Hong Kong: What You Need to Know

Low taxes, no VAT, the territorial tax principle, and a developed financial infrastructure make it one of the most favorable jurisdictions for companies.

However, competition with Singapore and Mainland China requires a clear positioning strategy. Successful projects in Hong Kong are most often concentrated in finance, IT, fintech, international trade, and innovative technologies.

Sources of Law

International Agreements

Hong Kong (separately from Mainland China) has signed over 250 bilateral agreements in various areas, including free trade, taxation, investment promotion, and protection.

The Basic Law of Hong Kong

• Came into force on July 1, 1997
• Constitutional-level legislation

Interpretations of the Standing Committee of the National People’s Congress of China (NPCSC)

Chinese legislation

Applicable PRC laws in Hong Kong are listed in Annex III to the Basic Law.

Hong Kong Laws passed by the Legislative Council of Hong Kong

Common law, equity, and case law

Customary Law

Certain norms of Chinese customary law (e.g., traditional property rights in the New Territories) remain legally valid, mainly in family and land matters.

Trends

Focus on Innovation

Hong Kong actively promotes Smart City technologies, including 5G infrastructure and digitalization of city services, making it an attractive platform for testing and developing such technologies.

Hong Kong continues to strengthen its position as an international center for artificial intelligence cooperation.

• In 2025, the Hong Kong government allocated HKD 1 billion (approx. USD 130 million) to create an AI research institute to support R&D and industrial applications.
• In early 2025, Hong Kong unveiled its first AI model, HKGAIV1.

Digital Assets Market Development

• In 2024, Hong Kong launched Asia’s first spot cryptocurrency ETFs.
• Licenses are available for virtual asset trading platforms.
• In February 2025, at the Consensus Hong Kong 2025 conference, the Hong Kong Securities and Futures Commission (SFC) announced initiatives to develop the crypto derivatives and margin trading markets for digital assets.

Alternative Dispute Resolution

Since 2015, Hong Kong has been among the top-5 preferred jurisdictions for arbitration (Queen Mary University of London) thanks to reliability, digitalization, neutrality in sanctions issues, and the recognition of arbitration awards in many jurisdictions.

Foreign Investment Attraction

At the end of 2024, the Hong Kong government published a redomiciliation bill to attract international companies and strengthen the city’s position as a global business hub.

“The ability to redomicile – to change the jurisdiction of a company without liquidation and re-registration – is in demand among businesses seeking a stable and predictable legal environment. This mechanism will allow companies to seamlessly transfer their headquarters to Hong Kong while maintaining legal continuity and asset structure. As a result, Hong Kong will be able to attract more multinational corporations, strengthen its status as an international financial center, and create favorable conditions for innovative businesses and startups.” Alexandra Kurdiumova Co-founder

Taxes

VAT

Not applicable

Corporate Income Tax

• Two-tier system: 8.25% on the first HKD 2 million, 16.5% on profits exceeding HKD 2 million
• Availability of “super deductions” in certain industries

Personal Income Tax

• Maximum rate: 17%
• Tax applies to Hong Kong-sourced income and worldwide income if you reside in Hong Kong
• Extensive double taxation treaty network