About Hong Kong

Hong Kong Landscape

Hong Kong is located in the South China Sea, 100 miles south east of Guangzhou (formerly known as Canton). As of the 1st July 1997, Hong Kong became a Special Administrative Region (HKSAR) of the People’s Republic of China. Hong Kong is the leading South East Asia centre for both finance and commerce and ranks as the world’s third largest financial centre after New York and London. The Hong Kong Stock Exchange is the most active in Asia outside Japan.

The legal system of Hong Kong is English Common Law supplemented by locally enacted Ordinances. Under the ‘one country- two system philosophy, the SAR has executive, legislative and independent judicial power. The capital system, legal structure and lifestyle remain unchanged.

Hong Kong is one of the few jurisdictions in the world that tax on a territorial basis. Many countries levy tax on a different basis and tax the world- wide profits of a business, including profits derived from an offshore source. Hong Kong profits tax is ONLY charged on profits derived from a trade, profession or business carried on in Hong Kong. Consequently, this means that a company which carries on a business in Hong Kong, but derives profits from another place, is not required to pay tax in Hong Kong on those profits. Income sourced elsewhere, even remitted to Hong Kong, is not subject to Hong Kong profits tax at all. Consequently, if a Hong Kong company’s trading or business activities are based outside Hong Kong no taxation will be levied.

A factor that determines the locality or profits from trading in goods and commodities is generally the place where the contracts for purchase or sale are effected. ‘Effected’ does not only mean that the contracts are legally executed; it also covers the negotiation, conclusion and execution of the contracts.

Hong Kong is one of the few jurisdictions in the world that tax on a territorial basis