An Introduction to Doing Business in Hong Kong 2021 - Preview

8 AN INTRODUCTION TO DOING BUSINESS IN HONG KONG 2021 Political system The Hong Kong Special Administrative Region (HKSAR) was established on July 1, 1997, after Great Britain returned it to the People’s Republic of China (PRC). HKSAR is currently ruled by the Basic Law of the HKSAR – The constitution adopted by the National People’s Congress of the PRC on April 4, 1990. Under the Basic Law, Hong Kong is allowed to retain the social, economic and legal systems present at the time of the handover for a 50 year period under the principle of “One Country, Two Systems”. Additionally, the Basic Law designates a system of governance led by the Chief Executive, who is the head of the HKSAR, and the Executive Council, which assists the Chief Executive in policy-making issues. Legal system Due to its previous status as a British colony, Hong Kong’s legal system is largely influenced by English common law. The constitutional framework for Hong Kong’s legal system is provided by the Basic Law approved by the National People’s Congress, which supplements the common law. The independent judiciary under the Basic Law ensures that Hong Kong remains within the common law system. The Court of Final Appeal is the highest court in HKSAR and is headed by the Chief Justice. Furthermore, reflecting its status as a Special Administrative Region, the HKSAR legal system is separated from the one governing the PRC under the principle of “One Country, Two Systems.” Economic system and ease of doing business Hong Kong’s economic system is defined as a free market economy and characterized by minimum intervention from the government. HKSAR is service oriented, and especially strong in the financial services, international trade, and tourism sectors. Additionally, it has strong economic links to mainland China and other major economies in the Asia Pacific region. The lack of tariff and non-tariff barriers to trade has made Hong Kong an attractive destination for investors. HKSAR has no tariffs on imported goods, no import quotas, and applies excise duties to only four commodities. Furthermore, Hong Kong has no taxes on dividends generated from doing business in the region. Free trade and low taxation have helped Hong Kong to be ranked as the world’s freest economy for 25 years in a row until 2019. Hong Kong has risen to the 3 rd place in the World Bank Group’s latest Ease of Doing Business Ranking 2020, a jump from last year’s 4 th place, with ease of dealing with construction permits ranked 1 st , paying taxes ranked 2 nd , and ease of starting a business ranked 5 th , which contains two steps and can be finished in 1.5 days. A Brief Overview of Hong Kong