Travel to Hong Kong

Hong Kong is a central hub for business in Asia. It is extremely popular for a variety of reasons, including political stability, economic freedom and tax benefits. Hong Kong has one of the lowest tax rates in the world for a developed country, and has an intricate and effective tax system that allows companies to conduct business without being overpowered by their tax liabilities. Indeed, Hong Kong is rated as the world's 3rd friendliest tax system by Forbes (Tax Misery & Reform Index 2009).

Corporate Tax in Hong Kong

Given the large number of companies that operate in Hong Kong or have a Hong Kong offshore company, an understanding of Hong Kong tax implications begins with corporate tax.

In Hong Kong, any company conducting business on or offshore can be liable to corporate tax. Profits sourced in Hong Kong are taxed at a low rate of 16.5%, and unincorporated businesses are taxed at 15%. Profits that are sourced overseas, also known as ‘offshore profits', benefit from a zero tax rate, even when remitted back to Hong Kong. Profits derived from operating ships in Hong Kong are treated as ‘offshore profits' and are not liable to tax, but profits derived by professional reinsurers for reinsuring offshore risks will be taxed at 8.25% -i.e. half the corporate tax rate.

To note: offshore payments for intellectual property usage are liable to tax at 4.95%, goods sold by Hong Kong consignment agents on behalf of non-residents are also liable to tax on 0.5% of gross proceeds. On the other hand, bank deposit interest, interest on Tax Reserve Certificates, interest income on long-term debt instruments, dividends and capital gains are free from tax.

With the low tax rates there are also other regulations that protect business from unjustified taxes. Hong Kong is fully committed to its double tax agreement with thirty three nations, including PRC, Thailand and Belgium, to relieve companies from having to pay two taxes on one set of profits, as a result of multinational enterprise and multiple jurisdictions. For full details on Hong Kong's double tax agreements, see the website for the Inland Revenue Department of Hong Kong (IRD).

Companies that conduct business through a branch in Hong Kong or are incorporated in Hong Kong cannot offset losses against the profits of other members in a group of companies –through consolidated accounting systems, however the Hong Kong jurisdiction allows losses to be carried forward indefinitely. Assets are depreciated at authorized prescribed rates of depreciation, for example, computer equipment can be depreciated at 100% in the first year.

The general procedure for corporate taxation after incorporation in Hong Kong is straightforward. Typically a Hong Kong incorporated company will be tracked by the Hong Kong authority and sent a tax return at year end. Even when no tax return is issued to a company, they are responsible for notifying the government of any profits liable to tax. In standard practice, estimated tax assessments will be issued provisionally during the tax year based on historic profit information. A final assessment will then be released after filing of the tax return.

It should be noted that the Hong Kong tax year begins on April 1st. Also, companies liable to tax in Hong Kong are required to fulfill accounting and auditing standards i.e. be audited by a firm of Hong Kong accountants.

Other Taxes

In Hong Kong, people also benefit from zero sales tax, zero value added tax and zero annual net worth taxes.

The Western and Eastern worlds are moving ever closer together, with the relative cheapness and prevalence of air travel, and the advent of that magical medium known as the internet. Business is often done with overseas partners, and a larger percentage of air passengers travel for business than for pleasure. Hong Kong is now one of the world's most multicultural cities, with many overseas companies opening Hong Kong branches.

However, with all of these new experiences and interactions comes confusion and uncertainty, especially in dealing with people from foreign cultures. In this article we look at why a good base for your travels is essential, in the form of a luxury hotel or spa in Hong Kong, and also go through some tips for doing business in Hong Kong.

If you are travelling to Hong Kong for business, be prepared for the pace of life in the city. It has been described as 'frenetic' - much like New York or London. The people that live in Hong Kong are often characterized as entrepreneurial, competitive, hardworking and very commercial. Best not to waste the time of these hard workers! They are very deadline conscious. It is also advisable to have a local contact make initial steps towards business dealings for you. These connections are known as quanxi in Cantonese, one of Hong Kong's official languages, and they help you establish some credibility before you meet your business partners.

Other things to consider when doing business in Hong Kong include local holidays like Chinese New Year. Many people take several weeks holiday around this time - January-February - just as Westerners often do at Christmas. If you are scheduling a meeting, it is best to do so well in advance - these are busy people, remember! Confirm appointments the day before they are scheduled, just in case. While your meeting is in progress, do not discuss politics - the same rules as for family gatherings in the West. To avoid fights, politics and religion are off the conversational cards.

Staying in Hong Kong for business is a great opportunity to experience some of the city's excellent five-star facilities, luxury hotels and spas. The Landmark Mandarin Oriental is a great choice of you are looking to stay in the Central district. This hotel is known for the spaciousness of its rooms and the gorgeous contemporary decor. The business facilities at this Hong Kong luxury hotel include a cable HDTV with keyboard for internet access, wireless internet in all rooms, an in room safe as well as laundry and dry cleaning service. If you want to do some intensive relaxing at your luxury Hong Kong hotel after your intensive business meetings, the Zen-like spa has some excellent treatments and relaxation areas.

The Shangri-La Bangkok is a great luxury hotel for longer trips to Hong Kong. The executive suites are one of the hotel's best features, with a separate living and sleeping area, the option to connect to an additional room to create a two bedroom suite, and a beautiful marble bathroom. The business facilities include an in-house mobile phone (avoid the horrendous roaming charges on your own phone), an ipod docking station, fax, printer and scanner, a high speed data transfer port, and a limousine service. Upon arrival, guests are personally escorted to their rooms, and the personal touch to the service certainly does not end there, with 24-hr butler service and massage facilities.

If you are moving up the corporate ranks, Hong Kong is almost certain to be a business destination for you at some stage. Make use of the city's excellent luxury hotels and spas while you are there, and you'll have an experience as intensely relaxing as it is productive!