Hong Kong is the natural gateway to China for various reasons: its geographic location, its legal system, basic circumstances such as speaking the same language, sharing the same time zone, and its recognition as an international financial capital, among others.
Below are some of the advantages of establishing a company in Hong Kong.
1. World’s Freest Economy and International Financial Capital
Hong Kong has maintained its status as the world’s freest economy, a distinction it held for 21 consecutive years. This facilitates financial operations and transactions such as sending and receiving capital, transferring and collecting letters of credit, investing, etc. Managing foreign currencies and capital in Hong Kong is remarkably simple.
a. The inflow and outflow of capital is completely free;
b. It is one of the few places in the world outside Mainland China where you can open a Renminbi (Yuan) account;
c. There is no minimum capital requirement to form a company, which is extremely beneficial when establishing a Limited Liability Company;
d. 63.9% of Foreign Direct Investment (hereinafter “FDI”) into China enters through Hong Kong, and 56.5% of China’s outward FDI is received in Hong Kong;
e. 25% of China’s imports and 40% of its exports pass through Hong Kong ports;
2. Tax System
Hong Kong’s tax system is recognized for its high efficiency, low tax rates, and remarkable simplicity. This is why many companies choose to incorporate in Hong Kong.
a. Hong Kong boasts the lowest taxes in Asia and the third lowest in the world;
b. There are only 3 direct taxes in Hong Kong: (i) profits tax; (ii) salaries tax; and (iii) property tax;
c. Corporate profits tax is 8.25% for the first HK$2 million and 16.5% on the remaining profit amount, with the ability to deduct a significant range of expenses;
d. There is no sales tax, capital gains tax, or dividend tax, making it an attractive option for receiving corporate capital.
3. Hong Kong as a Base for SMEs
Hong Kong represents the ideal platform for small and medium-sized enterprises looking to internationalize, thanks to the benefits mentioned above as well as the following advantages:
It facilitates international sales, as operating from Hong Kong allows you to sell anywhere in the world;
A company incorporated in Hong Kong can issue invoices and shipping documentation for various trading operations;
Securing financing is more accessible in Hong Kong than in mainland China;
It is the center of numerous international trade fairs;
Major Chinese enterprises maintain a base in Hong Kong to invest in international markets;
Residents of China perceive it as a hub for trends, fashion, and lifestyle.
4. Hong Kong as a Business Hub for China and Southeast Asia
Hong Kong is an ideal business hub and customer service center for China and Southeast Asia. It provides an optimal international business environment. A large number of multinational corporations establish their sales and purchasing offices in the region, while many companies from China, Taiwan, Thailand, Vietnam, and India set up their headquarters or sales offices in Hong Kong.
5. Hong Kong as a Science and Technology Platform
Hong Kong generates the technology and innovation driving the next growth stages of mainland China and Southeast Asia.
Additionally, it features two business tech accelerator hubs:
1. Hong Kong Science and Technology Park; and
2. Cyberport.
If you have any comments or require information on how to set up a company in Hong Kong, click here.
La Nao Consulting
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Alejandro Milán
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