Hong Kong Offshore

Published on 14 July 2006
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The government of Hong Kong is committed to the further development of the nation’s financial and taxation legislation to ensure Hong Kong becomes the most significant offshore haven in Asia and to that end Hong Kong recently abolished estate tax.

Hong Kong offshore is a concept embraced by many who incorporate companies in the jurisdiction for effective taxation structuring reasons, and now the offshore appeal of the nation has been improved by the abolition of inheritance tax.

Some of the main reasons why Hong Kong offshore is already such a popular haven include the fact that because it does not appear on the OECD tax haven watch list it is not generally thought of as a tax haven, furthermore the careful incorporation of an offshore company in the jurisdiction can result in zero income and corporate tax being payable. 

With the recent abolition of estate/inheritance tax, Hong Kong just became an even more attractive haven worthy of consideration by those seeking to secure their assets and privacy and protect them from unfair taxation.

Previously the estate of a deceased person was taxed on a sliding scale and annually inheritance tax in Hong Kong netted the government over one hundred and ninety million US dollars.  The government were content to lose this revenue stream to ensure they positioned the country in as favourable a position as possible in terms of its position as an offshore haven of note.

The Hong Kong Secretary for Financial Services and the Treasury ensured the act abolishing the collection of estate tax was put through last year and it came into effect in February 2006.  When speaking about the legislation change the Secretary advised that the tax was abolished as it was deemed unfair, it was relatively easy to avoid anyway and also because it was an obstacle in the way of Hong Kong progressing as a significant global asset management centre.

Hong Kong is pursuing asset management business as its primary offshore and financial function because it is an excellent lead in to other high returning professional services.  The abolition of estate tax helps simplify overall tax planning in Hong Kong and ultimately proves the government’s commitment to continuously promote and aid the development of Hong Kong as the most significant offshore centre in Asia.

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