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2022
21 Jul
Hong Kong after 2047 - message from President Xi

The year 2022 marks an important milestone for Hong Kong as we celebrate the 25th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR). Chinese President Xi Jinping, in a keynote speech at the inauguration ceremony of the sixth government of HKSAR, laid out the future for Hong Kong. President Xi spelled out Beijing's commitment to the unique governing formula that allows Hong Kong to maintain its own capitalist system. "One country, two systems is a good system, there is no reason to change it, and it must be adhered to for a long time!" he declared. President Xi's assurances enhanced the confidence of the Hong Kong society and international community in the stability and long-term adherence to the “one country, two systems". This principle would continue to support the city as one of the world's premier international financial centres, and continue to be central to Hong Kong's future and to the continued opening up of China's capital market.

 

With the assurance from President Xi, there is strong belief that the following existing advantages of Hong Kong would continue to exist even beyond 2047:

 

  1. Simple taxation system
    • No estate duty
    • No capital gains tax
    • No tax on dividends
    • No sales tax or VAT
    • No interest tax
    • No annual net worth taxes and no accumulated earnings taxes on companies which retain earnings rather than distribute them
  1. Low tax rates

Only three direct taxes are imposed:

  • Profits tax

Hong Kong’s tax rates are amongst the lowest in the region (e.g. compared with 25% in China and 17% in Singapore).

 

 

Corporations

Unincorporated Businesses

 

2018/19 onwards

8.25% on the first HK$2M; and
16.5% on the excess of the first HK$2M

7.5% on the first HK$2M; and
15% on the excess of the first HK$2M

  • Salaries tax

Charged at progressive rates from 2% to 17% or standard rate of 15% whichever is lower, which is also among the lowest in the region (e.g. 22% in Singapore).

  • Property tax: 15%

 

  1. Full ownership of business

A foreigner is eligible for 100% ownership rights of a company incorporated and based in Hong Kong and the law does not impose local residency requirements. This allows a foreigner to be the sole director and shareholder. A physical address is unnecessary to operate within the jurisdiction, means you can run the business from anywhere in the world. 

 

  1. No foreign exchange control

Hong Kong is free from any foreign exchange controls, there are no restrictions on capital flows in and out of the city.

 

  1. Gateway to China

China is now the world's second largest economy and international investment in China is still rising. Hong Kong’s proximity to, and close and unique relationship with, mainland China, has made it the dominant gateway to mainland China for business. It is the best place to capture China opportunities.

 

  1. Connectivity

Hong Kong’s long‑standing and important role as a “bridge” and “window” linking mainland China with rest of the world. Situated at the heart of the Asia Pacific region, Hong Kong is able to both capitalise on the strengths of the mainland China and engage with the rest of the world. Its prime location has made it an international financial, shipping and trade centre and an aviation hub, linking up mainland China and the global marketplace. The city plays a significant role in China’s dealings with the outside world in many spheres, including trade, logistics and transportation and capital flow.

 

  1. Largest global offshore renminbi business hub

As the world's largest offshore RMB business hub, Hong Kong's banks handle about 75% of global offshore RMB payments. China's economy will continue to expand and develop, as such, the demand for offshore using, holding and investing of RMB by mainland or foreign enterprises, financial or other institutions is expected to substantially increase. This further strengthens the status of Hong Kong as an important offshore RMB and international financial centre.

 

  1. Multicultural talent pool

Hong Kong is home to a diverse talent pool, equipped with the skills and knowledge to drive business in Hong Kong and beyond. The workforce in Hong Kong is among the most qualified and productive in Asia. Highly skilled and educated workforce represents one of the strongest advantages the city has for foreign investments.

 

With liberal immigration policies, a vibrant cosmopolitan lifestyle and abundant opportunities for career advancement, Hong Kong offers attractive prospects for professionals and experts from around the world. Various talent admission schemes are in place to attract talent and drive Hong Kong’s development as a high value-added and diversified economy.

 

For more information, please contact Ms. Amie Cheung at amie.cheung@lccpa.com.hk