Hong Kong

Occupied by the UK in 1841, Hong Kong was formally ceded by China the following year; various adjacent lands were added later in the 19th century. Pursuant to an agreement signed by China and the UK on 19 December 1984, Hong Kong became the Hong Kong Special Administrative Region (SAR) of China on 1 July 1997. In this agreement, China has promised that, under its "one country, two systems" formula, China's socialist economic system will not be imposed on Hong Kong and that Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years.

Hong Kong is an extremely attractive jurisdiction for investment. It is one of the world's largest securities markets, and the most liquid international market for companies in mainland China. Additionally, many types of investment returns are free of tax. Hong Kong imposes no withholding tax, sales, tax, capitals gains tax, new worth tax, or VAT. Parent companies may receive dividends from subsidiaries free of any tax on profit. Rental income from foreign real estate is exempt from profit tax. The individual employment income tax rate is 16% but there is no tax on investment income or capital gains.

In addition to having a well developed and sophisticated securities market, Hong Kong is home to one of the world's largest concentrations of international banks. The Hong Kong Banking Ordinance provides the legal framework for banking oversight. A local bank license requires paid-in capital of HK$300 million. Banks incorporated overseas may operate their local operations as subsidiaries provided that the local institutions have been licensed in Hong Kong for at least three years. Additionally, customer deposits and assets to be transferred to the subsidiary must total at least HK$3 billion and HK$4 billion respectively.

Hong Kong companies are incorporated under the Hong Kong Companies Ordinance. Companies may have only one director who is not required to be a resident of Hong Kong. Share capital may be denominated in multiple currencies. There is no minimum share capital requirement. Two or more shareholders are required and separate share classes are permitted. Each company must have a resident secretary and a registered Hong Kong office. General meetings must be held every 18 months. Annual audits must be performed by a qualified independent auditor. Foreign companies wishing to do business in Hong Kong may register as an "Oversea Company" under Part XI of the Companies Ordinance.