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General information about Hong Kong

Updated: Dec 19, 2023

Hong Kong offers several legal and tax advantages for international businesses, making it an attractive destination for companies looking to establish a presence in Asia.

Some of these advantages include:

Legal Advantages:

Rule of Law: Hong Kong boasts a robust and independent legal system based on English common law principles. The judiciary is known for its impartiality and fairness, ensuring that contracts and legal agreements are upheld and disputes are resolved fairly.

Intellectual Property Protection: Hong Kong has stringent intellectual property protection laws, offering strong safeguards for intellectual assets, including trademarks, patents, and copyrights. This provides a secure environment for businesses with valuable intellectual property.

Arbitration and Mediation: Hong Kong is a recognized hub for international dispute resolution. It has world-class arbitration and mediation facilities and is home to the Hong Kong International Arbitration Centre (HKIAC), which provides efficient and cost-effective dispute resolution services.

Business-Friendly Regulations: Hong Kong has a straightforward and efficient regulatory framework with minimal bureaucracy. It is consistently ranked high in ease of doing business indices, making it easy for companies to set up and operate.

No Foreign Exchange Controls: Hong Kong does not impose foreign exchange controls, allowing businesses to freely convert and transfer currencies in and out of the territory without restrictions.

Tax Advantages:

Low Corporate Tax Rate: Hong Kong maintains a simple and competitive tax system. The maximum corporate tax rate is 16.5%. Profits earned outside of Hong Kong are not subject to corporate taxation, making it particularly advantageous for businesses with international operations.

No Value-Added Tax (VAT) or Goods and Services Tax (GST): Unlike many other jurisdictions, Hong Kong does not impose a VAT or GST, which can significantly reduce the tax burden on companies and consumers.

Double Taxation Agreements (DTAs): Hong Kong has a network of DTAs with various countries, ensuring that businesses can avoid double taxation and benefit from reduced withholding tax rates on dividends, interest, and royalties.

No Capital Gains Tax: Hong Kong does not levy capital gains tax, whether on the sale of real estate or other assets. This provides opportunities for businesses to generate tax-efficient capital gains.

Territorial Taxation System: Hong Kong operates on a territorial taxation system. This means that only income generated within the territory is subject to taxation, while foreign-sourced income remains tax-free. This makes it an ideal location for international businesses with a global reach.

Tax Incentives: Hong Kong offers various tax incentives and deductions for specific industries, such as shipping and aircraft leasing. These incentives can further reduce the tax liability for eligible businesses.

No Estate Tax or Inheritance Tax: Hong Kong does not impose estate tax or inheritance tax, making it an attractive destination for succession planning and wealth preservation.

No Capital Duty: Hong Kong does not impose capital duty on the issuance of shares or transfer of shares, making it cost-effective for companies to raise capital and engage in corporate transactions.

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