With a low tax regime and simple territorial taxation system, Hong Kong is an excellent location for structuring holding, financing, intellectual property and trading structures. According to “2015 Paying Taxes”, a study conducted by the World Bank which investigates and compares tax regimes across 189 economies worldwide, Hong Kong has one of the most tax-friendly economies in the world.
Hong Kong is also an ideal gateway for setting up Chinese inbound and outbound investments structures. Furthermore, Hong Kong is also a key offshore RMB center outside the People’s Republic of China with a regulated stock market.
Why choose Hong Kong?
- Simple, predictable and low tax system, with only three direct taxes: profits tax capped at 16.5%; salaries tax at a maximum of 15% and property tax at 15%
- No tax on dividends;
- No capital gains tax;
- No estate tax;
- No VAT or GST;
- No withholding tax, except for royalties under certain specified circumstances/conditions;
- Profits tax exemption for specified transactions conducted by offshore funds including offshore private equity funds and their special purpose vehicles;
- No currency exchange controls or restrictions;
- Rapidly expanding double tax treaty network currently numbering 32 countries;
- Currency pegged to the US dollar;
- Free Port Status;
- Easy customs procedures with duties levied on very few products;
- World-class business infrastructure;
- International accounting standards;
- Well established legal system based on English Common Law which provides confidence to investors; and
- Gateway to Mainland China; apart from the location advantage, Hong Kong also has a favorable double tax agreement with Mainland China and Closer Economic Partnership Arrangement (“CEPA”).
In the 2015/16 Budget, the Hong Kong SAR Government has proposed to introduce tax initiatives to provide a more commercial friendly environment for operating a corporate treasury center and an intellectual property hub in Hong Kong. Given the changing international tax landscape under the OECD’s Base Erosion and Profit Shifting (“BEPS”) project, setting up regional offices/headquarters in Hong Kong with sufficient substance could put companies in a better position to manage their tax risks.
Languages spoken: Cantonese, Mandarin and English.
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