of experience in advising and administering Hong Kong company related structures for clients and assist them with:

• Company administration
• Formation of companies and trusts
• Use of our service companies as intermediaries
• Assistance with contracts
• Invoicing and accounting
• Administration
• Director and secretary services
• Registered office facilities
• Virtual office facilities
• Physical office facilities
• Accounting services
• Payroll
• Work permit
• Trademark registration.

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Please note: ILS World does not offer tax advice. If you are not professionally qualified to give tax advice, we will be happy to make an appropriate introduction.

Your Specialist
Lilian Cheung
Managing Director
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