Hong Kong

Hong Kong is a Special Administrative Region (SAR) of the People's Republic of China situated at its south-eastern tip, 130 kilometres from Guangzhou, the capital of Guangdong province. Hong Kong covers 1,095 square kilometres: Hong Kong Island, Kowloon and the New Territories, which include 235 outlying islands. One of those is Lantau Island, location for Hong Kong International Airport at Chek Lap Kok. A high-speed rail link, taxis and buses connect the airport with Hong Kong's urban centres.

Climate

Hong Kong has a moderate subtropical climate. The winter months from December to February tend to be cool and dry. Temperatures in January, February and March can drop below 7 degrees Celsius although the average temperatures December to March fall between 16 and 19 degrees Celsius. November and December are widely regarded as the best months to visit. The summer months between May and September have a tropical weather pattern. Tropical cyclones or typhoons are a seasonal event and a widely publicised warning system identifies their severity. Most businesses shut down when typhoon warning signal number eight or above is hoisted. With the heaviest rain normally falling between May and September, June is normally the wettest month.

 

Population and languages

The Hong Kong population is around 7 million, in one of the most densely populated areas in the world. But due to mountainous terrain, only 15% of the total area is developed. Cantonese, the language of Southern China, and English are the two official languages. Cantonese is the most common spoken language and is understood by 97% of the population. English is understood by many people in Hong Kong and is used by the Government, in courts and most businesses. Mandarin, the official language of mainland China, is still not widely used.

 

Passports and Visas 

Passports or other travel documents valid for at least 6 months are required for all visitors to Hong Kong. Nationals of many countries do not need visas for short-term stays in Hong Kong. Belgium and Luxembourg citizens do not require a visa before arriving in Hong Kong and get a three-month visitor's visa upon arrival.

Visitors or those holding student visas are not entitled to take up employment. Those wishing to do so must obtain an Employment Visa. Applicants may submit their visa applications to the nearest Chinese embassy/consulate-general in their place of residence or to the Hong Kong Immigration Department through the individual's sponsor in Hong Kong.

 

Any person staying in Hong Kong for more than three months is required to have a Hong Kong Identity Card and keep it on them. For further information, please contact: Immigration Department, 7 Gloucester Rd, Immigration Tower, Wanchai, Hong Kong. Tel: (852) 2824 6111; Fax: (852) 2824 1133/ 2877 7711 or website HYPERLINK "http://www.info.gov.hk/immd/"

 

Public holidays for 2008:

The first day of January	Tuesday	1 January
Lunar New Year's Day	Thursday	7 February
The second day of the Lunar New Year	Friday	8 February
The third day of the Lunar New Year	Saturday	9 February
Good Friday	Friday	21 March
The day following Good Friday	Saturday	22 March
Easter Monday	Monday	24 March
Ching Ming Festival	Friday	4 April
Labour Day	Thursday	1 May
The Buddha's Birthday	Thursday	12 May
The day following Tuen Ng Festival	Monday	9 June
SAR Establishment Day	Tuesday	1 July
The day following Chinese Mid-Autumn Festival	Monday	15 September
National Day	Wednesday	1 October
Chung Yeung Festival	Tuesday	7 October
Christmas Day	Thursday	25 December
The first weekday after Christmas Day	Friday	26 December

 

 

Traditional Festivals 

There are five major festivals in the Chinese calendar, with the Lunar New Year being the most important. Gifts and visits are exchanged among friends and relatives, and children receive 'lucky money'. During the Ching Ming Festival in spring, ancestral graves are visited. In early summer (fifth day of the fifth lunar month), the Dragon Boat Festival is celebrated with dragon boat races. The Mid-Autumn Festival falls on the 15th day of the eighth lunar month. Gifts of mooncakes are exchanged and people light colourful lanterns. Chung Yeung is on the ninth day of the ninth lunar month, when many visit their ancestors' graves.

 

Political System 

Since July 1, 1997, Hong Kong has been a Special Administrative Region of the People's Republic of China with responsibility for its own administration for the following 50 years. The Basic Law states that Hong Kong has its own government and legislature composed of local inhabitants -- and will enjoy a high degree of autonomy. Beijing is responsible for Hong Kong's foreign affairs and defence.

The Hong Kong SAR Government is headed by Chief Executive Donald Tsang and is served by two main bodies: the Executive Council and the Legislative Council. The Executive Council assists the Chief Executive with policy making. The Legislative Council legislates, controls public expenditure and monitors the performance of the HKSAR. The Judiciary operates on the principle of independence from the Executive and the Legislature. The Courts are under the direction of the Chief Justice. The legal system is based on English common law and rules of equity apply. It is developed further by local ordinances, subsidiary legislation, decisions of the local courts, and Chinese laws and customs. The Court of Final Appeal has the power of final adjudication.

 

The Economy 

Hong Kong is an open, free enterprise economy. Its prosperity mainly relies on trade, tourism, business and financial services. Hong Kong is consistently ranked one of the freest economies in the world by organizations including The Heritage Foundation, The Wall Street Journal and The Cato Institute. The International Monetary Fund classifies Hong Kong as an advanced economy. Hong Kong is the 2nd largest source of outward foreign direct investment (FDI) in Asia – as well as the 2nd largest FDI recipient in Asia. 

Hong Kong's economy has slowly recovered from the global slowdown in 1997 – and the subsequent SARS crisis in 2003. Consumer spending is also rising, boosted largely by a relaxation of visas for mainland tourists, who are proving to be surprisingly big spenders. Unemployment is also easing from an all-time high of 7.5% at the height of the economic downturn. Hong Kong is further strengthening economic ties with the Pearl River Delta (PRD), including pushing ahead with giant infrastructure projects and finalizing the Closer Economic Partnership Agreement (CEPA), encouraging cross-border business.

The government is also actively promoting creative industries in Hong Kong including the performing arts, digital entertainment, computer software development, animation production, and fashion and product design.

Hong Kong remains the world's 9th largest exporter of commercial services and 10th largest (6th if EU countries are regarded as one entity) trading economy. It is also the most important ntrepot for the Chinese mainland, handling about 30% of the mainland's foreign trade – which is growing significantly since China’s accession to the World Trade Organisation. The Chinese mainland is also one of the leading investors in Hong Kong. Additionally, Hong Kong is a leading telecommunications hub for the Asia-Pacific region with the world's busiest container port and busiest airport for international cargo.

A record high 3,800 overseas companies have regional operations in Hong Kong. The EU as a whole has the largest total number of regional headquarters and offices in Hong Kong with around 500 represented companies. Hong Kong's popularity for hosting international conferences and trade fairs continues with over 300 a year – making it a premier convention and exhibition center for Asia.

 

Tourism 

Tourism has long been one of Hong Kong’s largest industries and is the second largest earner of foreign exchange. Hong Kong is one of the most popular destinations in Asia.

Tourists come primarily from China, Japan, Taiwan, Southeast Asia, Western Europe, the US, Canada, Australia and New Zealand – with mainland visitors from China now accounting for the largest tourism sector. The Hong Kong government has opened a Walt Disney theme Park and resort on Lantao Island in 2005.

 

Cultural and Leisure Events

Hong Kong hosts a variety of cultural and leisure events, including the Hong Kong Arts Festival, Hong Kong International Film Festival, International Arts Festival, Thematic Arts Festival, Hong Kong Lantern Festival and the Hong Kong Flower Show.

Major sporting events held in Hong Kong include the annual Rugby 7s, Cricket Sixes, international horse races, International Dragon Boat Festival, International Lion Dance Invitation Tournament, World Shortcourse Swimming Championships, Women's World Volleyball Grand Prix and international tournaments. The 2008 Olympic Games hosted by the P.R. China, will hold the horse riding event in Hong Kong.

 

Telecommunications

Hong Kong is a global communications hub and has excellent communications infrastructure. It was the first major city in the world to have a fully digitised telephone network and to implement operator number portability. 

The number of subscribers to cellular phones is more than 8.6 million, representing a market penetration of 124% — one of the highest in the world. About 97 per cent of households and virtually all commercial buildings are covered by the broadband internet network. 259 Internet service providers cater for more than 2 million registered customer accounts with dial-up access, or 29.9 dialup access accounts per 100 residents.

 

Financial Services

Exchange rate: The local currency is the HK dollar, which since 1983 has been pegged to the US dollar at HK$7.8 = US$1. The exchange rate trades in a narrow range around that figure. The linked rate to the US dollar effectively ties local interest rates and monetary policy to US policy. 

Banking System: Hong Kong has no central bank but the Hong Kong Monetary Authority exercises supervision and control through the Banking Ordinance.

The banking system is organised according to a three-tier system of deposit taking institutions: licensed banks, restricted license banks and deposit taking companies.

Hong Kong is an important banking and financial centre in the Asia Pacific with 225 banks and 93 representative offices. The Bank of China and HSBC are the two largest banking group. Excellent communications facilities combined with a minimum of government interference and low tax rates create an exceptionally attractive environment for international banking.

Every major bank in the world has a branch or representative office in Hong Kong – including major Belgian and Luxembourg financial institutions such as ING, Clearstream, Euroclear, Fortis Bank and KBC. In recent years, Hong Kong has also developed a system for offshore banking.

Hong Kong also has the world's 5th largest foreign exchange reserves holding and the world's 2nd highest per capita holding of foreign currency. It is also the 2nd largest venture capital centre in Asia, managing 31% of the total capital pool in the region.

Exchanges: The Hong Kong's stock market is highly internationalised with a large number of international stockbrokers. It is the 2nd largest stock market in Asia and 9th largest in the world.

Nearly one thousand companies are listed on the stock exchange, including 167 on the growth enterprise market (GEM), with a total market capitalisation approaching US$500 billion.

The Hong Kong Futures Exchange offers futures contracts for the Hang Seng Index, which measures stock market performance.

The Chinese Gold and Silver Exchange Society in Hong Kong provides a free and active gold market. Hong Kong is the world's 4th largest gold bullion market.

 

Taxation 

Hong Kong's tax system is simple and predictable. Hong Kong has a low tax structure which imposes tax separately on different types of income arising in or derived from HK for the fiscal year ending March 31. There is no value-added or sales tax or capital gains tax. Only income sourced in Hong Kong is taxable. Belgium was the first country in the world to sign a double-taxation avoidance agreement with Hong Kong, finalized in 2004.

Three direct taxes are imposed: profit tax on business profits, salaries tax on income from employment and pensions, and a property tax on income from real estate.

Corporate tax is at a rate of 17.5%, one of the lowest in Asia. Tax for individuals is at the standard rate of 16% since 2004/2005.

However, the effective rate of tax payable in any of the categories may be considerably less due to the personal allowances and reduced rates available for salaries tax. Hong Kong does not impose a withholding tax on dividends or interest, or on profits remitted by a branch.

 

Profits Tax:

Corporations, partnerships, trustees and bodies of persons carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. The profits tax rate is currently at 17.5 per cent.

 

Salaries Tax:

Salaries tax of 16% is imposed on individuals who derive a source of income from any office, employment or pension which arises in or is derived from Hong Kong, including income derived from services rendered in Hong Kong. Income from any office or employment includes wages, salary, fees, commissions, gratuities and bonuses. Salaries tax is calculated after deduction of expenses and personal allowances.

 

Property Tax:

Only chargeable on rental income from owned property. 

 

Indirect Taxes:

Hong Kong does not levy a general consumption tax. It has numerous indirect taxes including user fees, rates on property, betting duty and various other selective taxes and charges (such as business registration tax, rental rates, excise duty, hotel accommodation tax and airport tax). Besides, a stamp duty is levied on documents relating to transfers of real estate and HK stocks and shares.

 

Establishing a company or corporation 

Because of its low taxes, unrestricted flow of foreign currency, skilled labour force, well-developed financial system and entrepreneurial environment, Hong Kong has always been regarded as the best example of free enterprise. Establishing a business in Hong Kong is therefore a relatively straightforward process. The legal and regulatory framework is set out in the Business Registration Ordinance and the Companies Ordinance. 

There are three types of companies: the limited liability company, the company limited by guarantee or the unlimited company. The form of business entity which is the most commonly registered in Hong Kong is the limited liability which is limited by shares and may be private or public. In addition to registering to the Registrar of companies pursuant to the Companies Ordinance, each limited company must obtain a business registration certificate. Most business can also be carried out in the form of a sole proprietorship or a partnership. No specific legislation applies to joint ventures. As far as trusts are concerned, Hong Kong legislation conforms with the English trust laws and a Trustee Ordinance exists.

Foreign corporations establishing a branch in Hong Kong must submit specific documentation regarding the company's structure, etc. to the Registrar of companies within one month of establishing the place of business in Hong Kong.

 

Mandatory Provident Fund  

Under the Mandatory Provident Fund System implemented on December 1, 2000, all employees aged between 18 and 65 (unless specifically exempted) have to contribute 5 per cent of their relevant income, up to a maximum contribution of HK$1,000 per month. This is matched by a contribution from the relevant employer.

 

Additional details can be downloaded from the following Government webistes : 

Commerce, Industry & Technology Bureau:	www.info.gov.hk/citb
Economic Development & Labour Department:	www.edlb.gov.hk
Financial Services & the Treasury Bureau :	www.info.gov.hk/fstb
Inland Revenue Department :	www.info.gov.hk/ird
Invest Hong Kong :	www.investhk.gov.hk
Labour Department :	www.labour.gov.hk
Trade & Industry Department :	www.tid.gov.hk
Company’s Registry :	www.info.gov.hk/cr