Hong Kong is an international financial center offering a sophisticated and secure variety of financial services. It is home to many local and international banks making this city one of the top banking centers in the world and the second largest in Asia following only Japan.
Banks in Hong Kong are Stable and Secure
Banks in HK have come through the recent global financial crisis in better shape than many US and European banks. According to the Hong Kong Monetary Authority (HKMA), charged with licensing HK's banks, the aggregate capital adequacy ratio of the banking sector, the liquidity ratio, the classified loan ratio, and other banking asset-quality indicators continue to be favorable.
In September 2010, HKMA issued a statement suggesting that the local banks would have few problems complying with the latest changes to international capital adequacy rules, noting the banks' capital ratios were well above existing standards.
There are three types of banking institutions in Hong Kong: licensed banks, restricted-license banks, and deposit-taking companies. Only those institutions authorized by the HKMA as licensed banks are permitted to accept deposits and to offer checking and savings accounts.
The Licensed Banks must be incorporated and must publish their annual audit reports as well as monthly returns showing assets and liabilities and allocate inn reserves, realized profits, and net assets. The audit reports are reviewed for compliance with banking laws and standards and violations of the laws and standards are punishable by fines, imprisonment, or both.
Foreign-owned commercial banks can establish a Hong Kong branch if they apply for a license to enter the financial services market. There are almost 200 foreign owned commercial banks from 30 countries doing business here and many local representations of overseas banks are also doing business in the city.
Hong Kong's Favorite Tax Policy
The city does not consider itself an offshore banking center but rather a low tax jurisdiction which offers offshore account holders favorable tax laws.
Not only are the tax rates lower than other jurisdictions the taxes are levied only on income earned in the city and not on income eared outside. In addition, there are no capital gains taxes, no withholding taxes, no sales taxes and no annual net worth or accrued earnings taxes on companies which retain earnings.
The tax rate in 2011 for individuals' salaries is 15% and the business profits tax is 16.5% for corporations and 15% for unincorporated businesses. There is no tax on dividends, interest or royalties earned.
Other Reasons to Bank in Hong Kong
In addition to the strong and stable banking community and favorable tax laws other reasons Americans and Europeans consider Hong Kong an attractive banking jurisprudence include:
- The official language is English
- There is a long held tradition of protecting account holder's privacy
- Local bank accounts and credit cards can be obtained in many different currencies and it is possible to hold gold in an account as well
- HK banks offer excellent interest rates on CD's