From 1841 to 1997, Hong Kong belonged to the UK. Then it became the Hong Kong Special Administrative Region (SAR) of China on 1 July 1997 and will be that way for 50 years. Hong Kong still has a high degree of autonomy in all matters except foreign and defense affairs.
Hong Kong’s chief of state is the President, and the head of government is the Chief Executive. The cabinet is called the Executive Council and has 31 members. It has a unicameral Legislative Council or LEGCO.
Hong Kong’s legal system is based on English common law. Judicially, the Court of Final Appeal in the Hong Kong Special Administrative Region is the highest court in the land.
Hong Kong’s economy is based mostly in international trade. China’s new connection to Hong Kong can be seen in increased trade, tourism, and financial partnerships. Almost half of Hong Kong’s trading practices are with China. Hong Kong’s currency is matched to the US dollar based on earlier agreements. It is the third-largest financial center in the world.
Fiscal year: 1 April – 31 March
The Hong Kong Stock Exchange has greatly benefited from Chinese firms’ desires to be listed “abroad.” Over half of the Exchange’s market capitalization comes from Mainland China.
Market value of publicly traded shares: $2.97 trillion (2007 est.)
ADB, APEC, BIS, ICC, IHO, IMF, IMO (associate), IOC, ISO (correspondent), ITUC, UNWTO (associate), UPU, WCL, WCO, WMO, WTO
Agriculture: Vegetables; poultry, pork; fish
Industry: Textiles, clothing, tourism, banking, shipping, electronics, plastics, toys, watches, clocks
Exports: Electrical machinery and appliances, textiles, apparel, footwear, watches and clocks, toys, plastics, precious stones, printed material to China, US and Japan
Imports: Raw materials and semi-manufactures, consumer goods, capital goods, foodstuffs, fuel from China, Japan, Taiwan, Singapore, US and South Korea
British nationals can enter Hong Kong and stay for up to six months without a visa. All others need a visa before entering Hong Kong.
Work permits can be granted to the following types of employees: Those who must work in Hong Kong at a branch office of a foreign parent company; those who are coming to Hong Kong after being hired for a specific position; and those who were offered a job while in Hong Kong but previously not on a work permit.
A Hong Kong International Business Company can be incorporated as a new entity, or as a branch or subsidiary of a foreign company already in existence.
Although the incorporation application must name two directors and two shareholders, there are no residency requirements for any position. Annual meetings can be held anywhere in the world.
The naming of Chinese nationals in officer or management positions in the incorporation documents doubles the length of time for the incorporation process to six weeks; otherwise, incorporation takes about three weeks. Name restrictions apply, especially regarding UK implication.
Hong Kong is frequently lumped in together with other offshore jurisdictions, but officially Hong Kong considers itself more of a low-tax territory.
Income earned in Hong Kong for business provided outside of Hong Kong is not taxed as long as some taxes were paid on it elsewhere. Income earned at a Hong Kong company but while working abroad for more than 60 days is tax-exempt; otherwise, the tax is paid only on days worked within Hong Kong.
Companies are taxed 16.5 percent on income earned in Hong Kong on Hong Kong-based trades. All other income is tax-exempt. Loans are exempt if they were made outside of Hong Kong, even if the funds are used in Hong Kong. There are no capital gains taxes, VAT, sales tax, withholding tax or taxes on the net worth of a company.
Consignment goods are taxed 1 percent unless it can be proven that the tax could have been less elsewhere.