Establishing a company in Hong Kong

Hong Kong is categorized as one of China’s Special Administrative Regions; it part of the “One China - Two Systems” model of the Chinese Republic (meaning centralist Chinese control that permits economic and operational freedom) and so this dense and ultra-developed region is the gateway to China and the entirety of Asia. Hong Kong is situated on China’s southern coast and its territories include several islands and a small land area surrounded by the delta adjoining Pearl River and the South China Sea. It became a territory of the British after the Opium War (between the UK and China over control of trade routes, years 1840-1860) and remained under its control until its return to China in 1997, excluding a short period of Japanese conquest during World War II. Establishing a company there offers a bounty of advantages for any business activity in the East.

Hong Kong’s government and politics are very different from that of mainland China, and it is autonomous in many respects, remaining practically unchanged in terms of economy and management since the reign of the British – a fact that makes it very easy to register foreign companies there and conduct in business in China. Culturally, economically and demographically, Hong Kong is defined as the meeting point between East and West, and this term is particularly apt for such a dynamic and unique territory.

Three things you did not know about Hong Kong:

• Hong Kong has a total area of 1,104 km² and together with its 7 million inhabitants is one of the most crowded places in the world.
• In contrast to the foundational concepts of Chinese law, and also other aspects of life in the mainland, Hong Kong law is based primarily on the British system, known for its great attentiveness to civil rights and personal liberties. This is the secret to its success as a business center and the reason for the huge diversity of its ethnic makeup and global companies there.
• Despite its unusual location, Hong Kong has an extensive Jewish history and still has a diverse Jewish population, including religious activities, four synagogues, a Jewish cemetery and even Jewish restaurants.

Hong Kong’s economy

Hong Kong has its own local currency, the Hong Kong dollar, its GDP is enormous in relation to its size (360 billion USD) and per capita income is over 50,000 USD. It is one of the biggest financial and trade centers in the world and probably the most important in Asia today, its significance stemming from its connection between China to the West and between all of Asia to the West as well. The regional economy is characterized by a very comfortable and inviting business environment, low taxation rates and free trade – for example, it imposes no import tariffs. Its tax regulations and rates are low and easy to adhere to: a maximal cap of 15% on income from wages and 16.5% corporate taxes on revenues. Revenues generated from outside Hong Kong are categorized as capital gains and tax is not imposed. It has a large stock exchange which contributes greatly to the global economy and various options for companies wishing to register there.

Offshore companies in Hong Kong enjoy a 0% corporate tax rate on income generated from outside Hong Kong, even if payment in made within its limits. Additionally, these companies enjoy accessibility to the developing Asian markets. However, they must submit company books and an annual fiscal report regarding shareholders holding company stock.

Additional information about establishing offshore companies in Hong Kong: