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Learn About Incorporating > Information on Hong Kong > Background Information

Location & Population

Hong Kong is situated at the south-eastern tip of the mainland of China. A total area of just under 1,100 square kilometers covers Hong Kong Island, Kowloon and the New Territories and Islands. Its population is around 6.8 million.

Business Environment

Hong Kong is famous for its open economy system and it is one of the world's premiere financial centres. Its freedom of capital movement, sound legal system, efficient transportation system, state-of-art telecommunication backbones and the wide use of English in business have contributed to its success.

Legal System

Hong Kong was ruled by the British Government but it became the Special Administrative Region of the People's Republic of China (PRC) on 1 July 1997. The British introduced the English legal system to Hong Kong. As a result, English common law and rules of equity apply. Laws in Hong Kong have also developed through the Legislative Council enacting its own statute law (i.e. Ordinance). After 1997, the laws in Hong Kong remain basically unchanged and Basic Law serves as the constitutional legislation.

Companies incorporated or registered in Hong Kong are governed by the Companies Ordinance (Chapter 622 of the Laws of Hong Kong).

Government Structure

Hong Kong is headed by the Chief Executive. The executive arm of the Government, the Administration, is organised into the Government Secretariat and departments. Bureaux in Government Secretariat formulate policies and initiate legislative proposals while departments implement laws and policies and provide direct services to the community.


There are several distinctive features of the Hong Kong tax system. Income taxes (salaries tax, profits tax and property tax) are charged on income which has a Hong Kong source (territorial source concept). Stamp duty is charged on instruments which relate to Hong Kong assets.

There is no capital gains tax and dividend income tax. The standard tax rate of 15% and corporation profits tax rate of 16.5% are relatively low compared with other developed countries.


Banknotes in Hong Kong are issued in denominations of HK$10, HK$20, HK$50, HK$100, HK$500 and HK$1,000. Coins are issued in denominations of HK$10, HK$5, HK$1, 50 cents, 20 cents and 10 cents.

Exchange Rates

Since 1983, the Hong Kong dollar has been tied to the US dollar at the rate of around US$1=HK$7.80.