Why Hong Kong?
Hong Kong is one of the few countries in the world that tax on a territorial basis. Many countries levy tax on a different basis and they tax the world-wide profits of a
business, including profits derived from an offshore source. Hong Kong profits tax is ONLY charged on profits derived from a trade, profession or business carried on in Hong Kong. Consequently, this means that a company which carries on a business in Hong Kong, but derives profits from another place, is not required to pay tax in Hong
Kong on those profits. Hong Kong sourced income is currently subject to a rate of taxation of 16.5%. There is no tax in Hong Kong on capital gains, dividends and interest earned.
The principle of Hong Kong profits tax is that it is a tax on profits that has its source in Hong Kong rather than a tax based on residence. Income sourced elsewhere, even remitted to Hong Kong, is not subject to Hong Kong profits tax at all. Consequently, if a Hong Kong company’s trading or business activities are based outside Hong Kong no taxation will be levied.
Hong Kong has arrangement with a number of jurisdictions for double taxation relief of shipping or airline income. It has also comprehensive double tax agreements with Austria, Belgium, Brunei, Czech Republic, France, Hungary, Indonesia, Ireland, Japan, Liechtenstein, Luxembourg, Netherlands, New Zealand, Portugal, Spain, Thailand, United Kingdon and Vietnam respectively to relieve taxation on income, for instance, dividends, interest and royalties. The Hong Kong Inland Revenue Department allows a deduction for foreign tax paid on a turnover basis in respect of income which is also subject to tax in Hong Kong. Therefore, businesses operating in Hong Kong do not generally have problems with double taxation of income.
Approximately 7 million.
Hong Kong elects its own legislature and maintains its own court structure.
The Hong Kong Dollar, which is officially pegged to the US Dollar. (approx: 1US$ = HK$7.74 to HK$7.68).
Hong Kong has one of the largest representations of international banks in the world: 71 of the world’s 100 largest banks have a presence there. Hong Kong is the world’s 9th largest international banking centre in terms of the volume of external transactions, and the second largest in Asia after Japan. The banking sector plays a vital role in establishing Hong Kong as a major loan syndication centre in the region. The banking sector, being the major participant of the Hong Kong foreign exchange market, contributes to Hong Hong’s status as the world’s 7th largest foreign exchange centre.
The banking system in Hong Kong is characterized by its 3-tier system, which is formed by 3 types of banking institutions, namely licensed banks, restricted licensed banks and deposit-taking companies, which are authorized to take deposits from the general public. The 3-tier of deposit-taking institutions operates under different restrictions. Only licensed banks and restricted licensed banks can be called banks.
Hong Kong’s banking sector is highly open, being the second largest international banking centre in Asia after Japan in terms of the volume of external transactions.
Common Law based on English Common Law.