About Us Doing Business with HK

Location 
Global Services Centre 
International Corporate Base 
Legal system 
Free Trade & Free Market 
Taxation 
Society 
Gateway to China 
Further information 

Location

The Hong Kong Special Administrative Region (SAR) of the People’s Republic of China lies on the Southern coast of China at 22° 15 North latitude and 114° 10 East Longitude. Local time is 8 hrs ahead of GMT and 2 ½ hrs IST. The SAR is composed of Hong Kong Island, Kowloon, the New Territories, and numerous outlying islands, occupying a total area of approximately 1106 sq kms. Hong Kong Island, the economic heart of Hong Kong Special Administrative Region, comprises only 7% of the land area (81 sqkm); Kowloon (47 sqkms) is a densely populated peninsula. The New Territories and the outlying islands occupy 88% of Hong Kong’s land area.

Global Services Centre
Hong Kong was the world's 15th largest exporter of commercial services in 2017. Civil aviation, shipping, travel and tourism, trade-related services, and various financial and banking services are the main components of trade in services.

Hong Kong draws more than 90 per cent of its GDP from the service sector. - services ranging from air transport and shipping to contract manufacturing and software designing. Exports of services gained growth momentum aimd robust inbound tourism and thriving offshore trade. Indeed, the four pillar economic sectors of Hong Kong are trade and logistics, tourism, financial services

International Corporate Base
Based on a government survey, as of October 2017, the number of business operations in Hong Kong with parent companies overseas and in Mainland China climbed to 8,225 in 2017, compared to 7, 986 a year ago.  Of these companies, 1,413 operate as regional headquarters (RHQs), 2,339 as regional offices (ROs) and 4,473 as local offices (Los).  These companies came from diverse countries and sectors. In terms of source country/territory, Japan was ranked first with 1,378 companies, followed by the United States (1,313), Mainland China (1,264), the United Kingdom (675) and Singapore (408). 

Legal System
Hong Kong has a liberal investment regime. Hong Kong law is based on the British Common Law System. The Court of Final Appeal, established on July 1, 1997 is the ultimate arbiter of the development of the common law in Hong Kong.

Free Trade & Free Market
Hong Kong advocates and practices free trade — a free and liberal investment regime, the absence of trade barriers, no discrimination against overseas investors, freedom of capital movement, well established rule of law, transparent regulations, and low and predictable taxation. 

Taxation

Low tax regime
Hong Kong taxes are among the lowest in the world, and the tax regime is simple and predictable. The corporate profits tax rate is 8.25% on assessable profits up to $2,000,000; and 16.5% on any part of assessable profits over $2,000,000.  Hong Kong’s salary tax rates follow a progressive tax rate system with five marginal tax rates of 2%, 6%, 10%, 14% and 17%.  No tax is paid by firms or individuals on foreign-sourced income of any kind, and there is no estate duty tax on non-Hong Kong assets. Tax returns are short and easy to complete. Basically, only company profits, salaries and property rental income are taxable. Hong Kong does not tax dividends or bank interest. There is no capital gains tax, VAT or sales tax. 

The basis of assessment
Liability to Salaries Tax is based on the actual income of the year of assessment, but an initial charge is made for a Provisional Salaries Tax first. That is, the taxpayer will pay an estimated tax first (based on expected income for that tax year) and then at the end of the tax year will receive a follow-up bill for any additional tax owed. Income tax is not deducted from regular employee pay-cheques, which has to be paid by the employees at the year-end.

Salaries tax computation
The Inland Revenue department has developed a simple Salaries Tax Computation Program to help one calculate an individual's own Salaries Tax liability. If assessment year is selected, and information on marital status, income, number of dependants are given, the web page provides the salaries tax liability.

For further information, please visit: http://www.ird.gov.hk 

Society
Hong Kong's population was about 7.41 million as in end of 2017.  The population density is 6,700 people per square kilometer. Hong Kong is a largely homogenous society, with about 92% of its people being Chinese (ethnically speaking, Han Chinese). There were about 584,383 non-Chinese people in Hong Kong, or about 8% of the population. Hong Kong's principal ethnic minorities are Filipino(184,081), Indonesian (153,299), White (58,209) and Indian (36,462). Chinese and English are the two official languages in Hong Kong. Ninety Five percent of the population speaks Cantonese, the southern Chinese dialect. English is spoken and understood by many people in Hong Kong and is used by the government and in courts. Increasingly, more Hong Kong people are also speaking Mandarin Chinese, the official language of Mainland China. 

Gateway to China 
Hong Kong is so far the most important entrepôt of the Chinese mainland. According to the HKSAR government statistics, in 2017, 58% of re-exports were of China origin and 54% were destined for the Chinese mainland. According to China's Customs statistics, Hong Kong is the third largest trading partner of the Chinese mainland after the US and Japan, accounting for 7% of its total trade in 2017.

Hong Kong is the largest source of overseas direct investment in the Chinese mainland. By the end of 2016, among all the overseas-funded projects approved in the Chinese Mainland, 44.7% were tied to Hong Kong interests. Cumulative utilised capital inflow from Hong Kong amounted to US$913.7 billion, accounting for 51.8% of the national total.
The Chinese mainland, on the other hand, is a leading investor in Hong Kong. According to the HKSAR Census and Statistics Department, the stock of Hong Kong's inward investment from the Chinese mainland amounted to US$418 billion at market value or 25.7% of the total at the end of 2016.

As of January 2018, there were 12 licensed banks and 7 representative offices, incorporated in the Chinese mainland, operating in Hong Kong. Big lenders including the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank have opened their branch operations in Hong Kong. Mainland commercial banks including Bank of Beijing, Bank of Dongguan, China Bohai Bank, China Guangfa Bank, Hua Xia Bank and Ping An Bank have representative offices in Hong Kong. 

Hong Kong is also a key offshore capital-raising centre for Chinese enterprises. As of December 2017, 1,051 mainland companies were listed in Hong Kong, comprising H-share, red-chip and private companies, with total market capitalisation of around US$2.9 trillion, or 66% of the market total. Since 1993, mainland companies have raised more than US$700 billion via stock offerings in Hong Kong.

Further information
Invest Hong Kong: www.investhk.gov.hk 
Hong Kong Trade Development Council: www.hktdc.com 
HKSAR Immigration Department: www.immd.gov.hk