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Hong Kong / Hong Kong

Hong Kong

Location and infrastructure

Since 1st July 1997 Hong Kong has been a special administrative region (SAR) of the People's Republic of China. Hong Kong is a former British colony in South-East China, near Canton and Macau. With a surface of 1,104 km2 (426 sq mi) and a population of seven million people, Hong Kong is one of the most densely populated areas in the world.

Its physical location has allowed the city to establish a transportation and logistics infrastructure that includes the world's second busiest container port and the world's busiest airport for international cargo, handling also almost 50 million passengers annually and hosting direct flights to over 150 international destinations.


The estimated population is 7 million. 


Hong Kong's official language is Cantonese – a Chinese language originating from Guangdong province in the north of Hong Kong. English is also an official language, and according to a 1996 by-census is spoken by 3% of the population as an everyday language.


Hong Kong’s currency is the HKD (Hong Kong Dollar).

Tax system

The Hong Kong tax system offers significant advantages for companies based in Hong Kong. 

Briefly the main advantages are:

  • Low corporation tax of 16.5%.
  • There is no distinction between branch profits tax and corporation profits tax. Branch profits of foreign corporations are also taxed at the flat rate of 16.5% on Hong Kong sourced profits.
  • There is no capital gains tax in Hong Kong and capital gains are not subject to corporate or personal income tax. 
  • There is neither sales tax nor value added tax in Hong Kong.
  • Dividend income, whether from Hong Kong or overseas, is not taxable. Dividends paid to either a resident or non-resident of Hong Kong are not subject to any withholding tax.
  • The low tax rates and territorial basis of taxation adopted by Hong Kong are in themselves major incentives to foreign investors.
  • Share trading profits derived by non-resident investors trading through share brokers in Hong Kong are exempt from profits tax.
  • Interest income derived from deposits placed in Hong Kong with authorized financial institutions by any person carrying on business in Hong Kong is exempt from profits tax.
  • Income derived from bona fide offshore funds managed in Hong Kong is exempt from profits tax.
  • Scientific research expenditure, including payments to an approved research institute and payments for technical education, qualify as allowable deductions.
  • Profits derived by a professional reinsurer from the business of reinsuring offshore risks will be entitled to a 50% reduction in the profits tax rate.
  • Profits derived from qualified debt instruments with a maturity period of at least three years will also be entitled to a 50% reduction in profits tax rate and full exemption will be granted to certain qualified debt instruments having a maturity period of seven years or more.

Double tax treaties

Hong Kong adopts the territoriality basis of taxation, whereby only income / profit sourced in Hong Kong is subject to tax and that derived from a source outside Hong Kong by a local resident is in most cases not taxed in Hong Kong. Therefore, Hong Kong residents generally do not suffer from double taxation. Notwithstanding this, the Hong Kong Special Administrative Region Government (HKSARG) recognizes that there are merits in concluding comprehensive double taxation treaties (DTT’s) with their trading partners. A DTT provides certainty to investors on the taxing rights of the contracting parties; helps investors to better assess their potential tax liabilities on economic activities; and provides an added incentive for overseas companies to do business in Hong Kong, and likewise, for Hong Kong companies to do business overseas. 

There are also agreements that cover both airline and shipping income.

The following countries are among those which have double-tax treaties with Hong Kong, although not all have been ratified at the time of writing:

  • Austria
  • Belgium
  • Brunei
  • Czech Republic
  • Denmark
  • Finland 
  • France
  • Germany
  • Hungary
  • Indonesia
  • Ireland
  • Japan
  • Jersey
  • Liechtenstein
  • Luxembourg
  • Malta
  • Malaysia
  • Mexico
  • Netherlands
  • New Zeeland
  • Norway
  • Portugal
  • Singapore
  • Spain
  • Sri Lanka
  • Switzerland
  • Thailand
  • United Kingdom
  • United States of America
  • Vietnam

Legal system

Hong Kong has a different political system from mainland China. Hong Kong's independent judiciary functions under the common law framework established under British rule. Hong Kong's courts may refer to decisions rendered by courts of other common law jurisdictions as precedents and judges from other common law jurisdictions are allowed to sit as non-permanent judges of the Court of Final Appeal.

Hong Kong Basic Law, its constitutional document, which stipulates that Hong Kong shall have a "high degree of autonomy" in all matters except foreign relations and military defense, governs its political system.


More than 70 of the world's 100 largest banks have a presence in Hong Kong – the world's 9th largest international banking centre in terms of the volume of external transactions, and the second largest in Asia after Japan.

Types Of Companies

  • Hong Kong Private Company Limited by Shares
  • Hong Kong Public Company Limited by Shares 
  • Hong Kong Branch of Overseas Company
  • Hong Kong Limited Partnership
  • Hong Kong Sole Proprietorship
  • Hong Kong Trusts