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Any new company in Hong Kong needs to be registered with theCompanies Registry and obtain the necessary permits for functioning. Afterward, the legal entity needs to be registered with the tax authorities in Hong Kong.

Our company registration specialists can guide you through the entire company formation process, from choosing the right type of company to hiring employees.

What are the steps for company registration in Hong Kong?

The first decision an investor in Hong Kong has to make concerns the type of company he will be incorporating. Several options are available and the choice is made according to the size of the future company and the available capital. The investor will also need to choose an available company name. A preliminary name availability search can be performed online through the Companies Registry.

What documents are needed for registering a company in Hong Kong?

The following documents are needed for company incorporation in Hong Kong:
  • the incorporation form,
  • the company’s articles of association (copy),
  • the Notice to Business Registration Office.
Fees apply for registration. If the name of the company is incorrect, then the application for registration is likely to be rejected.

What is the minimum share capital in Hong Kong?

One of the reasons why many investors chose to open a private limited liability company is Hong-Kong is the fact that no minimum share capital is required for incorporation. This is also the case for public companies, sole proprietorships or partnerships.

Are there any special requirements for establishing a limited liability company in Hong Kong?

The private limited liability company in Hong-Kong is based on the Memorandum of Association and the Articles of Incorporation. There has to be at least one shareholder, one director and a secretary (with Hong-Kong residence). The number of members cannot exceed 50. The shares of a private limited liability company cannot be freely transferable and are not available to the public. The liability of the members is limited to the amount of owned shares.

What are the requirements for special permits and licenses in Hong Kong?

Some business sectors in Hong Kong require more than one permit for functioning. The business owner needs to make a license application. The business sectors that require additional permits or licenses include the telecommunications sector, the import and export sector, those for money service operators or for restaurants in Hong Kong. Environmental permits and licenses are also needed as well as special licenses for residential care homes.

How can I register for VAT in Hong Kong?

In Hong-Kong, there is no Value Added Tax.

How can I open a bank account in Hong Kong?

Certain documents must be deposited in order to open a corporate bank account: the bank account opening application fully completed and signed by the authorized persons, the decision of opening the bank account, the certified copy of the Certificate of Incorporation, a certified copy of the Business Registration Certificate, the certified copy of the Memorandum of Association of the company, a declaration from the company’s manager, showing the details regarding him and the principal shareholder, a copy of the identity card and a residential proof, the proof of business, a list of specimen signatures.

Some banks may request additional documents along with the above. The certification of the documents is made by the company’s lawyer or the secretary, a certified public accountant or a banker.

How can I recruit personnel in Hong Kong?

Companies may choose different manners of hiring personnel in Hong Kong, such as publishing an announcement in the newspapers or participating in job fairs. The safest way, but a little more expensive, is to hire a recruitment agency to handle it. The agency must find, in exchange for a fee, the suitable candidate for the vacant positions in the company.

What is the overall economic situation in Hong Kong?

That fact that the city is a Special Administrative Region of China has not affected its political and economic stability. Much more, Hong Kong is considered a gate to the market of billions of customers China.

Hong Kong is not considered a tax heaven, but a low tax country, this granting it a trustworthy image among the investors and to the economic mechanisms. Hong-Kong has signed numerous treaties on an exchange of information with numerous states this conferring it the commercial activities’ transparency. In fact, the red tape is among the smallest from Asia (is situated on the 2nd place here).


For investors and business owners from the USA and the UK, Hong Kong is a natural gateway not just to China, but to Asia in general. As such, setting up a legal structure involving a Hong Kong entity continues to be popular. Let’s be honest, there are many corporate service providers who can help you set up an entity. There are those that can do it extremely cheaply as well. But you’re reading this for a reason. It’s because you’re from the USA or UK and you know that you need more than just an entity set up. US and UK tax rules are extremely complex – especially around Controlled Foreign Corporations. So you are reading this because you need something structured in a tax efficient way by an internationally qualified team of accountants and tax lawyers with expertise in corporate structuring, cross border taxation and transfer pricing. In the UK, HMRC has recently been speaking to the press; warning about increased scrutiny of taxpayers with international assets. In the USA, after years of cuts, the IRS recently got $11.4 billion. The money is to be used to improve customer service and fund a “business systems modernization program” meant to bring IRS systems into the 21st century. Also included in that number is an extra $320 million “to be used solely for carrying out” the new tax law passed in December 2017. Our international tax team at Moores Rowland Asia Pacific can advise on cross border issues involving the US, UK or Asia. Feel free to reach out to us at anytime. Now let’s talk about Hong Kong taxation from an international perspective. Hong Kong adopts a territorial source principle of taxation. Only profits which have a source in Hong Kong are taxable here. Profits sourced elsewhere are not subject to Hong Kong Profits Tax. The principle itself is very clear but its application in particular cases can be, at times, contentious. Under the Inland Revenue Ordinance, a person is chargeable to Profits Tax under the following conditions -
  • he carries on a trade, profession or business in Hong Kong;
  • the trade, profession or business derives profits; and
  • the profits arise in or are derived from Hong Kong.
The first two conditions are straightforward. Some elaboration is necessary for the third. Let us have a brief look at the basic principles for determining the source of profits. Basic principles for determining the source of profits  The Courts have over the years considered the subject of the source of profits. The following principles have emerged from authoritative court decisions -
  • Matter of fact- The question of locality of profits is a hard, practical matter of fact. No universal rule can apply to every scenario. Whether profits arise in or are derived from Hong Kong depends on the nature of the profits and of the transactions which give rise to such profits.
  • The operations test - The broad guiding principle is that one looks to see what the taxpayer has done to earn the profits in question and where he has done it. In other words, the proper approach is to identify the operations which produced the relevant profits and ascertain where those operations took place. The source of profits must be attributed to the operations of the taxpayer which produce them and not to the operations of other members of the taxpayer's group.
  • Antecedent or incidental activities - The relevant operations do not comprise the whole of the taxpayer's activities. The focus is on establishing the geographical location of the taxpayer's profit-producing transactions as distinct from activities antecedent or incidental to those transactions.
  • Place where decision is made - The place where the day-to-day investment/business decisions take place is only one factor which has to be taken into account in determining the source of profits. It is not usually the deciding factor.
  • Gross profits from transactions - The distinction between Hong Kong profits and offshore profits is made by reference to the gross profits arising from individual transactions.
  • Business presence overseas - A business may maintain a presence overseas which earns profits outside Hong Kong but the absence of a business presence overseas does not, of itself, mean that all the profits of a Hong Kong business invariably arise in or are derived from Hong Kong. However, in the vast majority of cases where the principal place of business is located in Hong Kong and there is no business presence overseas, profits earned by that business are likely to be chargeable to Profits Tax in Hong Kong.
Profits of trading firms 
  • Contracts for purchase and sale -  The factor that determines the locality of profits from trading in goods and commodities is generally the place where the contracts for purchase and sale are effected. "Effected" does not only mean that the contracts are legally executed. It also covers the negotiation, conclusion and execution of the terms of the contracts.
Following the Court of Appeal judgement (Magna Industrial Co. Ltd v CIR) it is now clear that a wider approach is necessary. The proper way is to look at all the relevant operations carried out to earn the profits, not simply the purchase and sale of the goods. In Magna Industrial Co. Ltd. v CIR, the Court of Appeal noted that: "Obviously the question where the goods were purchased and sold is important. But there are other questions: For example: How were the goods procured and stored? How were the sales solicited? How were the orders processed? How were the goods shipped? How was the financing arranged? How was payment effected?"
  • How relevant facts are considered - In considering the relevant facts the nature and quality of the activities matter more than their quantity. It is the cause and effect of such activities on the profits that is the deciding factor.
  • Irrelevant facts - Facts not directly related to the trading activities are considered irrelevant in determining the locality of profits. For example, renting office premises, recruiting general staff, setting up office, etc.
  • General practice -
    • Where the contracts of purchase and sale are effected in Hong Kong, the profits are taxable here.
    • Where the contracts of purchase and sale are effected outside Hong Kong, the profits are not taxable here.
    • Where either the contract of purchase or the contract of sale is effected in Hong Kong, the initial presumption is that the profits are taxable here. However, other relevant facts will have to be examined to determine the source of profits.
    • Where the sale is made to a Hong Kong customer (including the Hong Kong buying office of an overseas customer), the sale contract will usually be taken as having been effected in Hong Kong.
    • Where the effecting of the purchase and sale contracts does not require travelling outside Hong Kong but is carried out in Hong Kong by use of telephone, or other electronic means including the Internet, the contracts will be considered as having been effected in Hong Kong.
    • Trading profits are regarded as being either wholly taxable or wholly non-taxable here. Apportionment is not appropriate.
Profits of manufacturing businesses 
  • The place of manufacture - The source of profits for a manufacturing business is the place where the goods are manufactured. The profits arising from the sale of goods manufactured in Hong Kong are fully taxable here. Where goods are manufactured partly in Hong Kong and partly outside Hong Kong, that part of the profits which relates to the manufacture of goods outside Hong Kong will not be regarded as arising in Hong Kong. The place where the manufactured goods are sold is not relevant.
  • Manufacturing under a processing or assembling arrangement with an entity in the Mainland of China - In the Mainland, two types of processing trade normally involve Hong Kong companies: contract processing and import processing.
  • Contract processing - In contract processing, the document that governs the contractual relationship among the parties is the processing agreement. It sets out the rights and responsibilities of the Hong Kong company and the Mainland processing enterprise. The Hong Kong company is responsible for the supply of raw materials and machinery without consideration and to provide technical know-how while the Mainland processing enterprise is responsible for the provision of factory premises, utilities and labour force. In return for the processing service, the Hong Kong company pays a subcontracting charges to the Mainland enterprise. The legal title to the raw materials and finished goods remains with the Hong Kong company. Strictly speaking, the Mainland processing enterprise is a separate sub-contractor distinct from the Hong Kong company and the question of apportionment in respect of the latter's profits should not arise. In the Department's view, the Hong Kong company's operations in the Mainland complement its operations in Hong Kong. Recognising the operations of the Hong Kong company in the Mainland, an apportionment of profits on a 50:50 basis is usually accepted.
  • Import processing - In import processing, the manufacturing operations are carried out by a foreign investment enterprise (FIE) incorporated in the Mainland and related to the Hong Kong company. The Hong Kong company sells raw materials to the FIE and buys back the finished goods from the FIE. The Hong Kong company engages in the trading of raw materials and finished goods whilst the FIE manufactures the finished goods. The legal title to the raw materials and the finished goods passes to/from the FIE. The Departments holds the view that the profits which accrued to the Hong Kong company from "trading transactions" carried out in Hong Kong cannot be attributed to the manufacturing operations of the FIE carrying on business in the Mainland. The source of the trading profits must be attributed to the operations of the Hong Kong company which produced them. Apportionment of profits is not appropriate.
  • Manufacturing by an independent sub-contractor in the Mainland of China - In cases where the assembly work is contracted to various contractors in the Mainland, the jobs are numerous, small in value and of short duration and the Hong Kong company has minimal involvement in the assembly work, then the manufacturing in the Mainland is not regarded as having been carried out by the Hong Kong company. Given that the Hong Kong company does not carry out any manufacturing operations outside Hong Kong, its profits should be fully chargeable to profits tax without any apportionment.
Sale or purchase commissions 
  • The place where service is performed - When a business earns commission by securing buyers for products or by securing suppliers of products required by customers, the activity which gives rise to the commission income is the arrangement of the business to be transacted between the principals. The source of the income is the place where the activities of the commission agent are performed. If such activities are performed in Hong Kong, the income has a source in Hong Kong.
  • Factors such as the place where the principals are located, how they are identified by the commission agent, and the place where incidental activities are performed prior or subsequent to the earning of the commission are not generally relevant in determining the source of the commission income.
  • In the event that the commission income is earned by a person carrying on a business in Hong Kong but the activities which give rise to the commission are performed entirely outside Hong Kong, the commission is not taxable in Hong Kong.
Apportionment of profits and expenses  For manufacturing profits or service fee income involving substantial activities, both inside and outside Hong Kong, apportionment of profits is appropriate. In contract processing cases, a 50:50 basis of apportionment is applied as the norm, in view of the contractual conditions imposed on the parties to the arrangement. For other cases where apportionment is appropriate, the basis applied will depend on the facts of the case. When apportionment is applied, it may lead to the question of how indirect expenses are to be allocated. Briefly speaking, when these expenses contribute to both Hong Kong and offshore profits they should be apportioned on the basis of the ratio that Hong Kong and offshore profits bear to total profits. In Hong Kong, companies have to pay what is known as Profits Tax at a rate of 16.5% of their assessable profits. Such a corporate tax rate compares favorably to Japan’s 31%, and in South Korea’s 22%. In addition, companies do not have to pay capital gains tax nor pay value added taxes, nor sales taxes. There is also no withholding tax on dividends and interest that are imposed on companies, and no collection of social security benefits. Dividends from overseas companies are generally offshore in nature and not subject to tax in Hong Kong. Source: https://www.ird.gov.hk/eng/paf/bus_pft_tsp.htm

Hong Kong Visa

The most common way a Western executive will work in Hong Kong is through an internal company transfer. Arranging a Hong Kong work visa not a formality. The Hong Kong Immigration Department will still want to know why an expat is being granted a Hong Kong visa in at the expense of offering a local resident employment. Whether you are being transferred to Hong Kong or are an overseas hire, the employer will have to submit a Hong Kong work visa application and supporting documents, including the CV of the person being transferred. They may also need to show a copy of the local job advertisement and the CVs of the local candidates who were rejected for the advertised position.

Should you be transferring to, or joining a company that is already established in Hong Kong please see our Orientation page for assistance in making your Hong Kong work visa application.

Hong Kong Work Visa

When granted a visa, place the sticker in your passport so it can be validated on entry to Hong Kong



Companies opening an office in Hong Kong and those already trading here attract many foreign workers. Hence, the Immigration authorities tend to exercise some discretion in awarding approvals for a Hong Kong work visa. Many visitors holding a foreign passport can enjoy a Visa-free visit of 14 to 180 days, but visitors are not allowed by law to take up employment (paid or unpaid), to establish or join in any business, or to enter school as a student.

All non-Hong Kong residents wanting to work in Hong Kong will require a Hong Kong work visa. Whilst there are no documented qualifying criteria, when considering an application, the Immigration Department will usually examine several key areas:


  • Higher level educational background: a graduate degree and above would be preferable.
  • Relevant experience that is deemed to be in short supply in Hong Kong.
  • Reasonable salary level; a guide of US$40,000 per year is considered reasonable.
  • How beneficial the individual is to Hong Kong’s economy, trade and industry.
  • That a local or resident worker could not fill the position.
  • How the expatriate can benefit the local workforce (e.g. training).
Don’t work in Hong Kong without a working visa!
If an individual is not permitted to work in Hong Kong (by virtue of being a permanent resident, for example), the employer has to apply for a work permit for the individual. If the employer gives employment without first obtaining a working visa for that individual, the employer commits an offense and may be liable to a maximum fine of HK$350,000 and three years’ imprisonment. If the worker arrives as a Visitor (even with an application for a work visa pending) they are still a visitor. If they start work, the Visitor is breaching their conditions of stay. Working (paid or unpaid) in Hong Kong without approval from the Immigration Department, where such approval is required may result in the offender being liable to a maximum fine of $50,000 and imprisonment for 2 years.


From the submission of a Hong Kong visa the application can take 6-8 weeks to process. If Immigration needs to make further inquiries it may take longer. Those inquiries may be about you or the sponsoring company, if for example they are newly incorporated or have a high proportion of their workforce as sponsored workers. Once your Hong Kong visa is granted, Immigration will send you a sticker to put into your passport which needs to be validated on entry to Hong Kong. It is that validation that activates your Hong Kong visa. If you are already in Hong Kong you will need to take a ferry to Macau for the day so you can re-enter Hong Kong and validate your Hong Kong visa.

A Hong Kong work visa is typically granted for a period of 6-12 months. Extensions are typically given in 2-year increments up to the point where the worker has accrued seven consecutive years of employment. The worker can then apply for Permanent Residency (a Permanent ID Card), which means you no longer need to be sponsored for a Hong Kong visa.

If a worker leaves the employment of their sponsor, the new employer will re-sponsor the worker whilst they are working out their notice. This usually takes 2-3 weeks. If Immigration needs to make further inquiries it may take longer.

Hong Kong Dependent Visa

Whilst workers are sponsored by their employer, dependents are sponsored by the worker. A worker can sponsor their spouse and their children, up to the age of 18 for a Hong Kong Dependent visa. As holders of a Hong Kong Dependent visa, spouses are currently allowed to take up work when sponsored by their legal spouse, although these arrangements are changeable.

Please see our Orientation page for assistance in applying for Hong Kong dependents visa for your married spouse and children.

Unmarried spouses may not be recognized as legal spouses by the Hong Kong Immigration Department. In these circumstances the spouse should consider obtaining a visa independently of their partner in another category, (e.g. quality migrant scheme, capital investor or student) or applying for a Prolonged Visitor Visa.

Working Holiday Visa

Young adults aged 18-30 from participating countries can apply for a Working Holiday Visa. Although there are a number of conditions and an annual quota, this is a good way to get your first foothold into the Hong Kong employment market.

Immigration Arrangements for Non-local Graduates (IANG)

The government of the Hong Kong Special Administrative Region has introduced a special scheme called Immigration Arrangements for Non-local Graduates (IANG) to encourage non-local graduates to stay and work as professionals in Hong Kong.

Under the IANG, non-local students who have obtained a degree or higher qualification from a full-time, locally accredited local programme in Hong Kong can apply to stay (or return) and work in Hong Kong.

Graduating students who wish to apply for IANG but have not yet received the Graduation of Certificate may do so by filing an Application for Entry for Employment as Professionals in Hong Kong Form ID990A with the Immigration Department, together with your supporting documents which should include a Letter of Certification issued by the University. Potential graduates may apply for the Letter of Certification at Academic Regulations and Records Office (for undergraduates) or Chow Yei Ching School of Graduate Studies (for postgraduates).

Non-local graduates who apply for IANG within six months after the date of graduation (i.e. the date of graduation shown on the Letter of Certification or Graduation Certificate) are classified as fresh graduates. Fresh graduates may apply to stay and work in Hong Kong without having secured an offer of employment upon application. IANG applicants who meet the normal immigration requirements may be granted a 12-month stay with no conditions except for the time limitation, i.e. 12 months.

For graduates who apply for IANG beyond six months after the date of graduation (i.e. the date of graduation shown on the Letter of Certification or Graduation Certificate), they will be classified as returning non-local graduates. Returning non-local graduates who wish to work in Hong Kong must have secured an offer of employment when they apply for IANG. An application will be favourably considered so long as the job is at a level commonly occupied by degree holders and the pay package is set at market level.

Further details about IANG can be obtained from the Hong Kong Immigration Department. (Source: City University of Hong Kong)

Hong Kong ID Cards

Under the Registration of Persons Ordinance (Cap 177, Laws of Hong Kong), all Hong Kong residents (including children over 11) require a Hong Kong ID Card. Your Hong Kong ID card should be carried at all times and will be required when you wish to open accounts with utility companies, banks etc.

When you first attend the Immigration Department to apply for your Hong Kong ID card, you will first be issued with a paper copy. A plastic Hong Kong ID card will be available for collection about a month later.

Hong Kong visa

To apply for any type of Hong Kong visa Hong Kong Work Visa, Hong Kong Dependent Visa) or Hong Kong ID card you must make an appointment to attend the Hong Kong Immigration Department in person.

The address of the Hong Kong Immigration Department office is:

Immigration Tower,
7 Gloucester Road,
Wan Chai, Hong Kong
Attending the Hong Kong Immigration Department can be daunting
Hong Kong’s economic freedom score is 90.2, making its economy the freest in the 2018 Index. Its overall score has increased by 0.4 point, with improvements in government integrity, business freedom, and monetary freedom offsetting a decline in the score for the property rights indicator. Hong Kong is ranked 1st among 43 countries in the Asia–Pacific region, and its overall score is well above the regional and world averages.

An exceptionally competitive financial and business hub, Hong Kong remains one of the world’s most resilient economies. A high-quality legal framework provides effective protection of property rights and strongly supports the rule of law. There is little tolerance for corruption, and a high degree of transparency enhances government integrity. Regulatory efficiency and openness to global commerce undergird a vibrant entrepreneurial climate. Hong Kong’s economic linkage with the mainland is most evident in the finance and trading sectors.

Background

Hong Kong became part of the People’s Republic of China in 1997. Carrie Lam began a five-year term as chief executive in July 2017. Under the “one country, two systems” agreement, China promised not to impose its socialist policies on Hong Kong and to allow Hong Kong a high degree of autonomy in all matters except foreign and defense policy for 50 years. This policy has been strained by PRC political interference in recent years, but Hong Kong’s open and market-driven economy continues to flourish, increasingly integrated with the mainland through trade, tourism, and financial links. Hong Kong’s reliance on foreign trade and investment leaves it vulnerable to global financial-market volatility or a slowdown in the global economy.

Rules of Law

Private ownership of property is enshrined in the Basic Law. Commercial and company laws provide for effective enforcement of contracts and protection of corporate rights. The judiciary is independent, but Beijing reserves the right to make final constitutional interpretations, effectively limiting the power of Hong Kong’s Court of Final Appeal. Although the corruption rate is low, it is perceived as rising.

Government Size

The standard income tax rate is 15 percent, and the top corporate tax rate is 16.5 percent. The tax system is simple and efficient. The overall tax burden equals 13.9 percent of total domestic income. Over the past three years, government spending has amounted to 18.0 percent of total output (GDP), and budget surpluses have averaged 2.9 percent of GDP. Public debt is equivalent to 0.1 percent of GDP.

Regulatory Efficiency

Business operates within an efficient and transparent regulatory framework. In 2016, Hong Kong made starting a business easier by reducing the business registration fee. The labor code is strictly enforced but not burdensome. Hong Kong is the world’s most services-oriented economy. There are very few price controls, but the government funds some subsidies and regulates residential rents and prices for telecommunications, public transport, and electricity.

Open Markets

Trade is extremely important to Hong Kong’s economy; the combined value of exports and imports equals 373 percent of GDP. The average applied tariff rate is 0.0 percent. Nontariff barriers impede some trade. There is no general screening of foreign investment, and foreign investors can maintain 100 percent ownership in most cases. The financial sector remains highly competitive and well capitalized, serving as a leading global hub.


Hong Kong is one of the most densely populated areas in the world, with an overall density of some 6,300 people per square kilometre. At the same time, Hong Kong has one of the world’s lowest birth rates—1.11 per woman of child-bearing age as of 2012, far below the replacement rate of 2.1. It is estimated that 26.8% of the population will be aged 65 or more in 2033, up from 12.1% in 2005. Hong Kong recorded 8.2 births per 1,000 people in 2005-2010.

Ethnically, Hong Kong mainly consists of Han Chinese who constitute approximately 92% of the population. Of these, many originate from various regions in Canton. There are also a number of descendants of immigrants from elsewhere in Southern China and around the world after the end of World War II.

Terminology

People from Hong Kong generally refer to themselves, in Cantonese, as Hèung Góng Yàhn (Chinese: 香港人; Cantonese Yale: Hèung Góng Yàhn; literally: "Hong Kong people"); however, the term is not restricted to those of Chinese descent, owing to Hong Kong's roughly 160-year colonial history that saw the civil servants and traders of British, Indian, Russian and other ethnic groups stationed in Hong Kong.

In English, the term 'Hong Kongers' (or sometimes 'Hongkongers') is also used to refer to Hong Kongese people, while the term 'Hongkongese' is sometimes used as an adjective to describe people or things related to Hong Kong.


Promotion of Innovation and Technology:

Innovation and technology are drivers for economic growth and the key to enhance competitiveness of our industries. In November 2015, the Innovation and Technology Bureau was established with the responsibility of formulating holistic innovation and technology policies, thereby fostering the development of innovation and technology and related industries in Hong Kong. The Innovation and Technology Commission (ITC) under the bureau implements the related policies and measures. The goal is to create a vibrant ecosystem with excellent software and hardware support for the key players to collaborate on research, development and innovation activities. The approach in promoting innovation and technology development is underpinned by five core strategies: providing world-class technology infrastructure for enterprises, research institutions and universities; offering financial support to stakeholders in the industry, academia and research sector to develop and commercialise their R&D results ; nurturing talent; strengthening science and technology collaboration with the Mainland and other economies, and fostering a vibrant culture of innovation. The ITC also works closely with other Government departments, the industrial and business sectors, tertiary institutions and industrial support organisations to promote applied R&D in different technology areas, as well as the upgrading of foundation industries. In 2006, the ITC set up five R&D centres to drive and co-ordinate applied R&D in five focus areas, namely automotive parts and accessory systems; information and communications technologies; logistics and supply chain management enabling technologies; nanotechnology and advanced materials; and textiles and clothing. Since their establishment, the Centres have been working closely with the industries in conducting industry-oriented R&D and promoting commercialisation of the R&D results, thereby helping technology upgrading and enhancing the competitiveness of the industry in the Greater PRD region. As at the end of March 2016, 907 projects from the R&D Centres were approved at a total project cost of $4.8 billion.

Advisory Committee on Innovation and Technology:

In April 2015, the Government established the Advisory Committee on Innovation and Technology to tender advice on the development of innovation and technology. The Advisory Committee is chaired by the Secretary for Innovation and Technology. Funding Schemes: The ITC administers the Innovation and Technology Fund (ITF) to encourage the development of innovative ideas and technology businesses. The Government set up the ITF in 1999 with an injection of $5 billion. It aims to support projects that contribute to innovation and technology upgrading in industry. In February 2015, the Government injected another $5 billion into the ITF. There are four programmes under the ITF to cater for different needs: Innovation and Technology Support Programme; University-Industry Collaboration Programme; General Support Programme; and Enterprise Support Scheme (which was launched in late April 2015 to replace the Small Entrepreneur Research Assistance Programme). As at the end of March 2016, 5 088 projects with a total ITF funding of $11 billion were approved, of which 2 103 are R&D projects. Most of the funded R&D projects were related to information technology (27 per cent); electrical and electronics (21 per cent); manufacturing technology (18 per cent); and biotechnology (10 per cent). In April 2016, the R&D Cash Rebate Scheme was subsumed under the ITF. Introduced by the Government in April 2010, the Scheme aims to reinforce the research culture among enterprises and encourage them to establish stronger partnerships with local research institutions through providing cash rebate on applied R&D investments by enterprises. The Scheme covers projects funded by the ITF and applied R&D projects conducted by enterprises in partnership with local designated research institutions. The level of cash rebate has been increased from 10 per cent in 2010 to 30 per cent in February 2012, and further increased to 40 per cent in February 2016. As at end of March 2016, 1 303 applications with a total cash rebate of $170 million were approved.

Technological Infrastructure:

The ITC helps develop world-class support infrastructure to facilitate technological upgrading and development of the industry. The Hong Kong Science and Technology Parks Corporation (HKSTPC) was established in May 2001 to provide one-stop infrastructural support services to technology-based companies and activities. It offers a comprehensive range of services to cater for the needs of industry at various stages, ranging from supporting technology start-ups through incubation programmes , providing premises and services in the Science Park for applied R&D activities, to providing land and premises in the industrial estates for production. The 22-hectare Hong Kong Science Park located in Pak Shek Kok is an important part of our infrastructure in support of the Government’s mission to turn Hong Kong into a regional hub for innovation and technology. It provides a conducive environment to nurture world-class clusters, through making available suitable buildings for lease to technology-based enterprises to carry out R&D work. Its target sectors are biomedical technology, electronics, green technology, information and communications technology, and material and precision engineering. The Park is being developed in three phases. Phase 1 was officially opened in June 2002. Phase 2 was completed in stages from 2007 to 2011. Development of Phase 3 is progressing on schedule. Its first three buildings were completed in March 2014 and officially opened in September 2014, while the remaining two buildings will be completed in 2016.In order to cope with the development trend and ensure continuing development of the Park, the HKSTPC plans to develop two building blocks as Stage 1 of the Science Park Expansion Programme in the next few years. The Science Park provides state-of-the-art laboratories and shared facilities which help reduce the capital investment of technology companies in product design and development, and enable rapid entry of new products into the market at lower cost. They include the Integrated Circuits Design Centre, Intellectual Property Servicing Centre, Probe and Test Development Centre, Wireless Communications Test Laboratory, and Biomedical Technology Support Centre. The HKSTPC manages three industrial estates (IE), located at Tai Po, Yuen Long and Tseung Kwan O, provide 217 hectares of land in total. The Government and the HKSTPC have revised the IE policy to accommodate innovation and technology industries. In future, HKSTPC would mainly build and manage specialised multi-storey industrial buildings for rental to multiple innovation and technology industrial partners. The HKSTPC plans to develop two pilot projects on the vacant sites in the Tseung Kwan O IE in the next few years. The HKSTPC nurtures technology-based start-ups through its incubation programmes which provide subsidised office space and facilities, management, marketing, and technical assistance, as well as financial aid package in the critical initial years of these start-ups. The HKSTPC also provides small and medium-sized technology companies, technology-related service providers, financial and legal service providers, and regional headquarters and regional offices with office space and support services. The Hong Kong Applied Science and Technology Research Institute Company Limited (ASTRI) was set up in January 2000. It performs high quality R&D for transfer to industry for commercialisation with a view to elevating the technology level of our industry and stimulating the growth of technology-based industry in Hong Kong. The ASTRI is designated as the R&D Centre for Information and Communications Technologies which focuses on seven technology areas: communications technologies, electronics components, IC design (Analog), IC design (Digital), opto-electronics, security and data sciences, and software and systems. Through its participation in the expanded Internship Programme under the ITF, ASTRI helps enhance local high-technology human resources development by hosting fellows newly graduated from local universities to take part in its R&D rojects. The Hong Kong Productivity Council (HKPC) provides integrated support services to help Hong Kong’s industrial and commercial enterprises achieve more effective use of resources and increase the value added content of products and services, thereby enhancing productivity and competitiveness. Anchored on its core competence in manufacturing technologies, information technologies, environmental technologies, and management systems, HKPC has been helping Hong Kong’s industrial and commercial enterprises in technology and process upgrading, and helping innovative industries move up the value ladder and tap new business opportunities.

Human Capital:

Provision of suitable human resources is essential to the promotion of innovation and technology in Hong Kong. Towards this end, the ITC introduced an Internship Programme to attract promising science and engineering graduates to take part in ITF-funded R&D projects with an aim to stimulate their interest in a future career in industrial and commercial R&D. As at the end of March 2016, a total of 2 132 interns positions were approved. Science and technology co-operation with the Mainland:The Government strives to strengthen co-operation between Mainland and Hong Kong in innovation and technology. Through combining Mainland’s rich human resources and research strengths with Hong Kong’s capability and experience in applied research and commercialisation, the competitiveness of the industries in both places can be enhanced. There are 16 Partner State Key Laboratories in Hong Kong and six Hong Kong Branches of Chinese National Engineering Research Centres. The State Ministry of Science and Technology and the Government of the Hong Kong Special Administrative Region (SAR Government) havejointly established the Mainland/Hong Kong Science and Technology Co-operation Committee to formulate technology collaboration and exchange programmes between the Mainland and Hong Kong in 2004. Guangdong and Hong Kong have launched the “Guangdong-Hong Kong Technology Cooperation Funding Scheme” (TCFS) since 2004 to encourage collaboration between research institutions and industries of the two places. As at end-March 2016, the ITF has funded 238 TCFS projects at the total amount of about $822 million, of which 79 projects were jointly funded by Guangdong/Shenzhen authorities and the SAR Government, with about $193 million from the ITF funding. Shenzhen and Hong Kong signed a co-operation agreement in 2007 to establish “Shenzhen/Hong Kong Innovation Circle”. The two sides have agreed to strengthen exchange and sharing of talents and resources, and encourage closer co-operation between the research institutions of both places. City University of Hong Kong, The Hong Kong Polytechnic University, The Hong Kong University of Science and Technology and The Chinese University of Hong Kong have established Industry, Academic and Research Bases in High-Tech Zone, Nanshan District, Shenzhen, whereas The University of Hong Kong and Hong Kong Baptist University have established research centres in the same area.

Fostering an Innovation and Technology Culture:

The ITC organises an annual InnoTech Month which comprises InnoCarnival, roadshows, exhibitions, seminars, guided tours, workshops, talks, technology competitions, industry conference and seminars to arouse the interest of the general public in innovation and technology. ITC also supports innovation and technology related competitions such as the Hong Kong Student Science Project Competition and Joint School Science Exhibition. The Innovation and Technology Scholarship Award Scheme provides recognition to outstanding science undergraduates in local universities and encourages them to pursue innovation and technology as a career.
As one of the world's leading international financial centres, Hong Kong's service-oriented economy is characterized by its low taxation, almost free port trade and well established international financial market. Its currency, called the Hong Kong dollar, is legally issued by three major international commercial banks and pegged to the US dollar. Interest rates are determined by the individual banks in Hong Kong to ensure it is fully market-driven. There is no officially recognised central banking system, although Hong Kong Monetary Authority functions as a financial regulatory authority. When destabilising factors are hitting the financial market of Hong Kong, they will be monitored and inspected by the Hong Kong Monetary Authority, the financial regulatory agency in Hong Kong. Electronic finance trading is evolutionarily impacting the financial market of Hong Kong.

According to Index of Economic Freedom, Hong Kong has had the highest degree of economic freedom in the world since the inception of the Index in 1995. Its economy is governed under positive non-interventionism, and is highly dependent on international trade and finance. In 2009, Hong Kong's real economic growth fell by 2.8% as a result of the global financial turmoil. The 2017 version of the Economic Freedom of the World Index lists Hong Kong as the number one nation, with a score of 8.97.

Hong Kong's economic strengths include a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves at around US $408 billion as of mid-2017, rigorous anti-corruption measures and close ties with the mainland China. Despite the downturn, these strengths enable it to quickly respond to changing circumstances. It has the most efficient and a corruption-free application procedure, the lowest income tax, the lowest corporate tax as well as an abundant and sustainable government finance. The government of Hong Kong consistently upheld the policy of encouraging and supporting activities of private businesses. Examples include the Cyberport and the Hong Kong Disneyland. This has a positive impact on the overall economic performance by removing unnecessary barriers for the private enterprises in the Special Administrative Region. The Hong Kong Stock Exchange is a favourable destination for international firms and firms from the mainland China to be listed due to Hong Kong's highly internationalised and modernised financial industry along with its capital market in Asia, its size, regulations and available financial tools, which are comparable to London and New York.

Hong Kong's gross domestic product has grown 180 times between 1961 and 1997. Also, the GDP per capita rose by 87 times within the same time frame. Its economy size is slightly bigger than Israel and Ireland and its GDP per capita at purchasing power parity is the sixth highest globally in 2011, higher than the United States and the Netherlands and slightly lower than the Brunei.