On July 1st, 1997, Hong Kong returned under the People’s Republic of China rule after being a British administered territory since 1841. It is now a Special Administrative Region under the authority of the Chinese Government. The agreements between UK and China provide that the current Hong Kong legal system will remain in force until 2047.
The legal currency is the Hong Kong dollar (HK $). Hong Kong is one of the few countries in the world whose currency is issued by two of the largest banks listed on the Stock Exchange: the Hong Kong & Shanghai Banking Corporation and the Standard Chartered Bank.
Incorporation and registration of companies
A private company is incorporated by registering its memorandum and the articles of association.
The Registry provides a registration certificate, proving the company’s legal personality.
Shareholders and directors of an Hong Kong-based company may not be citizens or residents of Hong Kong, and may also be legal persons. However, the secretary of the company must be a resident or, in case of a corporation, he or she must have a registered office in Hong Kong.
The registration process of a company at the Company Registry of Hong Kong is fast (about seven days). The new company may also be activated by restoring an already registered but inactive company (shelf company): this procedure can take a few days.
Hong Kong tax authorities (Inland Revenue Department) encourage business thanks to an extremely low taxation. Company tax rate is 16.50%.
In addition, only income from activities actually carried out in the territory of Hong Kong is subject to taxation; if income comes from deals concluded outside the territory of Hong Kong, its profits are tax free. The Inland Revenue Department provides rulings about the possibility of classifying as offshore a particular source of income.
Other tax advantages are the absence of VAT, of capital gains and dividends taxes, as well as taxes on interests earned on deposits that companies maintain on Hong Kong bank accounts.