New tax incentives for Limited Companies
To further strengthen Hong Kong’s attractiveness as a company domicile and its competitiveness as an international business center, the government has implemented two tax reduction initiatives:
- Abolition of capital duty currently levied on Hong Kong companies, effective from 1 June 2012.
- Significant reduction to business registration fee (including levy) by up to HK$2,000 for principal place of business in Hong Kong to 31 March 2013.
Abolition of Capital Duty
Currently capital duty is payable to the Companies Registry on the registration of a Hong Kong company and on the subsequent increase in share capital or allotment of shares at a premium. The duty is levied at a rate of HK$1 per HK$1,000 of share capital, subject to a cap of HK$30,000.
The charge to capital duty will be abolished with effect from 1 June 2012 and will allow Hong Kong companies to register and to raise their capital free from any government fees or taxes. So allowing greater flexibility and increasing the ability to raise capital without incurring additional costs or charges to the tax authorities. This initiative seeks to encourage investors to establish companies in Hong Kong to raise funds and expand business activity.
Companies Ordinance (Amendment of Eighth Schedule) Order 2012 abolished the duty and is available online at http://www.cr.gov.hk/en/news/highlights.htm#108.
Reduction of Business Registration Fee
The business and branch registration (‘BR’) fees have been substantially reduced by up to HK$2,000 for a main BR) or HK$73 for a branch BR. The reduced fees will apply on both new certificates and the renewal of existing certificates for the year 2012-13.
The BR fee (including levy) is now :
Main BR Certificate - 1 year: HK$450 or 3 years: HK$4,550
Branch BR Certificate - 1 year: HK$450 or 3 years: HK$1,466
More information can be found at http://www.ird.gov.hk/eng/pdf/br_waiver_fee_e(2-2012).pdf
Doing Business in Hong Kong
Hong Kong is widely recognized as one of the freest economics in the world. Its attractiveness as a place to do business is reflected by the continuing inflow of foreign direct investment and the increasing number of foreign-owned regional headquarters and regional offices.
While there are no special incentives for foreign investors, there are no special conditions imposed on investment from overseas. There are no exchange controls of any kind and funds can therefore be moved freely into and out of Hong Kong.
Hong Kong boasts one of the lowest tax rates in the world. Only income sourced in Hong Kong is taxable. The principal direct taxes are profits tax, salaries tax and property tax. Hong Kong's taxation is also as simple as it is an incentive for enterprises to invest here.
There is no capital gains tax. Both the interest income received from bank deposits and dividends received from corporations are exempt from profits tax.
Hong Kong offers a very favorable and competitive tax environment for business operations and is clearly one of the best places in the region for your business to develop successfully.