Tax Regime Attracts Record Numbers of Regional HQs to Hong Kong

by Mary Swire, Tax-News.com, Hong Kong

15 October 2004

The number of regional headquarters and regional offices in Hong Kong reached all-time highs this year, attracted by, among other factors, the territory’s low and simple tax regime, the government of the Special Administrative Region announced yesterday.

According to results of the 2004 Annual Survey of Regional Offices Representing Overseas Companies in Hong Kong, conducted by the Census and Statistics Department, there were 1,098 regional headquarters (RHQs) and 2,511 regional offices (ROs) of companies incorporated outside the territory located in Hong Kong as of 1st June 2004.

This compares to 966 RHQs and 2,241 ROs at the same point in 2003, the survey noted.

The United States topped the list of countries/territories with companies that have RHQs in Hong Kong, with a total of 256, followed by Japan with 198 and mainland China with 106 firms. UK firms also have a major presence.

All companies that took part in the survey cited Hong Kong's simple and low taxes, the free flow of information, the absence of exchange controls, the corruption-free government and the city’s status as a free port as the main advantages of locating an HQ in the territory.

However, the high cost of renting office and residential real estate was seen as a negative factor in setting up in Hong Kong.

Welcoming the survey results, Director-General of Investment Promotion at Invest Hong Kong, Mike Rowse, noted: "It is encouraging that Hong Kong remains international businesses' preferred location to manage their regional operations.”

“The results also tell us that Hong Kong's traditional advantages - including a simple and low tax regime - keep Hong Kong competitive among neighbouring markets in Asia,” he added.

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