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Jurisdictions Hong Kong |
Jurisdictions - Hong Kong BASIC JURISDICTION INFORMATION Official Name: Hong Kong Special Administrative Region HISTORY Hong Kong Island was ceded to the British in perpetuity at the end of the first Opium War in 1842. Following additional conflicts with the Chinese in 1860, Britain gained Kowloon and Stonecutters Island, and then, in 1898, leased the New Territories from China for a period of 99 years. On July 1, 1997, Hong Kong reverted to Chinese sovereignty, and is now officially a Special Administrative Region (SAR) of the People¡¯s Republic of China. The constitution is known as the ¡°Basic Law¡± and is modeled on the Chinese constitution. Under the guiding principle of ¡°one country, two systems¡±, which was established before the handover, the Chinese government agreed that Hong Kong¡¯s economic and legal systems would remain unchanged until the year 2047. GEOGRAPHY Hong Kong is located at the mouth of the Pearl River in southeastern China, near Guangzhou and Macau. Victoria Harbour, on Hong Kong Island, is one of the finest natural harbours in the world. Hong Kong has a landmass of over 110 square kilometres, and supports an estimated population of 6.94 million (May 2005). GOVERNMENT The SAR¡¯s administration is headed by a Chief Executive, appointed by China. The Chief Executive appoints the Executive Council of Government. A legislative body, the Legislative Council, passes laws and controls expenditure. Its members are elected but the arrangements are undemocratic, so that the Executive can control a majority. This arrangement, established by the British, has not been changed since the handover. The government has consistently followed business-friendly policies and continues to do so. No otherAsia-Pacific country or city can boast Hong Kong¡¯s unique blend of Western expertise and Chinese knowledge. As China opens up to the world through its membership in the World Trade Organization, Hong Kong is both the natural conduit for Chinese exports toward the West, and the obvious base for international companies taking part in opening up China¡¯s expanding economy. MONETARY SYSTEM The currency in circulation in Hong Kong is the Hong Kong Dollar (HK$), which is pegged to the US Dollar by a currency board at the rate of HK$7.80 to US$1. Hong Kong has no foreign exchange controls. COMMON LAW SYSTEM BASED ON ENGLISH LAW As a former British colony, Hong Kong boasts English as one of its official languages, along with Chinese (Cantonese). Its legal system is based on British common law, supplemented by local statutes enacted by the Legislative Council, and this system is guaranteed under the Basic Law to remain distinct from the Chinese legal system until the year 2047. BUSINESS ENVIRONMENT Hong Kong has an exceptional physical and human infrastructure, as could be expected from the world's third largest financial center (after New York and London). The government's policy toward the economy is strictly non-interventionist. In 2005, Hong Kong was named the freest economy in the world by the US-based Cato Institute for the ninth consecutive year.Also in 2005, Hong Kong was named the second-best performing destination for foreign direct investment (FDI) in Asia, and the 7th largest FDI recipient in the world. Hong Kong and China accounted for two-thirds of the total FDI in the Asian region in 2004. STATUS WITH INTERNATIONAL AUTHORITIES Hong Kong is one of the world¡¯s largest economies and a member of the Financial Action Task Force. Its offshore financial services sector has never been subjected to special scrutiny by any international authority for its tax policy or money-laundering regulations. Hong Kong does not have a Tax Information Exchange Agreement with the United States. TAX SYSTEM Hong Kong is a consistently low-tax jurisdiction. At the end of 2005, Hong Kong had two comprehensive double taxation treaties with Belgium and Thailand, and limited treaties with Canada, Germany, Israel, Mauritius, Netherlands, New Zealand, the Russian Federation, South Korea, the UK and the US. Details regarding Hong Kong¡¯s tax system are as follows: A. Personal Tax B. Corporate Tax D. Capital Gains Tax F. Transfer Tax at Death and on Gifts COMPANY REGISTRATION Incorporation of Hong Kong companies takes approximately two weeks. Shelf companies are immediately available and may be purchased through ICS TRUST, but fees for shelf companies tend to be higher. Company names cannot be reserved in Hong Kong. Since a large number of Hong Kong companies already exist, it can be difficult to find an appropriate company name. TYPES OF COMPANIES Although Hong Kong's low-tax system makes its companies attractive vehicles for offshore business, the SAR does not have a separate offshore sector, per se. The types of companies generally purchased by non-resident or offshore business people are the same ones used by residents and nationals for active local trading. Under the Companies Ordinance, Cap. 32, companies may be either public or private, and may be unlimited, limited by shares or limited by guarantee. The preferred vehicle for offshore or international business is the private Hong Kong limited company, usually limited by shares. This type of company is discussed in detail below, followed by a brief mention of Hong Kong Limited Partnerships.
Limited Partnerships The Limited Partnership Ordinance permits the formation of Limited Partnerships in Hong Kong. Each Limited Partnership must have at least one general partner, and the total number of partners may not exceed 20. Limited partners may not reduce or withdraw their share capital while the partnership continues in existence, and may not take an active part in the management of the partnership nor bind it vis-¨¤-vis third parties without assuming the liability of a general partner. Limited partnerships must be registered at the Companies Registry under the Limited Partnership Ordinance, in default of which they are deemed to be general partnerships with unlimited liability for each and every partner. TRUSTS Hong Kong¡¯s trust law is contained in the provisions of the Trustee Ordinance (modeled on the English Trustee Act 1925). Both fixed and discretionary trusts may be settled in Hong Kong. Documents do not have to be registered and there are no statutory requirements in Hong Kong for a trust to make annual returns, submit audited financial statements, etc., unless it is carrying on business in Hong Kong. Unlike most offshore jurisdictions, Hong Kong has not modified its trust laws to make it a more attractive jurisdiction in which to create a settlement. BANKING FACILITIES Hong Kong is the world¡¯s third most important financial center, after New York and London. It is also the 10th largest banking center in terms of the volume of external transactions, and the second largest in Asia after Japan. More than 70 of the world¡¯s 100 largest banks have a presence in Hong Kong - one of the largest contingents of international banks in the world. The banking sector has played a vital role in establishing Hong Kong as a major loan syndication center in the region. Hong Kong¡¯s banking system is characterized by a tiered system made up of three types of banking institutions - licensed banks, restricted license banks and deposit-taking companies - which operate under different restrictions. Only licensed banks and restricted license banks can actually be called banks. In mid-2005, Hong Kong was home to 131 licensed banks, 36 restricted license banks and 35 deposit-taking companies. These 202 authorized and active institutions operated a comprehensive network of over 1,300 local branches; interests from over 30 countries beneficially own 197 of these institutions. Moreover, an additional 85 overseas banks had set up local representative offices in Hong Kong. The banking sector, being the major participant in Hong Kong¡¯s foreign exchange market, contributes to its status as the world¡¯s 6th largest foreign exchange center. WHY ICS TRUST? Based in Hong Kong, ICS Trust (Asia) Limited incorporates companies in Hong Kong and most offshore jurisdictions including Anguilla (Caribbean), where one of our affiliates is a registered agent. ICS TRUST is an independently owned, Hong Kong-registered trust company, also licensed as an Investment Advisor by The Hong Kong Securities and Futures Commission. With more than twenty years experience, we are a market leader in helping Entrepreneurs and Multinationals establish and grow their businesses in Asia as well as providing comprehensive TAX, TRUSTS and TRADE services.
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