Opinions expressed by Contractor the contributors are theirs.
In recent years, Hong Kong has had serious competition as Asia’s premier gateway for international trade. Singapore and Seoul have long been in contention, but people are also starting to notice other cities, such as Kuala Lumpur, Bangkok and Jakarta.
However, it is difficult to dethrone the pole position of Hong Kong. Consider that:
- In 2019, the World Economic Forum (WEF) ranked Hong Kong as having the best financial system in the world, well ahead of its closest competitor, the United States, in the Global Competitiveness Report.
- Astute handling of the pandemic means Hong Kong has seen very low Covid infection rates, avoided lockdowns and remained wide open for business over the past ten months. Few other major cities can say the same, either in Asia or in the world.
- The number of company incorporations in Hong Kong rebounded rapidly from the Covid-related uncertainty in 2020, leading to the creation of 110,000 new companies in Hong Kong in 2021.
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Here are seven reasons why, in my opinion, Hong Kong is still a top spot for international trade in 2022:
1. Ease of company incorporation
Setting up an offshore company in Hong Kong can usually be done in seven days, not weeks or months. Besides saving time, the application and documentation requirements are simple, with no restrictions for foreign directors or shareholders: you don’t even have to be physically present to open a company in Hong Kong.
Not only does it save time and effort, but incorporating in Hong Kong is a cost effective option – there are no minimum share capital requirements, with many companies being opened with a share capital of 1 $.
2. Low taxes
Corporate tax in Hong Kong is 16.5%. Hong Kong has always had low corporate and personal income tax rates. However, with the entry into force of a new minimum global corporate tax rate of 15%, Hong Kong will now have one of the lowest corporate tax rates in the world.
Personal income tax is also low – from 2 to 17%. This makes Hong Kong an attractive location for expatriate employees of international companies, who bring home a much larger proportion of their remuneration than elsewhere.
Hong Kong does not apply indirect taxes, such as value added tax (VAT) or goods and services tax (GST).
3. Professional confidentiality
A director of a Hong Kong company does not need to be a natural person (i.e. a real person): Hong Kong allows foreign companies to be directors of a Hong Kong company themselves. This allows international companies and entrepreneurs to direct and control their business in Hong Kong without needing to be personally identified in public documents. A named administrator can be appointed to act on behalf of the foreign company and can keep all personal information confidential.
Note that Hong Kong companies will still have to provide information to regulators about people who are material controllers of Hong Kong companies, but this is not in the public domain.
4. Hong Kong is free trade
Hong Kong is a free port, which means it does not charge any import or export duties.
Hong Kong is also unique in its trade agreements with mainland China and the rest of the world. There is a free trade area between Hong Kong and mainland China (the Closer Economic Partnership Arrangement (CEPA)). There are also free trade agreements between Hong Kong and various other developed economies, including Australia, New Zealand, ASEAN member states, and European Free Trade Association member states.
In addition to reducing the direct costs of doing business, it drastically reduces associated form filling and business bureaucracy.
5. No Currency Restrictions
In our connected world, working in multiple currencies is almost inevitable for ambitious businesses. Hong Kong has no exchange controls, allowing payments to be made and received worldwide without government restriction.
Hong Kong also facilitates the use of foreign currencies in various official settings. For example, the company’s share capital can be paid for in any major currency, not just Hong Kong dollars.
6. A global banking and payment hub
As a center of international finance and investment, Hong Kong has no shortage of payment services and solutions to best manage your money: it’s a breeze to set up and access accounts multi-currency business solution, which saves significant amounts of money on currency conversion when dealing in multiple currencies. .
The distinct advantage in Hong Kong is the ease of transacting with businesses in mainland China: businesses can pay in RMB as well as Hong Kong dollars. Many companies that mainly operate in cities like Shanghai, Shenzhen or Guangzhou also have a presence in Hong Kong, which makes transactions even easier.
Related: Will traditional banks survive Hong Kong’s digital banking movement?
7. World-class business reputation
Hong Kong is one of the few global cities in the world, alongside New York, London and Paris. With a centuries-old reputation as a business hub, international companies trust Hong Kong-incorporated companies as partners and customers. While their prospects are improving, the same is not true for companies based in other parts of Asia such as Indonesia, the Philippines or Thailand. For this reason, many companies from elsewhere in Asia choose to set up a subsidiary in Hong Kong to carry out their international business.
With a well-established reputation as an international business hub, few trade barriers, and low tax and compliance costs, Hong Kong is likely to continue to be Asia’s premier international business hub. Its unique geographical location, bridging the gap between East and West, means that if you want to expand your business, Hong Kong remains the go-to option.
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