Is Hong Kong the Best Offshore Tax Haven in the World?

Hong Kong has one characteristic feature that sets it head and shoulders above all other jurisdictions in the world - and that is that it is not a member of the Organisation for Economic Co-operation and Development (OECD) whilst at the same time it is a nation with an attractive tax system – so is Hong Kong the best offshore tax haven in the world?

In this report we look at what Hong Kong offers to international companies and individuals in terms of legitimate taxation planning opportunities and cross border business facilitation in an effort to determine whether Hong Kong can be classed as the best offshore tax haven in the world.

Hong Kong is one of the leading trading centres in the world, therefore it is legitimately a jurisdiction in which large numbers of international companies have a business and even a banking presence.  It is therefore not considered to be a tax haven in the true sense of the term because it does not derive its main source of revenue and income from providing tax efficient vehicles and shelters purely to external companies and individuals for the soul sake of taxation avoidance. 

Rather Hong Kong is a low tax country with attractive tax rules applicable to local companies and entities which derive no source income in Hong Kong.

It is possible to establish a Hong Kong company or register an existing foreign company in Hong Kong and structure and manage affairs so that all business conducted through said company is done 100% tax free.  In this way a Hong Kong company is much the same as many IBCs or offshore companies in jurisdictions around the world - however, the key difference is that because Hong Kong is not a member of the OECD, does not appear on any OECD tax haven watch list and does not have to introduce any form of exchange of information procedures required by the EU or OECD, Hong Kong has an impenetrable layer of confidentiality and privacy available to companies and account holders locally.

It is for this key reason that many believe Hong Kong is one of the very best offshore tax havens in the world.

If you are not convinced by this then you should also consider the following facts: -

- The rate of taxation locally is only 17.5% so even those who derive source income in Hong Kong have a lower than internationally average tax bill
- There are no exchange controls in Hong Kong
- Hong Kong is the major business centre of the Far East and is therefore strong in its position and does not need to bow to the likes of the OECD for the promise of greater benefits for example
- Internationally a Hong Kong company is not considered to be a tax avoidance mechanism
- Corporate and nominee shareholders are permitted
- There is no estate tax in Hong Kong

If you would like more information about establishing your business or moving your investments to Hong Kong please contact our strategic partners who are expert in such matters – you can make contact through our offshore advice form.