A highly dynamic city that serves as the perfect platform into Mainland China and Asia, Hong Kong is the ideal place for business in Asia. It is a business-friendly city with a multitude of advantages to ensure businesses can flourish.
A Supportive Government
Hong Kong will capitalise on the opportunities arising from the national Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area development proactively and holistically. The government shall play the role of a “facilitator” and “promoter”.
Key initiatives announced in the 2017 Policy Address and 2018/19 Budget include:
- Provide tax relief to small and medium-sized enterprises: profits tax rate for the first $2 million of profits proposed is lowered to 8.25 percent, and standard tax rate at 16.5 percent for profits exceeding that amount.
- Encourage research and development (R&D) investment by enterprises, propose to introduce a 300 percent tax deduction for the first $2 million eligible R&D expenditure, with the remainder at 200 percent.
- Increase the total number of comprehensive avoidance of double taxation agreements to be signed with other tax jurisdictions to 50 in the next few years.
Fostering Innovation and Technology
- Focus on four key areas: biotechnology, artificial intelligence (AI), smart city and financial technologies
- Inject $10 billion as university research funding to encourage private companies to increase investment in R&D.
- Kick-start the $500 million “Technology Talent Scheme” to train and pool technology talent, and through the injection of $3 billion into the Research Endowment Fund, provide studentships for local students admitted to research postgraduate programmes funded by the University Grants Committee (UGC); and subsidise local enterprises on a matching basis for training their staff on advanced manufacturing technologies.
- Set aside $20 billion for the first phase of the“Hong Kong-Shenzhen Innovation and Technology Park” at the Lok Ma Chau Loop, and through the Guangdong-Hong Kong-Macao Bay Area development and collaboration between Hong Kong and Shenzhen, develop an international IT hub in the Bay Area.
- Deploy $2 billion under the Innovation and Technology Venture Fund Scheme to co-invest, on a matching basis, with venture capital funds in local technology start-ups.
Promoting Creative Industries
- Propose to inject $1 billion into the CreateSmart Initiative to strengthen support for the development of the design and creative industries.
- Provide additional resources to the Hong Kong Design Centre to implement a series of measures to reinforce Hong Kong’s status as a city of design excellence in Asia.
Building a Smart City
- Invest $700 million to take forward key infrastructure projects for Smart City development, including electronic identity (eID), smart lampposts, Next Generation GovCloud and Big Data Analytics Platform.
- Take the lead to provide telecommunications companies with financial incentives to encourage the extension of fibre-based network to rural and remote areas.
- Launch WiFi Connected City programme to further expand common brand Wi-Fi.HK coverage in Hong Kong, the free Wi-Fi hotspots will increase to 34,000 by 2019.
- Continue to develop an intelligent transport system, including the installation of a new generation of on-street parking meters for payment of parking fees via remote payment using mobile applications and providing real-time information on vacant parking spaces.
The Government of Hong Kong SAR is also committed to driving local business through a variety of initiatives.
Different schemes have been established to assist companies wishing to set up or expand.
SME Funding Schemes: The scheme provides financial assistance to small and medium enterprises (SMEs) looking to expand their markets outside of Hong Kong.
Technology and Innovation Funding: The Innovation and Technology Fund (ITF) provides support for businesses which adopt innovative ideas and implement modern technology.
Universities and research institutions in Hong Kong can apply for science and technology funding of the Central Government and use the funding here in Hong Kong.
Various programmes have been developed to provide comprehensive support for businesses.
The Hong Kong Science & Technology Parks have three incubation programmes for start-ups in the field of web and mobile technology, technology and biotechnology. The schemes provide subsidised office space, consultancy services, investment matching and financial aid packages.
The Design Incubation Programme (DIP) provides incubates with office space and other professional support such as business knowledge enrichment programmes and mentorships.
The Cyberport Incubation Programme includes financial assistance and rent-free working space as well as other subsidised services.
Technology Talent Admission Scheme
The Government of Hong Kong SAR announced in May 2018 to launch the Technology Talent Admission Scheme (TechTAS) to meet the demand for talent in the innovation and technology sector. The scheme will fast-track the admission of overseas and Mainland research and development talent and will run on a pilot basis for three years. Under the pilot scheme, tenants and incubates of the Hong Kong Science and Technology Parks Corporation (HKSTPC) and Hong Kong Cyperport Management Company Limited (Cyberport) that are engaged in the areas of biotechnology, artificial intelligence, cybersecurity, robotics, data analytics, financial technologies and material science are eligible for application. A maximum of 1,000 people will be admitted in the scheme’s first year.
Premier Business Hub in Asia
Hong Kong enjoys an ideal location in Asia that enables businesses to tap into the multitude of opportunities in the Guangdong-Hong Kong-Macao Bay Area and throughout the rest of the region.
The Perfect Business Base
With all of Asia’s key markets less than four hours’ away, it is easy to see why over 8,000 businesses and companies have made Hong Kong their home. Many have placed their strategic functions, including sales, operations, research and development (R&D), distribution, regional headquarters and corporate treasury centres in the city. Over 100 airlines offer easy and efficient travel to 190 locations from Hong Kong whilst half of the world’s population can be reached within five hours by plane.
The Belt and Road Initiative is set to link Mainland China with countries across Asia, Europe and the Middle East. As an international finance centre, Hong Kong’s independent legal system, rule of law, free flow of information and capital, and sound regulatory regime, put it in a prime position to help businesses make the most out of the Belt and Road.
Another opportunity arises from the Guangdong-Hong Kong-Macao Bay Area . The economic integration will combine the expertise of more than ten cities throughout the region to create a world-class city cluster. Hong Kong will play a key role in ensuring the city cluster is internationally competitive, making it the ideal location for businesses and companies to reap the benefits of the city cluster.
Another benefit of setting up business in Hong Kong is its free trade policy. The city’s free port status and easy customs procedures makes it easier for businesses and companies to operate.
Trade and Economic Ties
The Economic and Trade Offices (ETOs) set up by the HKSAR Government in Mainland China and overseas will further promote economic ties and exchanges with Belt and Road countries. In the Mainland, liaison units were set up in Tianjin, Zhejiang, Guangxi and Shaanxi. In overseas countries, the Jakarta ETO was established in 2016. Preparatory work is also underway for setting up ETOs in other Belt and Road countries.
Hong Kong signed a Free Trade Agreement (FTA) with ASEAN in November 2017. FTA negotiation has also begun with other trading partners. Hong Kong has so far signed Investment Promotion and Protection Agreements with 20 economies and has concluded negotiations with Bahrain, Mexico, Myanmar and the United Arab Emirates. Negotiations will commence or continue with other Belt and Road countries.
A Leading Financial Centre
Hong Kong has long been the region’s leading financial hub. It offers a highly transparent and robust regulatory regime for financial services industries such as banking, securities and futures, insurance and retirement schemes. These industries adhere to the best global practices and standards, giving confidence to everyone looking to do business in Hong Kong.
The city is also home to the world’s largest offshore hub in Renminbi settlement. Businesses can easily enjoy a wide variety of Renminbi services on offer from banks and financial institutions.
Stock Connect and Bond Connect have launched in Hong Kong. They have given investors in Hong Kong direct access to Mainland China whilst further cementing the city’s status as an international finance centre.
The city is also positioning itself as a leading regional FinTech hub.
Low, Simple and Competitive Tax System
Businesses and individuals in Hong Kong enjoy one of the most tax-friendly systems in the world. Only three direct taxes are imposed and there are generous allowances and deductions which can reduce your taxable amount.
The three taxes are:
- Profits tax for the first HK$2 million of profits of corporations is 8.25 percent. Profits above that amount will be subject to the tax rate of 16.5 percent. For unincorporated business (i.e. partnerships and sole proprietorships), the two-tiered tax rates will correspondingly be set at 7.5 percent and 15 percent.
- Salaries tax which has a maximum limit of 15 percent
- Property tax of 15 percent
Here are the taxes which Hong Kong does not impose:
- No sales tax or VAT
- No withholding tax
- No capital gains tax
- No tax on dividends
- No estate tax
Free Trade Port
Another benefit of setting up business in Hong Kong is its free trade policy. The city’s free port status and easy customs procedures make it easier for businesses and companies to operate.
Multicultural Talent Pool
Hong Kong is home to a diverse talent pool, equipped with the skills and knowledge to drive business in Hong Kong and beyond.
A Multi-lingual Location
Newcomers to Hong Kong will find that language is rarely an issue with most locals being either bilingual or trilingual. Many business professionals can speak English and Cantonese (Hong Kong’s most widely spoken language), a lot of people may also speak Mandarin (Mainland China’s official language).
Top Educational Foundation
Hong Kong is home to 13 institutions of higher education and universities which award academic degrees. Currently five Hong Kong universities are featured in the Quacquarelli Symonds (QS) World University Rankings top 100 list, demonstrating the high quality of our education system.
Open Business Environment
Hong Kong has always maintained an open business environment for business activities and commerce.
One Country, Two Systems
Hong Kong has maintained its own currency, political and legal systems. This has allowed the city to continue to flourish as an international business city whilst enjoying the benefits of unrivalled access to opportunities in Mainland China.
Some of the benefits of One Country, Two Systems include:
- No foreign ownership restrictions
- English and Chinese as official languages with English the preferred language for business and contracts
- Free movement of capital, talent, goods and information
- Independent participation in international forums
World’s Most Competitive Economy
Hong Kong has been recognised as the world’s most competitive economy for the second straight year. The International Institute for Management Development (IMD) World Competitive Yearbook 2017 ranked Hong Kong first out of 63 economies.
The ranking reflects the consistent strides Hong Kong has made in building a favourable business environment. IMD assessed the economy across four competitiveness factors; economic performance, government efficiency, business efficiency and infrastructure.
Strong Intellectual Property Protection
The Government of Hong Kong SAR has specific policies and legal protection in place for intellectual property rights. The city’s intellectual property laws have been developed to reach the highest international standards to create a free and fair business environment.
Hong Kong is a global city that has attracted people from all corners of the globe. Many are drawn to Hong Kong thanks to its compact size, vibrant lifestyle, beautiful scenery and welcoming international community. The city’s business community is no different, allowing businesses of all types to thrive in the city’s cosmopolitan surroundings.
A Global Foodie Feast
The variety of food on offer in Hong Kong is one of the best in the world. With thousands of options from street-side food stalls to Michelin star restaurants, there’s something for everyone in Hong Kong. Options are not only plentiful but also diverse, with a wide array of cuisines available for Hong Kong’s international community.
No Language Barriers
Don’t worry if you don’t speak Cantonese – English is one of the city’s official languages along with Cantonese. All of Hong Kong’s signs and transport networks are bilingual in English and Chinese . Many locals are also fluent in Mandarin.
A Nature-filled City
You wouldn’t know it by looking at the towering skyscrapers and bright lights of Hong Kong, but the city is home to beautiful beaches and endless hiking trails. One only has to make a short journey away from the city to discover a completely different side to Hong Kong filled with nature and wildlife. Although Hong Kong is one of the world’s largest metropolis, three-quarters of the 1,108 square kilometres of land is countryside.
Those with children will be happy to know that Hong Kong has over 50 international schools offering different international curricula. From kindergarten all the way to university, an international level of education is available to those seeking to maintain the educational consistency of their home country.
Hong Kong is listed as one of the safest countries in the world by different publications and organisations. The city is a relatively crime-free society where people rarely fear for their personal safety.
World Class Infrastructure
Hong Kong enjoys some of the most advanced business infrastructures in the world. Businesses and companies can take advantage of the leading business infrastructures in place to maximize their opportunities throughout the region.
The multi-award winning Hong Kong International Airport is the world’s busiest cargo gateway and one of the busiest passenger airports. Getting between the city and the airport only takes 23 minutes via the Airport Express and in-town check-in is available for those seeking maximum convenience.
Convenient Public Transport
Hong Kong is one of the easiest cities to travel around thanks to its abundance of low-cost public transport options. With one of the world’s most reliable and efficient transport systems, commuters can choose from buses, ferries, taxis, trains and trams to reach their destination. Whether meeting clients or travelling to work, Hong Kong’s transport system has created a truly connected city that businesses can benefit from.
Complete Internet Coverage
Businesses can enjoy reliable and secure communications throughout the territory. With the city having made great investments in its broadband and fiber-optic infrastructure, everyone is able to reap the benefits of a reliable, high-speed internet connection.
World Leading Logistics
Hong Kong has long been one of the world’s leading sea and air cargo hubs. Advanced port and air cargo facilities has ensured Hong Kong’s place as one of the largest trading entities in the world whilst also servicing a large portion of cargo in and out of Mainland China.
Express Rail Link
By 2018, the Guangzhou-Shenzhen-Hong Kong Express Rail Link will ensure speedy rail travel between the three cities. Whether for client meetings or expanding your operations, Guangzhou will soon only be a 50-minute rail ride away.
Hong Kong-Zhuhai-Macao Bridge
With the Hong Kong-Zhuhai-Macao Bridge set for completion in the near future, Hong Kong will benefit from a better connection to key cities in the Pearl River Delta.