Hong Kong: Offshore Legal and Tax Regimes
Employment and Residence
All nationals require visas to enter Hong Kong (with the exception of British nationals who are allowed visa free entry for a period of 6 months). The rules governing residence and employment visas in Hong Kong are extremely complex, and have become even more so since 1997.
As a general rule any person other than those having the right of abode or right to land in Hong Kong must obtain a visa prior to arriving in Hong Kong if they wish to take up employment in the Special Administrative Region. Very roughly speaking, there are three categories of expatriates who might need employment visas:
Inter-Company Transferee: This is usually an individual being transferred by a group or company for a short or long period to work in the Hong Kong office. Visas of this type are usually issued fairly readily, although the full administrative process still has to be endured.
Locally Recruited Expatriate: This is usually a visitor who has been offered a job while staying Hong Kong, and is the most difficult type of visa to obtain. It's necessary to convince the Immigration Department that there is no-one in the SAR who can do the job in question, and this is not easy.
Specifically Recruited Expatriate: This covers individuals recruited abroad for a job in Hong Kong, and can again be quite difficult, with a need to convince the Immigration Department that the required skills are not on offer in the SAR. Presumably, few employers would go to the expense of overseas recruiting if they were, but try telling that to the Department!
Every employment visa applicant requires an offer of employment from a Hong Kong registered business entity. In all cases this must take the form of an offer to employ (as opposed to a confirmed employment contract per se) on condition that the Director of Immigration grants the requisite employment visa permissions. The Director of Immigration can not and will not condone any employment contract which appears to show that an employment has actually begun, prior to the issuance of the correct visa.
In October, 2007, then-leader of Hong Kong Donald Tsang announced new plans designed to ensure that Hong Kong's position as a leading global finance hub is consolidated and strengthened. He observed that China's rapid development and the opening up of its financial sector have presented unprecedented opportunities for Hong Kong's financial-services sector.
Tsang added that with these large-scale development projects, Hong Kong will need to expand its pool of skilled workers, and will "require talented people from everywhere". Consequently, to help attract more qualified people, the Quality Migrant Admission Scheme's (QMAS) requirements were relaxed and widely promoted. In 2006, 28,000 foreigners came to work in Hong Kong and settled in the jurisdiction, including about 5,500 from the Mainland.
In January 2008, changes were announced to QMAS in order to cast a wider net for quality migrants. The changes included: lifting the upper age limit of 50; adjusting the marking scheme under the 'General Points Test' so that younger degree holders have a better chance of meeting the minimum passing mark for further assessment; giving marks to applicants with two to five years working experience; and giving extra marks to those who are proficient in a foreign language in addition to Chinese (Putonghua or Cantonese) or English. The extension of stay requirement for entrants admitted through the Achievement-based Points Test (APT) was also streamlined. The Immigration Department will grant an extension to an APT entrant and his/her dependants if it is satisfied that he/she has the financial means to sustain their living in Hong Kong.
Capital Investment Entrant Scheme
Hong Kong also runs the Capital Investment Entrant Scheme, which facilitates the entry for residence persons who make capital investment in Hong Kong but would not be engaged in the running of any business in the SAR. The entrant is allowed to make his choice of investments amongst permissible assets without the need to establish or join in a business. The scheme is available to all foreign nationals (except nationals of Afghanistan, Albania, Cuba and Democratic People's Republic of Korea), Macao Special Administrative Region (Macao SAR) residents, Chinese nationals who have obtained permanent resident status in a foreign country, stateless persons who have obtained permanent resident status in a foreign country with proven re-entry facilities, and Taiwan residents.
During the Chief Executive’s 2010-11 Policy Address it was announced that the investment, net asset and net equity entry requirements for admission to Hong Kong under the Capital Investment Entrant Scheme have been increased.
After a review of the scheme, during which the government took into account overseas practices, changes in economic indicators, and the views of the public and Legislative Council members, the requirement was raised to HKD10m (US$1.3m) from HKD6.5m. In addition, real estate was suspended temporarily as a class of permissible investment assets under the Scheme.
Following the amendments, it was said that the Scheme remains competitive compared with similar overseas programmes. The investment threshold, net assets and net equity requirement will be reviewed every three years. The arrangement of the temporary suspension of real estate as a class will also be assessed at the next regular review, or earlier as necessary.
The amendments did affect applications received before the commencement date, whether already approved or still being processed.
As at June 30, 2012, formal approval had been granted to 15,105 applicants under the scheme, for a total investment of HKD111.8bn.
For applications submitted after October 14, 2010, entrants under this scheme must invest in one or a combination of the following permissible investment assets:
- Equities - shares of companies that are listed on the Hong Kong Stock Exchange and traded in Hong Kong dollars.
- Debt securities - denominated in Hong Kong dollars including fixed or floating rate instruments and convertible bonds which are issued or fully guaranteed by the HKSAR government, the Exchange Fund, the Hong Kong Mortgage Corporation, MTR Corporation Limited, Kowloon-Canton Railway Corporation, Hong Kong Airport Authority and other corporations, agencies or bodies wholly or partly owned by the HKSAR government as may be specified from time to time; or by companies referred to under (A) above.
- Certificates of Deposits - denominated in Hong Kong dollars issued by authorized institutions as defined in the Banking Ordinance with a remaining term to maturity of not less than twelve months at the time of purchase (such purchase should take place after approval in principle has been given by the Immigration Department for the entrant to join the Scheme and that such instruments, on reaching maturity, should be replaced by Certificates of Deposits with a remaining term to maturity of not less than twelve months or by assets in other permissible investment asset classes).
- Subordinated debt - denominated in Hong Kong dollars issued by authorized institutions which satisfies sections 42(1) (e) and (g) of the Banking (Capital) Rules (Chapter 155L), a subsidiary legislation under the Banking Ordinance.
- Eligible Collective Investment Schemes.