The Reasons Why Hong Kong Became One Of Asia’s Best Destinations For Business

Hong Kong, known as Special Administrative Region (SAR) of China, locates at the head of Pearl River Delta.

In more than 20 years, since 1997, Hong Kong has kept moving forward with its prosperity and dynamism. Thanks to its high standards of living as well as the benefits of setting up Hong Kong companies, foreign investors are attracted as they have figured out more opportunities here.

Hong Kong’s benefits of easy incorporation

Almost all open-oriented jurisdictions facilitate foreigners to set up companies and encourage their investments. One superiority of Hong Kong is that overseas entrepreneurs are permitted to have complete ownership of their enterprises registered in its territory. There is no limit of holding percentage; therefore, they have the right to own their corporates either primarily or entirely.

People can incorporate effortlessly with up to 50 individuals in the structure of Private Limited Company. There is at least one person needed, who can be both director and shareholder, to set up a corporate in Hong Kong. It does not require directors to be local residents. Significantly, Hong Kong offers a moderate amount of share capital which can be 1 HKD minimum.

Company formation procedure is faster and simpler than you ever think.

Generally, an enterprise can be incorporated remotely through a professional service firm in Hong Kong. It takes only 1 day, or even an hour, to accomplish an E-registration with Hong Kong Company Registry (CR) for company structure with individuals. Hard copies of the incorporation documents are provided within a week later.

Besides, parent companies may be shareholders of subsidiaries. And certainly, this progress is longer, about 7 working days, as CR asks for a physical version of NNC1 signed by shareholders.

1. Attractive tax system

Numerous investors in search of Hong Kong “tax haven” are due to many reasons. One key point is that Hong Kong benefits investors with its low-tax regime.

Hong Kong adopts a two-tiered tax rate for corporate profits:

• 8.25 percent for assessable profits under 2 million HKD
• 16.5 percent for the exceeded part

This policy is appraised business-friendly as it is one of the most competitive rates in Asia, while some other countries’ corporate taxes range from 17 percent to 30 percent.

Moreover, corporations established in Hong Kong can take advantage of a tax exemption by Inland Revenue Department (IRD) for their gains from the outward of the country. This validation is called Offshore Claim, which is granted under a letter form with up-to-5-year activeness.
To summarize, Hong Kong maintains three fundamental types of tax:

• Corporate profits tax: Inward profits taxed at 8.25 to 16.5%. Outward profits not taxable.
• Salary tax: 2% to 17% of assessable incomes.
• Property tax: 15% on the net assessable value of the property.

Taxes not applicable in Hong Kong:

• Capital gains tax
• Dividend tax
• Hotel accommodation tax (HAT)
• Value-added tax (VAT), Goods & Services Tax (GST), or Sales tax
• Withholding tax

2. Free economy and trade

Heritage Foundation recognized Hong Kong’s advantage as the freest economy in the world this early 2019. Hong Kong SAR has retained its first rank for over 20 years, as a result of providing trade and monetary freedom with the integrity and transparency of its governments.

Hong Kong accepts corporates to run almost all types of business, definitely, it must be legal, such as trading, E-commerce, manufacturing, consulting services, and even financial asset holding. Hong-Kong-based enterprises are able to open bank accounts anywhere without restrictions from Hong Kong governments.

Furthermore, there is no chargeable tax for goods imported to Hong Kong, excluding motor vehicles, liquors, tobacco, hydrocarbon oil, and methyl alcohol.

Considered as a free port, Hong Kong exempts tax, and excise duty on total exports. You need to apply for licenses of some goods for shipment from and to Hong Kong; however, the licensing process is uncomplicated.

Therefore, it can be seen that money transfer and currency exchange are admissible for any type. For these reasons, most people state Hong Kong as the world’s fourth-easiest country to do business in the 2019 report by World Bank. Those advantages boost Hong Kong up to one of the first choices for business start-ups and expansions.

3. Straightforward access to Mainland China

Lying on the Southeast coast of China, Hong Kong fascinates investors with its vitally strategic location. People are possible to travel to China’s cities within a single day. Hong Kong plays a significant role as a preferential gateway to China markets based on the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).

Hong Kong advances business enlargement to not only Mainland China, but also Asian countries. Free Trade Agreement (FTA) was signed between Hong Kong SAR and ASEAN and has been effectual since 2017, which is an essential tool to develop their connections in terms of business trading, investments, intellectual property, dispute settlement, and economic and technical co-operations. Hong Kong is moving forward to associate with its other partner markets to consolidate its status.

4. World-class infrastructure

Hong Kong is not only one of the largest commercial centers, but also the heart of Asia. With well-developed and interconnected transportation, it takes only from 5 to 8 hours to fly to any country in this area. Hong Kong International Airport is recorded in the top ten list of the busiest airports globally in the first quarter of 2019. The transport network is among the most efficient ones with railways, trams, ferries, double-decker, and minibusses.

Furthermore, this jurisdiction owns an outstanding shipping hub and telecommunications. The ideally natural conditions of Victoria Harbour enhance its abilities to handle different kinds of vessels, making it one of the most active ports. Another key factor of Hong Kong’s evolution is the hotspot and broadband speed which is one of the highest worldwide. Hong Kong is expected to be among the earliest territories that experience 5G technology in 2020.

5. Productive workforce

There is huge manpower that is highly-trained, flexible, and energetic in Hong Kong. Hong Kong residents have an ability to adapt to international business as English is their second official language alongside Chinese. In addition, immigrants from the West and other Asia countries bring Hong Kong a variety of languages such as French, Japanese, Filipino, etc.

6. Quality of life

Though Hong Kong is assorted among the most expensive countries to live in, either entrepreneurs or immigrants are fascinated by its benefits from life qualities. There are various public means of transportation that are high-qualified but cheap and reliable. Hong Kong has been perceived as a livable country with the efficient services of banking, public, entertainment. Besides, the diversity of foods and consumer goods gives people a vast option for their daily lives. Moreover, foreigners choose Hong Kong to re-locate undoubtedly due to its excellently world-ranked education system.

Necessarily, Hong Kong approved about 170 nationalities to visit Hong Kong without a visa from 7 to 180 days. To attract skillful foreign talents and professionals, Hong Kong offers work visa and student visa for a period under 2 years. There are many kinds of visa suitable for particular subjects including investment, dependant, training, etc. to raise abroad attention to Hong Kong market.

To summarize, Hong Kong has become one of the world’s influential international financial center. The country is famous for its combination of uncomplicated incorporation, reasonable taxes, open-oriented and accessible markets, and a developed living environment. Last but not least, the workforce productivity and excellent infrastructure have strengthened the reputable status of Hong Kong. With the benefits for Hong Kong company formation, investors make it their preference for business incorporation and expansion.