Today, many investors and entrepreneurs are choosing to set up their businesses overseas – especially in jurisdictions like Hong Kong. The rationale behind this trend is to primarily facilitate entry into an international market and to benefit from tax friendly jurisdictions. Hong Kong is considered as one of the best cities to establish and run a business, as it scores high on factors that matter to businesses. Strategic location, productive work-force, stable economic and political environment, attractive tax regime, pro-business environment, world-class infrastructure, an effective legal system are some of the factors that continue to contribute to its success.
Detailed below are some of the key benefits of setting up a business in Hong Kong.
International Financial Centre
Strategic Location
Hong Kong is strategically located at the heart of the Asian continent. A five-eight hour flight will connect you to most markets in the Asia-Pacific region. If you need to tap into the Mainland Chinese market you will find that Hong Kong is perfectly situated on the southeast coast of Mainland China, flanking the mouth of the Pearl River Delta. This facilitates travel to and from Hong Kong to Beijing, Shanghai and other major Chinese cities within a single day.
Ease of doing business
Hong Kong is renowned for being an easy place to set up a business. You can open your company in about two week’s time in Hong Kong. It is noted for its excellent infrastructure facilities and business premises are easily available. Intellectual Property protection is taken seriously, with strict regulations in place. There are various dispute resolution channels that businesses can avail of. The simple and business friendly tax system draws foreign investors to the city. Foreigners who wish to setup business in Hong Kong can easily relocate by applying for an appropriate work visa.
Attractive Tax Regime
Taxes are the main concern for any entrepreneur who intends to set up a business in a given jurisdiction. In this regard, Hong Kong boasts of being one of the lowest tax jurisdictions in the world. Personal income tax, or salary tax as it is known, starts at 2% and goes up to 17%. Under the two-tiered profits tax rates regime, the profits tax rate for the first $2 million of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations and 7.5% (half of the standard rate) for unincorporated businesses (mostly partnerships and sole proprietorships). Assessable profits above $2 million will continue to be subject to the rate of 16.5% for corporations and standard rate of 15% for unincorporated businesses. There is no capital gains tax, nor any withholding tax on dividends and interest or collection of social security benefits. Furthermore, there is no sales tax or VAT in Hong Kong.
World’s freest economy
Hong Kong is one of the world’s most dynamic economies driven by the principles of free enterprise, free trade and free markets open to all. The robust economy over the past two decades has contributed to the GDP growth at an average annual rate of 5% in real terms. There are no restrictions on inward and outward investments, no foreign exchange controls and no foreign ownership restrictions. Factors such as a sound banking system, almost no public debt, a strong legal system, sizable foreign exchange reserves and a strict anti-corruption regimen serve to strengthen Hong Kong’s position as a business friendly region.
Liberal Immigration Policy
Hong Kong follows a liberal immigration policy. Nationals of about 170 countries and territories are allowed visa-free visits to Hong Kong for periods ranging from 7 to 180 days. Short-term visitors may conduct business negotiations and sign contracts by entering Hong Kong on a visitor visa or entry permit. The government has introduced appropriate work visa provisions, anticipating the needs of business entrepreneurs who may wish to relocate to Hong Kong to run their business or who may want to hire foreign professionals to work in their company. There are various policies and schemes for the employment of foreign professionals, employment of Mainland talents and professionals, those wishing to enter for investment etc. Dependent visas are issued and allows the holder to undertake almost any type of lawful employment in Hong Kong.
Sound Legal Environment
Noted for its transparency, law and order is central to Hong Kong’s success. All are considered equal before the law. Hong Kong’s legal system is separate from Mainland China’s, and English common law prevails. With the establishment of the International Arbitration Centre in 1985, Hong Kong has become a key centre for arbitration in Asia and arbitration is now a popular method of dispute resolution in Hong Kong. The law is committed to the protection of Intellectual Property Rights (IPR) and enforces stringent regulations for patents, copyrights, trademarks and registered designs. The specially set up Intellectual Property Department monitors the IP regime in Hong Kong and is reputed to have extensive experience in handling IP matters. There are distinct rules and regulations concerning trade and commerce, employment, taxation and other business-related areas, making it an attractive place to setup and operate a business.
Clean Governance
Hong Kong is a Special Administrative Region of the People’s Republic of China with a high degree of autonomy in all matters except foreign and defense affairs. According to the Sino-British Joint Declaration (1984) and the Basic Law, Hong Kong retains its political, economic, and judicial systems. This setup is often referred to as “One China, Two Systems”. Most businesses choose to set up operations in Hong Kong as it believed to be politically stable with a pro-business governance and free market principles. It is also cited as one of the most corruption-free economies in the world. Hong Kong has even set up an anti-corruption watch-dog – the Independent Commission Against Corruption (ICAC) – mandated to deal with both public and private sector corruption.
Productive Work Force
Hong Kong consists of a highly trained, well-educated and skilled work-force. The workforce consists of a local talent pool of experienced and entrepreneurial professionals who are known to be especially well versed with the business culture in the fast-growing Mainland cities. Employees are generally considered to be hard-working, competitive and are constantly seeking to improve themselves. Although English is the language of communication in business settings, bulk of the workforce is also conversant with Cantonese and Mandarin, owing to the country’s link to China.
Robust Infrastructure
Hong Kong has taken endless measures to continuously upgrade its infrastructure in order to meet the growing demands of businesses. It is said to have one of the Best Airports and Busiest Ports in the world. Transportation services are efficient and cheap connecting all major centres. Hong Kong is also the preferred Exhibition and Convention Centre for most businesses in the region. The Hong Kong Exhibition and Convention Centre has received several awards and accolades. It is often voted as the ‘Best Convention and Exhibition Centre in Asia Pacific’. Hong Kong is home to world-class industrial/business parks like Cyberport and the Hong Kong Science and Technology Parks. These parks provide integrated infrastructure in one region that help reduce the per-business expense, and also help companies operate in a highly conducive, environment friendly setting.
