Advantages of Incorporation in Hong Kong

1. Tax Advantages

The tax burden on business is recognised as one of the lowest in the world.

Corporate profits tax is based on the territorial principle. Only profits which have a source in Hong Kong are taxable here.

The two-tiered profits tax rates regime has applied since 1st April 2018. Under this regime, the first HK$2 million of assessable profits of corporation is subject to the profit tax at the rate of 8.25% and the profit above at the standard rate of 16.5%.

There is no tax on capital gains or dividends; furthermore, there is no sales tax or VAT.

Hong Kong has entered into Double Taxation Agreements (DTAs) with more than 40 jurisdictions. They prevent double taxation of income arising from cross-border trade and investments. A business will only be affected by a DTA if it is a tax resident of Hong Kong or the other DTA jurisdiction.

The uniqueness of Hong Kong is that it is not recognised as an international offshore centre, while providing the tax advantages that compete with recognised offshore jurisdictions.

For more information on taxation in Hong Kong, refer to Taxation in Hong Kong.

2. Ease of Doing Business

The regulation of business is rather simple and reliably protected by the local legislation.

There are no restrictions on foreign investment. You don’t need to be a Hong Kong resident or travel in Hong Kong to set up a business here. Starting a company takes a few days, and is a cost-effective procedure.

English is the official language and the main business language, and almost everything can be done in English.

For more information on incorporation in Hong Kong, refer to Hong Kong Guide in Company Formation.

3. Safe Banking System

Hong Kong is the cluster of almost all the leading financial institutions of the world. The banks are strong, stable, innovative, and well-capitalized.

There is no foreign exchange control trade in Hong Kong, which means there are no barriers to international fund transfer.

Account holders are free to choose the account currency, be it HK dollars, US dollars, Chinese Yuan, etc.

You can easily access your Hong Kong bank account; on-line banking facilities are widely used in local banks.

For more information about bank accounts, refer to Bank Accounts in Hong Kong.

4. The Rule of Law

Being a part of the People’s Republic of China, Hong Kong has significant autonomy. The primary legislation for the region is based on the “one country, two systems” policy. The Hong Kong legal system is based on British law.

The rule of law is one of Hong Kong’s greatest strengths. Everyone in Hong Kong is equal before the law. Everyone has access to the justice system.

Benefiting from a sound and independent legal system, Hong Kong has long been a regional hub for dispute resolution and offers extensive mediation and arbitration services.

Hong Kong is one of the most corruption-free economies in the world due to its strong public administration.

5. The Gateway to Mainland China

Hong Kong is an ideal place for businesses that want to trade with Mainland China and Asia. Hong Kong is strategically located at the heart of Asia – close to many of the region’s most exciting business markets.

The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) opens up huge markets for Hong Kong goods and services, greatly enhancing the already close economic cooperation and integration between the Mainland and Hong Kong. In brief, the Mainland has applied zero import tariff for exports from Hong Kong, meeting CEPA origin rules for goods and preferential market access for Hong Kong companies in various sectors to facilitate trade in services.