Hong Kong Confirms Record Company Numbers Last Year
by Mary Swire, Lowtax.net, Hong Kong
02 November, 2016
Hong Kong has seen growth in the number of businesses with overseas parents and start-ups engaged in various sectors, according to Invest Hong Kong.
The results of two surveys, undertaking annually by InvestHK and the Census and Statistics Department, show that there are 7,986 overseas parent companies in Hong Kong, compared with 7,904 a year ago. Of these, 1,379 companies were operating as regional headquarters, 2,352 as regional offices, and 4,255 as local offices.
The number of people employed by foreign and Mainland companies (435,000) was up by three percent, from 422,000 persons in 2015.
Most companies were from Japan (1,376), followed by the United States (1,353), and Mainland China (1,123).
InvestHK also announced the results of its 2016 start-up survey. There are a total of 1,926 start-ups across Hong Kong, a substantial 24 percent increase compared with 1,558 in 2015.
While Hong Kong does not provided tax breaks specifically for start-ups, InvestHK set up a dedicated team to assist such businesses in 2014.
While Hong Kong's profits tax rate has remained at 16.5 percent, in a period when global corporate tax rates have been falling, it has been pointed out that, unlike many other jurisdictions, there are no capital gains taxes, withholding taxes, sales or value-added taxes, or wealth taxes in Hong Kong. There is also no tax on companies that retain earnings rather than distribute them. It is considered that the major incentive for companies to set up in Hong Kong has been its low, stable, and simple tax regime across all sectors and company sizes.
However, recently, in an attempt to attract companies in specific sectors, the Government has introduced a concessionary 8.25 percent profits tax rate for corporate treasury centers, and has improved the intra-group financing interest deduction rule. In addition, to reinforce Hong Kong's aim of becoming a venture capital and private equity hub in Asia, a tax exemption for offshore funds has been extended to private equity funds in respect of profits gained through the disposal of portfolio companies incorporated outside Hong Kong.
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