Hong Kong is a popular option since it does well on a number of key measures that contribute to a company’s success.
It has been noted that there has been an increase in the number of American investors and businesses choosing to set up shops in other nations, with a focus on Hong Kong.
The major reasons for this trend are the desire to take advantage of tax havens and the lowering of obstacles to entry in global markets.
The following are some of the persistent factors that have contributed to its success:
- Location for maximum benefit
- opportunity to hire efficient employees
- the safe political and economic climate
- favorable tax structure
- approving environment for business activities
- high-level infrastructure
- a legal system that really works
Location for Maximized Benefit
Hong Kong is well situated in the middle of Asia. Most markets in the Asia-Pacific area may be reached with a flight of five to eight hours.
Hong Kong is conveniently located on the southeast coast of Mainland China, at the entrance of the Pearl River Delta, making it an excellent entry point for doing business in China proper. This makes it possible to travel to and from Hong Kong to other major Chinese cities such as Beijing and Shanghai in a day.
Over 100 airlines fly out of Hong Kong International Airport (HKIA), which makes it the eighth-busiest international passenger airport in the world. These airlines fly to over 180 destinations across the globe, including major cities in the Asia Pacific, North America, Europe, and the Middle East, as well as to roughly 40 destinations in mainland China. The HKIA routinely ranks high on the “Best Airport in the World” lists and is the recipient of several honors.
Over 90 cities and villages in the PRD are serviced by the bus network, and fast cross-boundary ferries connect six mainland ports. When it comes to shipping, freight, and passenger traffic, Hong Kong is one of the world’s most important ports. It serves as a hub for all marine activity in southern China.
Regulatory Burden Reduction
To start Hong Kong company formation is considered a simple process. Within two weeks, you may get your business up and running in Hong Kong.
The availability of high-quality infrastructural amenities and commercial real estate is a major selling point.
The protection of the intellectual property is strictly regulated because of its importance. Businesses may use a number of different options for settling disputes.
Foreign investors are attracted to the city because of its low business tax rate and easy filing procedures.
Foreigners who want to establish a company in Hong Kong may do it with relative ease by applying for the right work visa.
An Enticing Tax Structure
Every business owner places a premium on low tax rates when making decisions about where to set up a shop. If you compare Hong Kong to other nations, you’ll find that its tax rate is among the lowest in the world.
A person’s salary or personal income is taxed at a rate of 2%, rising to 17% on earnings above HKD 200,000.
The tax rate for corporations is 16.5% of taxable profits, whereas the rate for a sole proprietorship is 15%. There are two Profit Tax Rate options available to Hong Kong corporations.
- Companies pay 16.5% tax on assessable profits under the Single-Tier Corporate Tax System, whereas sole proprietorships pay 15%.
- Under the Two-Tier Profits Tax Regime, corporate and unincorporated businesses pay lower tax rates on the first $2 million in assessable profits.
There is no tax on realized profits, no tax on dividends and interest, and no tax on the receipt of social security payments.
Additionally, Hong Kong does not impose any kind of value-added tax or sales tax.
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