Benefits of Doing International Business in Hong Kong | Company formation in Hong Kong

Benefits of Doing International Business in Hong Kong

Hong Kong is known to all of us. One of the world’s biggest economic areas, where a corporation is registered for trade purposes with most international investors. 80 percent of Hong Kong firms are incorporated for overseas trading, 18 percent are licensed to represent an offshore corporation or a business, according to research, while the remaining 2 percent consists of other forms of business. This population shows how supportive the legislature of the region is to trading firms. Most foreign investors prefer to establish their trading business in Hong Kong.

A range of factors must be considered when selecting where you can start or expand your business. These considerations include the affordability, demographics of consumers, cost of production, taxes, and civic engagement. To understand and forecast how the product or service is-in various countries, market analysis is important. The World Bank’s Doing Business says that in 2021, five countries are the best to launch their business in which Hong Kong ranks 3rd.

Many businessmen worldwide have selected Hong Kong as a place to start their business. Hong Kong has proved itself to be an outstanding choice in this respect because of its businessfriendly environment, lack of legal obstacles to start up a business, and low corporate cost. In this post, we will address the factors behind the success of Hong Kong and what benefits you will get by starting up a business here.

Why Hong Kong

Hong Kong is a vibrant city, acting as the ideal forum for business in mainland China and Asia. It is an affordable city with various benefits that will guarantee the success of companies.

Reasons Why One Should Start a Business in Hong Kong

#4

Hong Kong ranked 4th for ease of doing business which was conducted by The World Bank.

#2

Ranked 2nd for Global Competitiveness in a survey of 63 countries by The IMD World Competitiveness Center.

#11

Ranked 11th for technology readiness in a survey of 63 countries by The IMD World Competitiveness Center.

#16

Hong Kong ranked 16th for innovation in a survey of 127 countries by INSEAD.

#18

Ranked 18th for talent Competitiveness in a survey of 63 countries by The IMD World Competitiveness Center

#16

Hong Kong ranked 16th for rule of law

Where people want to Work across the Globe?

A Supportive Government

In the 2020-21 Budget, key initiatives announced include:

Supporting the Enterprise

• $10,000 cash payout to permanent residents aged 18 or over in Hong Kong

• The implementation of a low-interest concessionary loan with a 100 % guarantee for businesses that will be available for application for six months. Total $2 million loans with a maturity term of up to 3 years. Principle repayment freeze for the first six months

• Reducing benefit tax by 100 percent for the 2019-20 appraisal year, subject to a $20,000 cap

• Waive the 2020-21 business registration fees

• Waive registration fees for annual returns from the company for two years

Innovation and Technology

• $3 billion from Earmark to pursue Phase 2 of the Science Park Expansion Program

• Explore the formation of the third cluster of InnoHK research

• Increase the grant cap to $600,000 under the Technology Voucher Program and increase the government’s financing ratio to 75%

• Inject $345 million to enable the logistics sector to improve efficiency by introducing technologies to a pilot subsidy scheme

• Waive registration fees for annual returns from the company for two years

Trade

• $150 million in additional funding for the Hong Kong Trade Development Council to help Hong Kong businesses explore business opportunities

Tourism

• Further funds for the Hong Kong Tourism Council to raise external marketing after the outbreak by over $700 million

Cultural and Creative Industries

• 900 million additional dollars to the Art Development Matching Grants Scheme to promote cultural and arts sponsorship from all industries

Professional Services

• To improve Hong Kong’s, understand ledge of the definition of the rule of law and its application, earmark around $450 million to implement the Vision 2030 for Rule of Law project

Natural Talents

• Enhance the research and postdoctoral research program to include all technology firms undertaking research and development in Hong Kong

Key initiatives announced in the 2019 Policy Address include:

• Extend coverage to the new technology areas of the technology talent admission scheme

• Inject $500 million into the Fund for Social Innovation and Entrepreneurship

• Inject 1 billion dollars into the BUD Foundation scheme and increase the ceiling to 2 million dollars for companies within the mainland and free trade programs.

• Inject 1 billion dollars into the Funding Fund for Export and Industrial Organizations

• Tax concessions for boat owners and rental managers

• Improve the guarantee scheme for SME financing

Ease of Doing Business

• Hong Kong is famous for being a convenient place to start up a business. You should start a business in Hong Kong in around two weeks.

• It is known for its exceptional infrastructure services and is readily accessible for company premises.

• The protection of Intellectual Property is taken seriously, with stringent laws in effect. There are different channels of conflict settlement that corporations should take advantage of.

• The simple tax scheme, which is business-friendly, attracts international investors to the region.

• By applying for a suitable work visa, foreigners who plan to set up business in Hong Kong can easily relocate.

Innovation and Technology

• $3 billion from Earmark to pursue Phase 2 of the Science Park Expansion Program

• Explore the formation of the third cluster of InnoHK research

• Increase the grant cap to $600,000 under the Technology Voucher Program and increase the government’s financing ratio to 75%

• Inject $345 million to enable the logistics sector to improve efficiency by introducing technologies to a pilot subsidy scheme

• Waive registration fees for annual returns from the company for two years

The field is in the top five in the 2018 Doing Business Ranking of the World Bank. Behind New Zealand, Singapore, Denmark, and South Korea, it lies. Hong Kong operates well when it comes to beginning a company and collecting taxes, less well when it comes to cross-border trade, land registration, and insolvency resolution. It is also one of the simplest ways to do business worldwide, though.

Ranking Category 

Hong Kong’s Rank 

Source

Ease of doing business ranking

3

The World Bank’s Doing Business 2020 Report

World’s business environment rankings

4

The Global Financial Centers Index 25 2019

Best countries for business 

3

Forbes lists, 2019

World’s fastest place to start a business 

5

World Economic Forum: The Global Competitiveness Report 2019

Global competitiveness 

3

World Economic Forum: The Global Competitiveness Report 2019 

Strategic positioning

At the center of the Asian peninsula, Hong Kong is geographically placed. You will be linked by a five-eight-hour flight to most markets in the Asia-Pacific region.

You can find that Hong Kong is conveniently located on the south-east coast of Mainland China, flanking the mouth of the Pearl River Delta, if you need to tap into the Mainland Chinese economy. Within a single day, this enables travel to and from Hong Kong to Beijing, Shanghai, and other major Chinese cities.

Hong Kong International Airport (HKIA) is the eighth busiest international airport for flights, with 100 airlines serving more than 180 destinations, including major cities in the Asia Pacific, North America, Europe and the Middle East, and nearly 40 mainland Chinese destinations. The HKIA is also ranked as the ‘World’s Best Airport’ and wins accolades and awards consistently.

Cross-boundary ferries provide smooth sea transport to and from six mainland ports, and more than 90 PRD cities and towns are served by the coach service. Hong Kong is also a focal point for all maritime operations in southern China and is one of the world’s largest ports in terms of shipping tonnage by its infrastructure, freight handling, and passenger capacity.

 

Ranking Category 

Hong Kong’s Rank 

Source

World’s best financial system

1

World Economic Forum: The Global Competitiveness Report 2019 

World’s best global financial center

3 (1 in Asia) 

The Global Financial Centers Index 25 2019 

World’s leading investment hub for FDI (Foreign Direct Investment) inflows in Asia 

3

United Nations Trade and Development (UNCTAD): World Investment Report 2020 

The best location for IPO and M&A activity in Asia-Pacific

1

Baker McKenzie & Oxford Economics: Global Transactions Forecast 2019

 

Future Driven

The Belt and Road Initiative would connect mainland China with Asian, European, and Middle East countries. The independent constitution, the Rule of Law, the free circulation of knowledge and resources, and a sound regulatory system of Hong Kong, as an international financial hub, have made it the primary assistance for corporations to make the most of the roads.

The Guangdong-Hong Kong-Macao Bay Area offers a further chance. Economic convergence will draw together the talents of more than 10 cities throughout the country to create an international city cluster. Hong Kong will play a vital role to ensure the international success of the city cluster, making it the right spot for industries and enterprises to take advantage of the city cluster.

Simple and Comfortable Tax System

In Hong Kong, companies and people enjoy one of the world’s most tax-friendly schemes. There are only three main taxes imposed and generous allowances and deductions are available that can reduce your taxable amount.

For any entrepreneur who plans to set up a company in a given jurisdiction, taxes are the main consideration. Hong Kong boasts of being one of the world’s lowest tax regimes in this respect.

Personal income tax, or salary tax as it is called, starts at 2 percent for income above HKD 200,000 and goes up to 17 percent.

For businesses, corporation tax is set at 16.5 percent on assessable earnings and 15 percent for unincorporated entities. Corporations have two options for profit-tax rates in Hong Kong:

• The Single-Tier Corporate Tax Structure Corporations are levied on assessable income at 16.5 percent and unincorporated entities are levied at 15 percent. The Single-Tier Corporate Tax Structure

• Two-Tier Income Tax System-All businesses and unincorporated entities are entitled to the Two-Tier Income Tax Regime by lowering the tax rate on the first $2 million in assessable profits.

 

There is no tax on capital gains or other withholding tax relating to dividends and interest or the collection of social security payments.

Furthermore, there is no sales tax or VAT in Hong Kong.

 

Ranking Category 

Hong Kong’s Rank 

Source

World’s lowest tax jurisdictions

1

The World Bank’s Doing Business 2019 Report

World’s most business-friendly tax system

1

PWC & The World Bank Group: Paying Taxes 2019

 

Here are the taxes which are not levied by Hong Kong:

• No Tax on Revenue or VAT

• No withholding tax on dividends and interest

• No Tax on capital gains

• No levy on dividends

• No Tax on Estate

Free Trade Port

Its open trade stance is another bonus of starting up a business in Hong Kong. The free port status of the city and simple customs processes make it easier for industries and enterprises to work.

Currencies

It’s worth remembering that the currency of Hong Kong is indexed to the US dollar. The dominance or vulnerability of the greenback influences the currency of the territory directly, as do adjustments in interest rates by the US Federal Reserve.

The second-largest foreign exchange market in Asia is also based in Hong Kong, the fourth in the world after London, New York, and Singapore. It also sought to be at the forefront of the internationalization of the Chinese currency-the yuan-by launching the world’s biggest offshore renminbi market.

The good thing is that when it comes to foreign exchange, the territory is firmly capitalized. Hong Kong’s official foreign currency reserve reserves amount to over USD400 billion. This is more than seven times the circulating currency.

Most Dynamic Economy

One of the freest economies in the world, Hong Kong is propelled by the principles of free capitalism, free trade, and open markets for all. Over the past two decades, a strong economy has led to GDP growth at an annual average rate of 5 percent in real terms.
There are no limits on internal and external transactions, no restraints over foreign exchange, and no restrictions on foreign ownership.

The status of Hong Kong as a business-friendly area is reinforced by factors such as a stable financial system, almost no public debt, a robust legal system, high foreign exchange reserves, and a tight anti-corruption regime.

Also, companies founded in Hong Kong (i.e. any Hong Kong corporation irrespective of nationality) will now benefit from the Closer Economic Partnership Arrangement (CEPA), a free trade agreement between the Government of the Central Peoples and the Government of the Special Administrative Area of Hong Kong, to obtain preferential access to the Mainland China market.

All products listed as originating in Hong Kong can be exported tariff-free to the Mainland.

Also, in 40 regions, Hong Kong service providers are entitled to obtain special care while delivering services in the Mainland zone.

 

Ranking Category 

Hong Kong’s Rank 

Source

World’s freest economy

1

Index of Economic Freedom, 2019

World’s most competitive economy

5 (2 in Asia)

Swiss-based International Institute for Management Development (IMD): World Competitiveness Yearbook 2020

 

Competitiveness Market

In the 2019 Global Cities Ranking, which reports on the dynamism of cities around the workplace, Hong Kong ranked 5th. The Index looks at a variety of variables, including human resources, local policy, and spending by businesses. The inflated land values of the territory have dampened its world reputation. At the same moment, in the World Productivity Yearbook 2018 by the IMD, Hong Kong ranks as the second most competitive global economy.

There is no question that, on the world stage, this is a highly competitive city. To accomplish its aims, it is keen to use its financial muscle. Hong Kong is maintaining a watchful eye on these forms of rankings and is changing its tax rates, infrastructure investment, and trade-facilitating procedures to preserve its incentives and prestige.

Corruption Free Economy

Hong Kong is the People’s Republic of China Special Administrative Area with a high degree of sovereignty on all matters, except for foreign affairs and security.

Hong Kong maintains its political, fiscal, and judicial structures, according to the Sino-British Joint Declaration (1984) and the Basic Law. One China, Two Systems “is sometimes referred to as this configuration.”

Many firms chose to set up operations in Hong Kong because, with a pro-business government and free-market values, it was considered to be politically secure.

It is often cited as being one of the world’s most corruption-free countries. The Independent Commission Against Corruption (ICAC) has also set up an anti-corruption watch-dog ordered by Hong Kong to deal with both public and private sector corruption.

 

Ranking Category Hong Kong’s Rank Source
The index of political stability and absence of
violence/terrorism
8 (in Asia)The World Bank 2018
Corruption perceptions index2 (in Asia)Transparency
International 2019

 

Hong Kong’s corporate climate has always been open for industry and business.

One Country, Two Systems

The economy, political and legal structures of Hong Kong have been it is own. This helps the city to prosper as a multinational business city while enjoying the advantages of unparalleled proximity to mainland Chinese opportunities.

Two systems provide some of the advantages of one country:

• No limitations on foreign property

• Chinese and English as official languages, English as a preferred trade and contract language

• Capital, talent, goods, and information freedom

• Independent presence in global forums

World’s Best Infrastructure

To satisfy the rising demands of firms, Hong Kong has taken countless steps to constantly update its infrastructure. One of the best airports and busiest ports in the world is said to have one. Transportation networks linking all major centers are effective and inexpensive.

For most companies in the country, Hong Kong is also the chosen Exhibition and Convention Centre. Several awards and accolades have been granted to the Hong Kong Exhibition and Convention Centre. It is also voted as the ‘Best Asia Pacific Convention and Exhibition Centre’.

World-class industrial / business parks such as Cyberport and the Hong Kong Research and Technology Parks are situated in Hong Kong. In one zone, these parks have interconnected facilities to help minimize per-business spending, and also help businesses work in a highly favorable, environmentally sustainable climate.

Hong Kong International Airport, a multi-award recipient, is the busiest cargo gateway in the world and one of the busiest airports for passengers. It takes just 23 minutes to get between the city and the airport with the Airport Express, and in-town check-in is accessible for anyone wanting full convenience.

 

Ranking Category 

Hong Kong’s Rank 

Source

Infrastructure competitiveness rankings 

1

The Global Financial Centers Index 25 2019 

World’s innovation capability rankings 

26 

World Economic Forum: The Global Competitiveness Report 2019 

World’s liner shipping connectivity rankings 

World Economic Forum: The Global Competitiveness Report 2019 

World’s airport connectivity rankings 

21 

World Economic Forum: The Global Competitiveness Report 2019 

World’s digital competitiveness rankings 

8 (2 in Asia) 

IMD: World Digital Competitiveness Ranking 2019 

 

Digital Infrastructures

In Hong Kong, the number of smartphone users has now crossed 17 million, but only seven million people live here. This is a world technologically wired and saturated. Household broadband penetration rates are more than 85%, although 44,000 public Wi-Fi interconnections are now available throughout the territory. The economy of Hong Kong is highly dependent on high-quality and low-cost telecommunication services.

Comprehensive Internet Coverage

Throughout the territory, businesses can enjoy reliable and safe communications. All will enjoy the rewards of secure, high-speed internet service with the city that has made great investments in its cable and fiber optic networks

The government of Hong Kong is spending millions of US dollars to create an ecosystem of information technology, develop infrastructure, finance R&D initiatives, and cultivate start-ups in the digital field. The city has four major telecom operators, each aiming to phase out 5 G technology in Hong Kong by 2020, as the market for mobile data from customers is increasing.

Highly Productive Work-Force

When it comes to productivity in Asia, Hong Kong is just behind Singapore, but ahead of all the others. The safe, effective, and trustworthy economic climate of the territory ensures it scores strongly in this respect. This mechanism is also driven by the city’s economic productivity, smooth-running government, low unemployment, and social stability.

Hong Kong is made up of a work-force that is highly trained, well qualified, and professional. The workforce consists of a local talent pool of seasoned and entrepreneurial professionals in the fast-growing mainland cities who are considered to be extremely well versed in the business community.

In general, workers are known to be hard-working, ambitious, and actively strive to better themselves.

While English is the language of communication in business environments, due to the country’s connection to China, the majority of the workforce is still familiar with Cantonese and Mandarin.

 

Ranking Category 

Hong Kong’s Rank 

Source

World’s best cooperation in labor employer relations  

9

World Economic Forum: The Global Competitiveness Report 2019

World’s total workforce engagement  

2

Total Workforce Index Rankings 2019 

World’s easiest place to find skilled employees 

17

World Economic Forum: The Global Competitiveness Report 2019

World’s best labor market 

7

World Economic Forum: The Global Competitiveness Report 2019 

 

Standard of living

Most foreign professionals and entrepreneurs in Hong Kong prefer to migrate with their families when starting up a business.

As a result, most people are worried about the standard of life in Hong Kong: the socioeconomic environment, living expenses, healthcare, schooling, etc.

Transportation, telecommunications, and public hospitals cost considerably less than certain European or North American countries here. Yet, Hong Kong is an expensive spot for expatriate employers. High prices are covered by high sales, but here it is housing that is at a severe premium, creating the most trouble for those who travel to Hong Kong.

• The social and ethnic fabric is a complex mix of cultures and a cosmopolitan lifestyle made up of individuals.

• The town is considered new and westernized, but sadly there is a high degree of air pollution and congestion in traffic.

• You will learn that residential rents in Hong Kong are lucrative and are deemed in line with those in major foreign cities such as London and New York.

• With a large variety of Chinese ethnic cuisines, Hong Kong is widely cited as China’s food city. To fit foreign tastes, it also provides equally impressive gastronomic cuisine.

• The public transit system is well integrated, clean, secure, reliable, effective and, above all, accessible. Given its large network of buses, trains, ferries, and taxis, getting around Hong Kong is convenient.

• Several international schools in Hong Kong follow a curriculum identical to those in their country of origin. Because of the imperative to develop into a knowledge-based economy, Hong Kong puts a considerable focus on education and provides its people with nine years of free compulsory education.

• Hong Kong provides private and public health services and professional medical practitioners of the world-class. There is a clean, effective, safe, and accessible healthcare climate.

• Hong Kong boasts a lively and thrilling nightlife and is also referred to as the ‘capital that never sleeps.’ There are many leisure opportunities to participate in.

• It is said that Hong Kong has one of the world’s lowest crime rates and is also cited as a safe place to live.

 

Ranking Category 

Hong Kong’s Rank 

Source

World’s easiest place to settle in  

19

HSBC: Expat Explorer Survey 2019

World’s most expensive city for ex-pats

1

Mercer: Cost of Living Ranking 2019

World’s most expensive city for rental accommodation

1

Deutsche Bank Research: Mapping the World’s Prices 2019 

World’s best place for security and safety

4 (1 in AsiaPacific) 

Legatum Institute: Legatum Prosperity Index 2019

 

Setting Up in Hong Kong

Hong Kong is one of the biggest cities to start up a company worldwide. It is relatively fast and convenient to get started, setup costs are low and the overall climate helps companies to succeed. If you need assistance, feel free to get in touch.

 

Immigrant & Visa Policy

Multicultural immigration policy is followed by Hong Kong. Visa-free visits to Hong Kong for periods ranging from 7 to 180 days are approved by citizens of around 170 countries and territories. Short-term visitors can, by entering Hong Kong on a visitor visa or entry permit, perform business negotiations, and sign contracts.

Relevant work visa requirements have been adopted by the government, anticipating the needs of business owners who may want to travel to Hong Kong to operate their business or who may want to recruit foreign professionals to work in their business.

Different policies and programs exist for the jobs of overseas professionals, the jobs of skills and professionals from the Mainland, those wanting to enter for investment, etc

 Based visas are issued and enable almost any form of legal employment in Hong Kong to be pursued by the holder.

How We Can Help You

Organizing

For realistic information on preliminary preparations, explore our website and services. Our facilities cover:

• Sector-specific prospects for the industry

• Regulations on tax and industry

• Legislation on Work

• The requirement for customs and visas

• Opportunities for networking

• Procedures of corporate incorporation

• Market models cost

• Recruiting

• Trademark registry and laws regulating commerce.

Set-Up

With the following facilities, we will help promote the smooth set-up of your company in Hong Kong:

• Identify the correct suppliers of business services and goods

• Advice on seeking grounds for offices

• Agency Advisor on License Application Department

• Living, healthcare, school, social networking tips on settling in HK.

Launching

We will aid your launch and make it a success with services like:

• Support from PR & media

• Feature your company in the newsletter of IHK Distribute joint HKSAR Government Newswire press release

• Release functions and opening ceremonies are attended by the IHK Directorate.

Expansion

We have resources available to help your company grow and expand, including:

• Company prospects to network

• Matching Company

• Advice on government projects and grants under the HKSAR.

Office in Hong Kong

Address: Office room 77, 7/F, Woon Lee Commercial Building, 7-9 Austin Ave, Tsim Sha Tsui, Kowloon, Hong Kong

Contact 

Email: legal@vitaliberta.com
Office Tel: +85268416177
Skype: ygrtima

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