Foreigners who set up Hong Kong companies can enjoy various preferential policies, mainly as follows:
-Tax incentives:
-Low tax rate: Hong Kong implements a simple and low tax system, with a corporate income tax rate of 16.5%. However, for eligible small profit enterprises, the profit tax rate for the first 2 million Hong Kong dollars is 8.25%, and the profit tax rate for the portion exceeding 2 million Hong Kong dollars is 16.5%. This has strong competitiveness in the Asian region.
-Tax relief: Hong Kong has corresponding tax relief policies every year, which can reduce the tax burden of enterprises.
-Avoiding double taxation: Hong Kong has signed the “Arrangement between the Mainland and the Hong Kong Special Administrative Region on Avoiding Double Taxation and Preventing Tax Evasion on Income” with the mainland. Overseas companies can open accounts in Hong Kong and fully utilize the double taxation agreements between Hong Kong and other countries and regions to avoid double taxation and minimize tax burden.
-Offshore exemption: Companies established in Hong Kong can apply for overseas gains exemption without paying profits tax if they can prove that their profits come from outside Hong Kong.
-Trade facilitation:
-Free Port Policy: Hong Kong is a free port that exempts all exported goods from tariffs and consumption taxes (except for some goods such as automobiles, alcohol, tobacco, hydrocarbon oil, and methanol), and most imported goods are also exempt from taxes. And the process of applying for a license for goods is not complicated. At the same time, any type of remittance and currency exchange is accepted, which provides great convenience for international trade. In the World Bank’s 2019 report, Hong Kong was listed as the fourth easiest place to do business in the world.
-International Market: Hong Kong is an important gateway connecting mainland China and the global market, serving as an international hub for business, finance, shipping, and trade.
-Advantages of financial services:
-Free flow of funds: As an international financial center, Hong Kong has numerous banks and financial institutions that provide various financial services. Bank accounts opened in Hong Kong are not subject to foreign exchange controls and can freely receive and exchange foreign currency funds, facilitating the receipt of foreign exchange payments and avoiding exchange rate losses. Meanwhile, funds from Hong Kong companies can be freely transferred to mainland companies to support their operations and development.
-Financing convenience: Hong Kong’s financial market is developed, and it is relatively convenient to conduct capital operations (such as financing, listing, etc.) after registering a Hong Kong company, which helps accelerate the development of enterprises and achieve greater commercial value.
-Other discounts:
-Easy company registration: Hong Kong’s company registration regulations are relatively simple and flexible, and the registration process is fast and efficient. Foreigners are allowed to own the company wholly. There is no restriction on the proportion of shares held, and directors are not required to be local residents, which provides greater freedom for international investors and entrepreneurs.
-Policy support: The Hong Kong SAR government will introduce some policies to attract companies to develop in Hong Kong, such as the introduction of a company relocation mechanism in the 2023 Policy Address, which will facilitate the registration of companies from other regions, especially those with the Asia Pacific region as their core business, to relocate their registration to Hong Kong; It has also introduced measures such as allowing foreign personnel registered in Hong Kong to apply for a “one sign multi line” visa for 2 years or more in Hong Kong to the mainland, and speeding up the processing to facilitate foreign company personnel to come to Hong Kong and negotiate business in the north.
