Hong Kong

City: Hong Kong (SAR of China)
Population: 7,400,000 (est. 2003)
Languages: English/Cantonese (official)
Area: 1,042 sq. km (land area)
Currency: Hong Kong dollar (HKD)
Fiscal year: 1 April - 31 March
Independence status: SAR of China (from U.K.)

BACKGROUND
HONG KONG was occupied by the United Kingdom in 1841; Hong Kong was formally ceded by China the following year; various adjacent lands were added later in the 19th century. Pursuant to an Joint Declaration negotiated & signed by China and the United Kingdom on 19 December 1984, Hong Kong became the Hong Kong Special Administrative Region (HKSAR) of China on 1 July 1997. In this agreement, China has promised that, under its "one country, two systems" mechanism, Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years. Hong Kong remains a free port with a free flow of capital and a freely convertible Hong Kong. It is widely recognized that Hong Kong is and will continue to be a significant gateway to China.

Legal System
Hong Kong's legal system is based upon English Common Law, with local modifications and with China Laws. Hong Kong is having the Executive, legislative and independent judicial power.

Currency
Hong Kong dollar ("HKD") is pegged to United States dollars (USD) at a rate of more or less USD1 to HKD7.8 but book transactions with major currencies like USD and Euro dollar (EUR) are common. As China permits residents to visit Hong Kong with simplify procedures, China Reminbi (RMB) is common used in retail or department stores.

Confidentiality
Particulars of directors/shareholders and the company capital structures are required to file and for public inspection. Annual Return is required to file regularly. For the confidentiality of shareholdings, company may use nominee shareholders to hold shares on behalf.

Taxation
Hong Kong is employing a simple tax system and is said to have a territorial system of taxation. Profits tax is charged on every person carrying on a trade, profession or busines in Hong Kong in respect of his/her assessable profits arising in or derived from Hong Kong. The tax rates are 17.5% (2003) for corporations and 16% (2003) for unincorporations or individuals. Hong Kong, unlike Singapore, does not tax foreign source income even if repatriated back to Hong Kong. There is NO capital gain tax NOR taxes on dividends to shareholders.

Legislations
A private limited company can have no more than 50 shareholders, and cannot invite the general public to subscribe to its share. A private company restricts the rights to transfer shares. Unlike a public company, a private company is not required to file a copy of its annual accounts with the Registrar of Companies. From 13 February 2004, Hong Kong private limited company can be setup by a minimum of ONE shareholder, ONE director and one Company Secretary. Shareholder and director can be in the same capacity. It is by law that the Registered Office must be in Hong Kong and the Company Secretary must be Hong Kong resident or Hong Kong corporation.

Every company is required to keep proper books at the company's Registered Office or place of business in Hong Kong. Every company must appoint the auditors who must be members of the Hong Kong Institute of Certified Public Accountants, "HKICPA"(formerly known as the Hong Kong Society of Accountants, "HkSA")and hold practicing certificates. Although there is no requirement to file accounts with the Registrar, there is a requirement to file accounts with the Tax Authority.

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