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Why is Hong Kong one of the best places for business in 2021
After a very hard 2020, full of economic uncertainty, in which the world faced an unprecedented sanitary emergency and an economic shut down, people are trying to adapt to a new world order. In 2021 we will see different tendencies, especially among businesspeople, to find places where they feel save both in a personal and financial level. Before the coronavirus pandemic, the CBI market was mainly composed of investors trying to acquire a second citizenship that would allow for a minimum stay requirement. Thus, they would continue their lives in their home countries while maintaining their new passports.
Now the tendency has changed, and the applicants to second citizenships want to know whether their new countries will provide a haven in case of a major economic crisis or social unrest. They want to know whether their country will repatriate them, if they will have access to clean food and water, and if their new country has a stable political and social environment.
From a financial point of view, businesspeople around the world are also looking for those places where they are treated best. Sadly, most of the major governments are applying the only strategy they know in order to face their economic crisis: increase tax. The increase and implementation of wealth tax is a matter that is widely discussed all around the globe by major governments, and this concerns many people. This is the reason why many businessmen and businesswomen are looking for those jurisdictions that still offer financial advantages and whose policies are based on low taxation and business incentives.
Why Hong Kong in 2021
In a post pandemic 2021, Mundo recommends Hong Kong, not only because we have great partners here but also because of its success in fighting the pandemic. Hong Kong is one of the few cities that functioned in a close to normal way despite the pandemic in 2020. There was not a complete lockdown until recently (January 2021) and only in one section of the city. In comparison with other important urban centers, Hong Kong did not have as many Covid-19 cases in 2020 and thanks to this, the most important business activities were operating as usual.
Since the city did not have a complete cessation of activities, its economy did not suffer as much as others and still works as a world class financial center. Let us analyze the business opportunities available in Hong Kong in 2021.
For more information on Honk Kong banking and corporate options, please visit our Mundo TV episode.
1- Direct access to the Greater Bay Area (GBA)
This is a special area formed by different provinces and jurisdictions in China: Hong Kong and Macao Special administrative areas and nine different Chinese municipalities. This area was established with the intention of developing the country´s economy in a framework of innovation and cooperation. All the involved provinces and special regions work together for the creation of a common strategy that will help the region and hence the country´s economic growth. The zone has a population of 72 million people and incredible opportunities for project developments.
From the provinces that form the GBA, the Hong Kong special administrative region is the most international and cosmopolitan of all. By investing or establishing your business in Hong Kong, you have direct access to the GBA which is one of the hottest innovation centers in the PRC today.
2-Simple and low-tax regime
As a competitive international financial center, Hong Kong offers great tax incentives and opportunities to develop your business and optimize your profits. Hong Kong is characterized for having a two-tiered profit tax regime, in which an entity can pay as little as 8.25% on their profits.
This system stipulates two levels of taxation: the tax for the first 2 million in profits will be an 8.25% rate and 7.5% for unincorporated businesses. For businesses making over 2 million in profits, the tax rate is 16.5% and 15% respectively.
All entities qualify for this benefit except if the company has one or more connected companies, in which case only the company that is nominated as chargeable can make use of this tax reduction.
The company may also not qualify for the two-tiered tax system if it conducts the following activities:
- Reinsurance business and captive insurance
- Corporate treasury center
- Aircraft lessor
- Aircraft leasing manager
3-Easy company incorporation
Hong Kong allows for a straightforward incorporation process. Moreover, our partners offer great opportunities and discounts such as a waiver of the business registration fee according to the 2020 and 2021 budgets, and a waiver of a 1-year business registration fee. Thanks to this opportunity you will be saving approximately 2,259 HKD. This applies to the registration fee corresponding to the period April 2020 – March 2021. In order to know more about the benefits and discounts our partners offer, contact us for a consultation.
Of course, Hong Kong is not entirely free of coronavirus, but it has reported less cases than other important urban centers in 2020. It was only in January 2021 that Hong Kong enacted the first strict lockdown because of an increase in coronavirus cases. However, the main businesses have continued their activities till now and there is no reason to expect otherwise in 2021. The coronavirus upbreaks are raising again in different parts of the world and this uncertainty sadly exists in all countries and regions, but Hong Kong will surely remain a business-friendly environment even with some restrictions.
When there is a tragedy, there is also an opportunity, and this is the case with Hong Kong fintech environment. Due to the pandemic and the travel restrictions imposed in 2020, the fintech banking in Hong Kong developed notably to the point that it was one of the hottest topics last year. This sector is predicted to continue its growth also during 2021. Currently there are approximately 10 trustworthy providers of fintech banking solutions and they are all partners with Mundo´s Hong Kong expert. If you are interested in fintech services, Mundo can help you through our network of experts.
Mundo is happy to have an experienced and reliable expert in Hong Kong that offers company registration and bank account opening. With its tax incentives, business friendly policies and the opportunity of entering the Chinese and Asian market, Honk Kong is a unique financial center that every investor should consider. Contact our experts to register your business in Hong Kong.
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