Business in Hong Kong

Hong Kong - About the country's legal system

Hong Kong combines a stable legal system based on English common law with a progressive economic policy aimed at attracting international business. Low taxes, no VAT, territorial taxation and a developed financial infrastructure make it one of the most advantageous jurisdictions for companies. However, competition with Singapore and mainland China requires a clear positioning strategy. Successful projects in Hong Kong most often focus on finance, IT, fintech, international trade and innovative technologies.

Sources of law

International agreements

Hong Kong (separate from mainland China)
signed more than 250 bilateral agreements in various areas, including free trade, taxation, promotion and protection of investments

The Basic Law of Hong Kong

Came into force on July 1, 1997, an act of constitutional significance

Judicial clarifications of the Standing Committee of the National People's Congress of the People's Republic of China

Chinese legislation

The laws of the People's Republic of China applicable in Hong Kong are set out in Appendix 3 of the Basic Law of Hong Kong.

Laws of Hong Kong made by the Legislative Council of Hong Kong

Common law, law of equity and case law

Customary Law

Some Chinese customary laws (such as traditional property rights in the New Territories) remain in force, most commonly in family and land matters.

Trends

Vector for innovation

Hong Kong is actively implementing Smart City technologies, including the development of 5G infrastructure and projects to digitalize urban services, making it an attractive platform for testing and developing relevant technologies.

Hong Kong continues to strengthen its position as an international hub for AI collaboration. In 2025, the Hong Kong Government has allocated HK$1 billion (approximately US$130 million) to establish an AI research institute to support the development and industrial application of the technology.

In early 2025, Hong Kong already introduced its first AI model, called HKGAIV1.

Development of the digital asset market

In 2024, Hong Kong launched Asia's first spot cryptocurrency exchange-traded funds.

Licenses for virtual asset trading platforms available in Hong Kong.

In February 2025, at the Consensus Hong Kong 2025 conference, the Securities and Futures Commission of Hong Kong (SFC) announced initiatives to develop the crypto derivatives market and margin trading of digital assets.

Alternative Dispute Resolution

Hong Kong, as a global arbitration hub, has been ranked among the top 5 preferred jurisdictions for arbitration since 2015 – according to Queen Mary University of London – due to its reliability, digitalisation, neutrality on sanctions and recognition of awards in many jurisdictions.

Attracting foreign investment

In late 2024, the Hong Kong Government published the Redomiciliation Bill, aimed at attracting international companies and strengthening the city's position as a global business hub.

"The possibility of redomiciliation - changing the jurisdiction of a company without liquidation and re-registration - is in demand among businesses looking for a stable and predictable legal environment. This mechanism will allow companies to seamlessly transfer their head offices to Hong Kong, while maintaining legal continuity and asset structure. As a result, Hong Kong will be able to attract more transnational corporations, strengthen its status as an international financial center and create favorable conditions for the development of innovative businesses and startups." Alexandra Kurdyumova. Senior партнер

Taxes

VAT

Absent

Personal Income Tax

The maximum rate is limited to 17%.
Tax is levied on income derived from sources in Hong Kong and on income derived from any source if you are resident in Hong Kong.
The system of double taxation agreements (DTTs) is well developed.

Income tax

Two-tier system of taxation of corporate profits:

8.25% - on the first 2 million HKD
16.5% - on the remaining part of profit over HKD 2 million
Possibility of applying “Super-deductions” in certain sectors of the economy

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knowledge base

Read also

Main taxes in Hong Kong

Who is Hong Kong suitable for?

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