With population of seven million people, Hong Kong is one of the most densely populated areas in the world. By running a different economic system from those Mainland China, Special Administrative Region of Hong Kong has wide range of freedom from its territory’s mini-constitution. From business freedom, trade freedom, investment freedom, fiscal freedom, labor freedom, property rights, monetary freedom, to freedom from corruption. The implementation of these freedom factors has been placed Hong Kong at the top spot of Index of Economic Freedom (this index is annual survey conducted by the Heritage Foundation and Wall Street Journal) for 16 consecutive years, up to year 2010.

Although there is an implementation of non-tariff barriers on some parts of its trade system, Hong Kong’s weighted average tariff rate was 0 percent in 2008. For information on Hong Kong’s tariff, Hong Kong Trade and Industry Department has provided online tariff enquiry.

Hong Kong’s tax rate is one of the lowest in the world. For individual tax the rate are between 2 percent and 17 percent on income adjusted for deductions and allowances, or at a flat 15 percent of gross income, depending on which liability is lower.

Hong Kong’s corporate tax rate is 16.5%. Profit generated by offshore businesses, known as “offshore profits”, is tax exempt even when remitted back to Hong Kong. However, tax exemption on offshore income is subject to approval by Hong Kong’s tax authorities. To claim for tax exemption on offshore profits, the company need to submit some documentation and related ‘proof’ to the tax authorities. Hence, additional tax fees may be involved for this work. For more information about Hong Kong’s tax, please refer to Hong Kong Inland Revenue Department.

On business side, the freedom of starting, running and even to close a business in Hong Kong are regulated by the Hong Kong Company Registrar under the Hong Kong Companies Act. Companies registered in Hong Kong, can appoint a local or foreigner individual as a shareholder or a director, and a corporate director is permitted. Hence, a Hong Kong company can be set up with director or shareholder a British Virgin Islands (BVI) offshore company or a Panama foundation. Public access to information on the company such as Register (directors and shareholders) can be obtained from Hong Kong Company Registry. 

Starting a business in Hong Kong takes approximately 7 working days and obtaining necessary licenses up to 6 months in some instances. This process speed up once the Hong Kong’s government set up electronic system for incorporation and registration of business (by early 2011). Although this one stop incorporation process will be made accessible online worldwide, government will also apply some adjustments to the process as the safeguards, such as a mandatory registration and even proposal on individual company director requirement.

This entry was posted on Friday, April 30th, 2010 at 6:06 pm and is filed under Offshore Business, Offshore Company Administration, Offshore Incorporation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.