Jurisdictions like Hong Kong enable companies to swiftly enter the international marketplace. Moreover, they allow companies to gain the most benefit from tax-friendly jurisdictions.
Regarded as one world’s best cities to establish and run a business, Hong Kong scores high on the key metrics that matter to investors. This is evidenced by factors such as its strategic location, high-level infrastructure, stable economic and political environment, efficient workforce, and attractive tax regime. Furthermore, the Hong Kong dollar is now one of the world’s best-performing currencies.
In findings published by the World Economic Forum’s Global Competitiveness Report 2019, Hong Kong ranks number one as the world’s best financial system. In addition to this report, Baker Mckenzie & Oxford Economics’ Global Transactions Forecast 2019 ranks Hong Kong as the number one location for IPO and M&A activity in the Asia-Pacific.
Hong Kong has also been recently ranked as Asia’s best global financial center and among the top three global investment hubs for foreign direct investment inflows in Asia. This is based on research conducted by the Global Financial Centres Index 25 2019 and the United Nations Trade and Development (UNCAD): World Investment Report 2020 respectively.
Outlined below are some of the major advantages of opening a company in Hong Kong. They showcase why you should look towards Hong Kong when growing your business overseas.
Ease of conducting business
Renowned as one of the world’s easiest places to set up a business, it’s possible to open a company in Hong Kong in approximately two weeks. Taking the procedure step by step, individuals and businesses should select a suitable entity type, choose a company name, decide on the company structure, and make an application with the Hong Kong Companies Registrar (CR).
Hong Kong possesses outstanding infrastructure facilities, as well as business premises that are readily available and easy to travel to.
The region also has strict regulations in place that concern the protection of intellectual property. This is highlighted by the many dispute resolution channels that businesses have at their disposal.
Additionally, Hong Kong’s simple and business-friendly tax system is seen as one of the key drawcards to the city. With resources in place to quickly apply for a relevant work visa, foreigners wishing to establish a company in Hong Kong can easily relocate.
The World Bank’s Doing Business 2020 Report lists Hong Kong as the third-ranked global location for ease of doing business. And in findings published by the World Economic Forum’s Global Competitiveness Report 2019, Hong Kong ranks among the top three locations for global competitiveness.
Strategically located at the heart of Asia, Hong Kong exists alongside many of the region’s most advanced business markets, including China, Singapore, and South Korea.
Hong Kong International Airport is one of the world’s busiest international airports and a hub for many international airlines. It is also frequently ranked as the ‘best airport in the world’ and often receives many international awards and accolades. Furthermore, a five-eight-hour flight will enable you to reach most Asia-Pacific markets.
With its location on the southeast coast of Mainland China, Hong Kong is ideally situated for any businesses looking to tap into the mainland Chinese market. Travel from Hong Kong to major Chinese cities like Shanghai and Beijing can be facilitated in less than a day, and cross-boundary ferries provide swift transport to and from six mainland ports.
To meet the growing demands of global businesses, Hong Kong has taken many steps to continually upgrade its infrastructure. This is evidenced by the city having the world’s best international airport, the ‘Best Convention and Exhibition Centre in Asia Pacific’, and some of the busiest ports in the world. In addition, local transportation services are efficient, cost-effective, and connect to all major centers.
As the home to world-class business parks like the Hong Kong Science and Technology Parks and Cyberport, Hong Kong provides integrated infrastructure in one centralized region. This not only reduces per-business expenses but also helps investors and entrepreneurs to operate in a setting that is both conducive and environmentally friendly.
With some of the most advanced telecommunications infrastructure in the world, Hong Kong is home to a number of competitive mobile and internet providers. Broadband coverage is also available to nearly all commercial and residential buildings.
In data released by the Global Financial Centres Index 25 2019, Hong Kong is the number one global location for infrastructure competitiveness rankings. IMD: World Digital Competitiveness Ranking 2019 also lists Hong Kong as Asia’s number two market, concerning the world’s digital competitiveness rankings.
Favorable tax regime
Hong Kong is renowned for having one the lowest tax jurisdictions in the world. This is yet another reason it is such an attractive destination for expanding businesses from across the globe.
Personal income tax, which is known locally as salary tax, starts at 2% and rises up to 17% for income beyond HKD 200,000. Conversely, corporate tax is set at 16.5% of assessable profits for corporations and 15% for unincorporated businesses.
There are two options for Profit Tax Rates in Hong Kong. The first is the Single-Tier Corporate Tax System, where corporations are taxed at 16.5% on assessable profits and unincorporated businesses are taxed at 15%. The second option is the Two-Tier Profits Tax Regime, which applies to both corporations and unincorporated businesses by lowering the tax rate for the first $2 million of assessable profits.
It is important to note that there is no capital gains tax in Hong Kong. In addition, there is no withholding tax on dividends and interest or collection of social security benefits, nor sales tax on VAT.
The World Bank’s Doing Business 2019 Report ranks Hong Kong as number one among the world’s lowest tax jurisdictions. And in PWC & The World Bank Group: Paying Taxes 2019 Report, Hong Kong was named number one in the world’s most business-friendly tax systems.
Business assistance & support
To help companies improve in each aspect of their business, a host of programs have been established by the Hong Kong government and the private sector. These include business support programs and financial incentives that have been developed to foster the growth of SMEs.
The Hong Kong Productivity Council promotes higher productivity and the use of more efficient methods throughout Hong Kong’s business sectors. Its goal is to deliver social, economic, and environmental initiatives that reaffirm Hong Kong’s status as the international innovation and technology hub.
The Support and Consultation Centre for SMEs serves as an information and advisory platform for SMEs. It also acts as a resource for companies looking to secure financial assistance through applicable government funding schemes.
Finally, organizations such as the Hong Kong Trade Development Council help global companies do business across greater Asia. This council also assists Hong Kong enterprises to find new markets.
The world’s freest economy
Hong Kong is famed for having one of the world’s most dynamic economies; an economy that is driven by principles of free trade, free enterprise, and free market to all investors. To illustrate this fact, over the past 20 years the region’s economy has contributed to the GDP growth at an average annual rate of 5%. The Index of Economic Freedom, 2019 Report also ranked Hong Kong as the number one market in a list of the world’s freest economies.
Adding to Hong Kong’s appeal, there are no foreign exchange controls, tariff-free exports to Mainland China, no foreign ownership restrictions, and no restrictions on inward and outward investments. This, coupled with factors like sizeable foreign exchange reserves, strict anti-corruption regimens, and strong legal and banking systems, make Hong Kong the perfect destination for growing businesses.
Businesses that incorporate in Hong Kong can also benefit by gaining preferential access to the Mainland China market from the Closer Economic Partnership Arrangement (CEPA). This is a free trade agreement that exists between the Government of the Hong Kong Special Administrative Region and the Central People’s Government.
Liberal immigration policy
As a city that follows a liberal immigration policy, nationals from around 170 countries and territories are entitled to visa-free visits to Hong Kong for up to 180 days. Additionally, short-term visitors are allowed to conduct business negotiations and sign contracts by entering Hong Kong on an entry permit or visitor visa.
In recent years, Hong Kong officials have also introduced appropriate work visa provisions. These are designed to assist investors and entrepreneurs relocating to Hong Kong, or those who wish to hire foreign professionals to work for their company. There are also a number of policies that help to facilitate the employment of Mainland talent and foreign professionals.
Finally, dependent visas can be issued and entitle the holder to undertake most forms of lawful employment in Hong Kong.
Hong Kong is home to a well-educated, highly trained, and skilled workforce. This workforce consists of a local talent pool of entrepreneurial and experienced professionals across all industry verticals. Moreover, these professionals are regarded as being knowledgeable and well versed in the business culture of mainland cities like Shanghai.
Employees in Hong Kong are renowned for being competitive and hard working — with an innate drive to constantly improve themselves. While English is the language of communication in business environments, the majority of Hong Kong’s workforce are proficient in both Mandarin and Cantonese.
Legal & political stability
As an attractive destination to set up and operate a business, Hong Kong is noted for its sound legal environment; an environment of transparency where all people are considered equal in the eyes of the law.
The city’s legal system is separate from Mainland China, with English common law prevails. There are also distinct regulations and rules governing employment, taxation, trade, and commerce.
Hong Kong law is committed to protecting Intellectual Property Rights, with the enforcement of stringent regulations for copyrights, patents, and trademarks. This is enforced by the Intellectual Property Department, which monitors Hong Kong’s IP regime and oversees all IP matters.
Hong Kong is defined as a Special Administrative Region of the People’s Republic of China. It is a unique region, in the sense that it retains autonomy over its economic, political, and judicial systems. Hence the phrase “One China, Two Systems”.
Due to its political stability, combined with its free-market principles and pro-business governance, Hong Kong has earned a reputation as one of the most corruption-free economies in the world. This is evidenced by Transparency International’s 2019 report that ranks Hong Kong as number two (in Asia), concerning the corruption perceptions index.
Quality of life
Hong Kong is regarded as having one of the lowest crime rates in the world and is consequently cited as a safe place in which to live.
Like a modern, cosmopolitan, and westernized city, Hong Kong is home to people from all walks of life and many diverse cultures. Although residential rentals are considered expensive, they are nonetheless in line with other major international cities like New York and London.
The city offers world-class private and public health services, with a health care environment that is deemed safe, clean, and affordable. Additionally, Hong Kong’s public transportation system is well-connected, reliable, and affordable, with a large network of buses, trains, and ferries at your disposal.
Hong Kong is one of the world’s most attractive destinations for investors, entrepreneurs, and expanding businesses; a destination with a prosperous and dynamic local market that encourages foreign investment.
With open-oriented jurisdictions, favorable tax incentives, and the heart of Asia at your doorstep, it’s possible to open a company in Hong Kong in less than two weeks. Consequently, many investors and business owners are electing to incorporate their companies in Hong Kong.
If you’re looking to take advantage of the Hong Kong market, you’ll need a multi-currency account to make it happen. Open a business account with Statrys today and transform your expansion into Hong Kong and beyond.