Hong Kong remains one of Asia’s leading financial hubs and continues to attract entrepreneurs and international investors thanks to its dynamic economic environment, competitive tax system, and well-established legal framework. Many European companies, including French firms, set up their regional headquarters there or expand their operations to access Asian markets.
Why Invest in Hong Kong?
Hong Kong offers a favorable environment for numerous sectors, including international trade, finance, technology, logistics, luxury goods, professional services, and e-commerce. Its strategic location, modern infrastructure, and proximity to mainland China make it a preferred destination for businesses looking to expand across Asia.
Simple and Competitive Taxation
One of Hong Kong’s main advantages lies in its tax regime. The territory applies the principle of territoriality, meaning that, in principle, only profits derived from activities carried out in Hong Kong are taxable.
Hong Kong also offers several tax advantages:
- One of the most competitive corporate profit tax rates in the region;
- No VAT (VAT/GST);
- No withholding tax on dividends and, in most cases, on interest;
- No capital gains tax in many situations.
The Principle of Territoriality
Unlike many countries, Hong Kong generally does not tax income generated outside its territory. As a result, some companies whose operations, clients, and suppliers are located abroad may — subject to applicable tax rules and review by local authorities — benefit from an exemption on their offshore profits.
As each situation is different, it is recommended to obtain tax advice before claiming this status.
Tax Treaties and a Recognized Legal Framework
Hong Kong has signed numerous double taxation avoidance agreements with various countries. These agreements can help reduce the international tax burden and facilitate cross-border investment.
The territory also applies international standards regarding tax transparency, anti-money laundering (AML) measures, and regulatory compliance, offering an environment valued by international investors.
Is Hong Kong Still a Good Choice in 2026?
For businesses oriented toward Asian markets or international trade, Hong Kong remains an attractive jurisdiction thanks to its competitive taxation, stable legal system, developed banking sector, and ease of company incorporation.
However, before setting up a company in Hong Kong, it is essential to assess tax obligations in your country of residence, economic substance requirements, and the international rules applicable to your activity.
FAQ: Investing and Setting Up a Company in Hong Kong
Why set up a company in Hong Kong?
Hong Kong is recognized for its competitive taxation, business-friendly environment, common law legal system, and strategic position at the heart of Asia. It serves as an excellent base for international trade and expansion into Asian markets.
Can foreign companies set up a business in Hong Kong?
Yes. Foreign investors can establish a company in Hong Kong and hold 100% of its capital, with no residency requirement. Company formation is generally fast and can be completed remotely with the help of a specialized service provider.
What is the corporate tax rate in Hong Kong?
Hong Kong applies an attractive tax regime with one of the most competitive profit tax rates in Asia. Taxation depends notably on the profits generated and their source. As tax rules evolve regularly, it is recommended to verify current rates before setting up a business.
Does Hong Kong apply VAT?
No. Hong Kong does not levy VAT or a goods and services tax (GST), which simplifies administrative management for businesses.
What is the principle of territoriality?
Hong Kong’s tax system is based on the principle of territoriality: in principle, only profits derived from activities carried out in Hong Kong are taxable. Income generated abroad may receive different tax treatment depending on the circumstances and applicable regulations.
Is a Hong Kong company tax-exempt?
Not automatically. Each company must analyze the source of its income and comply with the requirements of the Hong Kong tax authorities. Any potential exemption depends on the facts and the tax rules in force.
Is Hong Kong still an attractive jurisdiction in 2026?
Yes. Despite international regulatory developments, Hong Kong remains an attractive destination for businesses active in international trade, services, finance, new technologies, and e-commerce, thanks in particular to its economic environment, high-performing banking sector, and competitive taxation.
Must a Hong Kong company be declared in one’s country of residence?
In most cases, yes. Directors and shareholders must also take into account the tax and reporting obligations of their country of residence. It is advisable to consult an international tax expert before setting up a company in Hong Kong.
