Sovereign Trust (Hong Kong) Limited

 

About Hong Kong

Hong Kong is located in the South China Sea 100 miles south east of Guanzhou (formerly known as Canton). The total land area is 1,064 sq km with the main island covering 76 sq km and Kowloon and the New Territories the remainder. As of the 1st July 1997 under the Sino-British Agreement of December 1984 Hong Kong became a Special Administrative Region (HKSAR) of the People's Republic of China. The Basic Law, which is the Constitution of the HKSAR, is intended to maintain the HKSAR and the PRC as separate governmental, legal and economic systems. This is known as the "One Country, two Systems" concept. Hong Kong is governed by a Chief Executive and a Provisional Legislature. The Chief Executive is voted in by an electoral college and endorsed by the Preparatory Committee the latter also approving candidates for the Provisional Legislature. One of the major tasks of the Provisional Legislature is the devising of the electoral system for future elections to the first Legislative Council.

The legal system of Hong Kong is English Common Law supplemented by locally enacted Ordinances. Under the Basic Law the U.K. court system and U.K. law, except that a local Court of Final Appeal will replace the Privy Council in London, are guaranteed to remain in place for 50 years unless the matter in question involves a threat to PRC national security. There is now a bilingual legal system with Ordinances being translated into Chinese but English will continue to prevail. There are an excellent range of professional services available as Hong Kong serves as the major business centre for the whole of the Far East.

The local currency is the Hong Kong Dollar which is freely interchangeable but has a pegged exchange rate against the US Dollar. There are no exchange controls.

The handover of Hong Kong to China has been the cause of some concern for the local population and has led to many seeking to take out a second or new nationality. Australia, Canada, New Zealand, USA and UK have attracted many Hong Kong emigrants but many of those have now returned to Hong Kong having qualified for an alternative passport and are again actively pursuing their business interests in the Territory. Most local and international businesses based in Hong Kong are optimistic about the prospects after 1997 and have shelved plans to relocate their Far East headquarters to Singapore or other nearby jurisdictions. Whereas many businesses have taken steps to protect their assets most now view the handover as the ending of a period of uncertainty and as a new opportunity to join the fastest growing and largest economy in the world. Hong Kong looks set to remain the most important financial and service centre within the Far East.

Hong Kong has a very open economy and there are no restrictions on foreign investment or on the transfer of income and capital in foreign currencies. The main attraction of investing in Hong Kong lies in its establishment as a worldwide financial and market trading centre and a gateway for markets in the Asian Pacific Region. It is doubtful whether anywhere else in the world offers the same financial freedom as Hong Kong and puts less barriers in the way of setting up and operating a business. The whole infrastructure of Hong Kong is specifically geared to allowing free enterprise to flourish with a minimum of bureaucracy and restrictions. These factors have undoubtedly contributed greatly to the unprecedented economic success of Hong Kong.

Hong Kong is one of the world's leading financial, economic and trading centres. Hong Kong is an integral financial centre which supports the establishment of substantial trading enterprises in addition to being useful in an international tax planning context. The financial infrastructure available in Hong Kong ranks among the best in the world and is comparable with such cities as New York and London. Further, Hong Kong does not suffer from the relatively high tax regimes and complicated revenue enforcement and collection machinery encountered in those aforementioned cities.

Most of the world's leading banks and corporations have major offices in Hong Kong.

The absence of tax treaties together with a developed banking system provide considerable confidentiality.

Communication systems in Hong Kong are excellent and commensurate with what is to be expected of one of the world's leading financial centres. There are numerous daily flights connecting all major destinations world wide. Hong Kong has also established itself as one of the most popular stopovers for international flights. Its relative proximity to the West Coast of the United States, China and Japan makes is popular for use as a major trading base.

Time

Hong Kong is eight hours ahead of Greenwich Mean Time (GMT).

 

About Sovereign Trust (Hong Kong) Limited

Sovereign Trust (Hong Kong) ("ST(HK)") is the Hong Kong member company of The Sovereign Group.

Apart from supplying the full range of offshore company and trust incorporation and management services which are available from all other Group offices ST(HK) specialises in the following additional areas of work:-

1. Trade Services
   Hong Kong has become the world's eighth largest trading economy calculated in terms of total value of trade undertaken. Hong Kong is the seventh biggest importer of goods and the ninth biggest exporter. This is an astonishing achievement for a territory with a population of only 6 million. Because of Hong Kong's pre-eminent position in world trade, ST(HK) has naturally specialised in the setting up of offshore and Hong Kong companies for trading purposes. Our services include originating letters of credit, transfer of letters of credit, the preparation of invoices, full trade management and documentary trade services. In short we can manage every aspect of a trading operation.
2. Business Startup & Immigration to Hong Kong
   We specialise in the setting up and management of Hong Kong businesses. We are able to incorporate Hong Kong companies speedily and efficiently and make residency applications on behalf of key personnel who wish to relocate to Hong Kong. This is normally achieved by showing that the relevant personnel is crucial to the operations of the business and has skills which cannot be found locally. It would also be necessary to show that the company has sufficient resources and business contacts to enable it to support the relocated personnel and to ensure the success of the business. It is important to show that once the emigrants have arrived in Hong Kong they will not become a burden on the jurisdiction. To achieve this it is normally recommended that the new business be capitalised to the amount of US$100,000 per employee to be relocated. The capital could be provided in cash or kind and it would also be necessary to present a business plan which illustrates that the business will be successful. It is of great assistance to such applications if it can also be shown that local employment will be created. We are able to handle all matters in relation to the setting up of the new business and the application to the immigration authorities.
3. Hong Kong Bank Accounts
   As well as being a major trading centre Hong Kong is also one of the world's major financial centres and the expertise of the banks reflects this. The Hong Kong banking system is amongst the most efficient in the world and Hong Kong banks are particularly well geared up to process letters of credit and import/export documentation and also to open accounts through which stocks and shares can be traded on the world's major stock exchanges. Our excellent connections with the banking community mean that we are well placed to make suitable bank introductions. Accounts can be opened on a same day basis where necessary and, under certain circumstances, references on the beneficial owners of companies applying for facilities may not be required.
4. Pre-Immigration Tax Planning
   Throughout the 1980s and 1990s many Hong Kong based persons sought to migrate to foreign countries ahead of the 1997 takeover. As a result we have developed expertise in settling offshore trusts and company structures designed to minimise tax payable on arrival in the new country of residence and give protection to capital assets.
5. Second Nationalities & Permanent Residencies
   For the reasons stated above we are also frequently asked to advise clients on how to take out a second nationality or obtain a right of residence in another country. As a result, in common with other Group offices, we advise upon immigration programmes run out of Belize, Dominica, Ireland, UK, Canada, USA, Turks & Caicos Islands etc. Some of the available schemes allow the applicant to obtain an immediate second citizenship and passport for a relatively modest investment of around US$50,000. Others require greater levels of investment and a substantive period of residence before nationality can be applied for.
6. Hong Kong as an Offshore Administrative Base
   The concept of residence has no applicability to Hong Kong tax law. Only Hong Kong source income is subject to Hong Kong tax. For this reason Hong Kong is a suitable base from which to administer an offshore company without tax consequence provided that company does not do business with other Hong Kong residents. This is one of the reasons why the use of offshore companies by Hong Kong residents has proliferated to such a great extent. Offshore companies can conveniently have Hong Kong based directors, a Hong Kong bank account and a Hong Kong office address without being brought into the Hong Kong tax net. Most other countries of the world operate a residency based tax system and care therefore needs to be taken to ensure that the offshore company does not establish a permanent place of business within those countries or is managed and controlled from those countries. For example, an offshore company which had UK based directors or which established a place of business within the UK may become liable to UK tax on its worldwide income. Additionally, it is interesting to note that a Hong Kong company does not have to state its registered office address or place of incorporation on its letterhead. This would give the offshore company the added respectability of a Hong Kong persona combined with the added flexibility and ease of administration of an offshore company.

Sovereign is able to offer assistance on China tax and Foreign Investment Enterprises (FIE's) with the assistance of its Shanghai liaison, Sunny Liew. This assistance may take the form of the incorporation of Wholly Foreign Owned Entities (WFOE's) for overseas parent companies, establishing Representative Offices and Joint Venture companies or business and tax consulting generally. Expatriates living in China can also benefit from Sovereign's expertise in advising on, inter alia, China tax, US, UK and Australia tax and suitable structures to mitigate taxes for those persons with multi-jurisdictional tax concerns.

The Hong Kong office is well placed to take the initial queries relating to these issues and draw on the expertise of its Shanghai affiliate in providing a full range of services.