Under the one country, two systems arrangement, Hong Kong has a separate legal system from that of Mainland China. It has its own legislative framework and a judiciary independent of the government.*
Hong Kong's legal environment provides a strong foundation for its free market, competitive economy.The court system ensures the enforcement of contracts and effective resolution of disputes. Bankruptcy proceedings are dealt with effectively. There are minimal legal procedures to register a company or to set up a business.
Hong Kong Companies Ordinance provided by the Department of Justice, Hong Kong SAR Government.
Hong Kong e-Legislation provided by the Hong Kong Department of Justice, Hong Kong SAR Government
Doing Business Law Library from the World Bank is a collection of free online business laws and regulations. It lets you create a report of all business laws or choose from a range of laws for an economic region or a specific economy. Select
"Business in Hong Kong can be conducted through limited companies, limited partnerships or by individuals acting as sole traders. " To incorporate a company or to set up a business can be done through the appropriate Hong Kong government departments.
Types of businesses in Hong Kong:
Setting up a business in Hong Kong from the Hong Kong Trade & Development Centre provides more detailed information about the legal structures of companies in Hong Kong.
Companies Registry's Cyber Search Centre is a searchable registry for all companies registered in Hong Kong.
Hong Kong has a very simple system of taxation with low rates making it easy to conduct business.
There is no capital gains tax, no tax on dividends, estate duty or inheritance tax, no payroll tax, no VAT tax and no tax on profits derived from outside of Hong Kong. Some indirect taxes such as vehicle registration fees and duties on tobacco and liquour are in place.
The government receives revenue from the following sources:
More information about Hong Kong's taxation system can be found in the following web sites:
Trade regulations*
Hong Kong has an open door policy on trade and does not charge tariffs on exporting or importing goods. Import and export licencing is kept to a minimum.
Labour laws*
Hong Kong's labour legislation is in line with those of international laws and it has implemented many conventions from the ILO (International Labor Organization). It has legislated policies to facilitate the entry of highly skilled financial professionals. A statutory mimimum wage was introduced in May 2011.
Taxation*
Hong Kong has a clear and simple taxation system.
Foreign investment*
Foreign investment is strongly encouraged. All industry sectors with some exceptions are open to foreign investment and it is not uncommon to have 100% foreign investment in an industry. There is no discrimination between foreign and domestic investors.
Corporate governance*
Hong Kong has in place high standards to ensue effective corporate governance. A Draft Code on Corporate Governance Practices and Corporate Governance Report issued by the government in 2004 has become the standard for corporate governance in Hong Kong.
Independent Commission Against Corruption (ICAC)
Hong Kong is one of the cleanest places in the world to do business. ICAC uses law enforcement, community education and prevention to fight corruption.
Corruption Perceptions Index From the International Transparency Organisation. Measures perceived level of public sector corruption.
*From the Hong Kong Country Profile. (2012).
Hong Kong scores highly on the Worldwide Governance Indicators scale from the World Bank which is a measure of:
What is an incorporated company?
An incorporated company is one that is legally declared to be separate from its owners.
This means that that owners of the company, its directors and shareholders aren't exposed to a company's losses or liabilities except for their original investment in the company.*
*Websters new world finance and investment dictionary. (2003)
Business Reforms from the World Bank, lists recent regulatory and legal reforms that have been put in place in the HK economy making it easier to do business.