Hong Kong's success is partially built on its spirit of free trade and free market. In providing the maximum support and minimum interference to businesses in Hong Kong, the HKSAR Government is committed to providing a well-developed regulatory framework within which enterprises can maintain their competitiveness and compete on a level playing field.

Tax Regime

The five major attractions of Hong Kong's tax system to foreign investors and businessmen (and in turn major reasons for their increasing presence and contribution here) are:

• the low rate of tax on profits - the current profits tax rate for corporations is 16.5% and 15% for individual income tax;
• the fact that only income and profits derived from Hong Kong are subject to tax - only profits arising in Hong Kong from a trade, profession or business carried on in the territory are taxable. A company pays no tax in the territory on income derived from outside Hong Kong;
• no sales tax, and no taxes on capital gains, dividends or interest - the local tax system is attractive because many taxes present in other jurisdictions are absent: there is no sales tax; gains from the sale of capital assets are not subject to tax; there is no withholding tax on dividends paid by Hong Kong companies; interest tax was abolished with effect from 1 April 1989;
• estate duty (inheritance tax) was abolished with effect from 15 July 2005; and
• generous capital allowances - generous capital allowances are given in respect of capital expenditure incurred in the construction of industrial and commercial buildings and structures used for trade, professional or business purposes. In the case of capital expenditure on the acquisition of plant and machinery, generous depreciation allowances are also provided.

The type of company structure that is most appropriate will depend on tax issues, strategic plans, financial aspects, willingness to take on ongoing obligations and so on. Small and medium-size businesses can find more relevant information can be found here.

When opening a business in Hong Kong, relevant licences are required across the full spectrum of business operations. Business Licence Information Search of the Trade and Industry Department helps start-ups to save time and reduce the risk of non-compliance with government regulation.

For further information about Hong Kong's tax regime, please visit the Inland Revenue Department.

Other Regulations

Other regulatory matters are overseen by various government departments, some of them include:

Import / Export   

• Hong Kong Customs and Excise Department
• Trade and Industry Department

Fight Against Corruption   

• Independent Commission Against Corruption 

Environment  

• Environmental Protection Department 

Equality Opportunities   

• Equal Opportunities Commission 

Protection of Intellectual Property   

• Intellectual Property Department
• Hong Kong Customs and Excise Department 

Visa / Work Permit   

• Immigration Department 

Employment Matters   

• Labour Department 

Provident Fund   

• Mandatory Provident Schemes Authority