Profile

Hong Kong is a special administrative region of China and has its own independent judicial system, historically based on common law. There is a hierarchy of courts headed by a Court of Final Appeal down to lower level tribunals. It is a gateway to Asia, especially China, and is very well connected for international travel. It is relatively easy to incorporate in Hong Kong and there is very good access to professional services.

Do note, incorporating a company in Hong Kong is expensive compared with many other jurisdictions and the administrative burden is fairly high. Renewal fees and dissolution fees are also higher. However, if you are looking for a gateway to China, Hong Kong is a great option.

Political

The direction of policies coming from Beijing seems to favour the maintenance of the current arrangements in the longer term. Having Hong Kong as a significant international business location works well for China and helps to attract international investment. In comparison, mainland China has less ability to manage deals across international borders; the legal resources to support this trade are concentrated in Hong Kong.

Tax

Hong Kong has a low-tax system that taxes only income earned in Hong Kong itself. This means there is no tax on capital gains, dividends, or interest, and no VAT or sales tax.

Profits tax for corporations is 8.25 % on the first HKD 2 million of profits and 16.5 % on the remainder. Taxes on salaries for individuals are charged at progressive rates up to 17 %.

Stamp duty applies to transfers of Hong Kong shares and property. The city has over 50 tax treaties to prevent double taxation.

Legal

With its history as a British territory, it is no surprise that the legal system is based on the British common law system, and it is the only area of China to have this given China’s ‘One Country, Two Systems’ policy. It is particularly well served by high-profile international law firms and the court system is able to function in both English and Chinese.

Privacy

Hong Kong entities require the disclosure of the members’ details. Shareholders, Directors, and Company Secretaries must register their details on the Companies Registry, which is publicly accessible. Members with significant control must be registered although their details are not publicly visible. It is fairly common for Hong Kong companies to be formed in conjunction with companies in other locations, which can act as shareholders for privacy reasons.

Nominees may be used although at least one director must be a natural person

KYC and AML Regulations

Hong Kong does require that members of newly-forming entities undergo Know Your Customer (KYC) procedures and provide proof of ID and residence.