If you want to grow rapidly, taking your business to a jurisdiction such as Hong Kong is the best thing. For decades, Hong Kong administration has put all efforts into creating systems that help local enterprises to grow. The jurisdiction is an island that lacks arable land or minerals to drive its economy.
Therefore, it has become a unique launch pad that every enterprise can use to grow and become a multinational. This idea has worked very well because Hong Kong has for many years been ranked among the business paradise that investors anticipate going to.
In mid-2016, Hong Kong passed the CRS framework that aims at helping to curb tax avoidance. The CRS system is based on Automatic Exchange of information (AEOI). The primary role of the AEOI was to ensure that tax information of offshore accounts was shared with different OECD members. However, the Hong Kong administration looked at it differently and saw an opportunity to advance its focus on the business economy.
Application of AEOI was pegged on CTDAs
Like other frameworks, OECD left member states to identify the best ways to implement CRS framework. Hong Kong, when passing the CRS framework in 2016, saw the new framework as a great opportunity to advance its business focus. Therefore, it added new requirements for CRS to be operationalized.
The CRS Hong Kong framework requires that only the countries that have signed Comprehensive Avoidance of Tax Agreement (CTDA) can exchange financial info with Hong Kong. This implies that there will be more bilateral trade agreements for Hong Kong that will benefit local enterprises. This is a great step in making Hong Kong more competitive. One great example of a CTDA signed under the CRS framework was between Saudi Arabia and Hong Kong in August of 2017.
The best opportunity for Hong Kong to seek new market for local businesses
For years, Hong Kong has won the tag of being the best business Hub in the globe. But a lot of countries appear to hold a different view. Some believe that investors and businesses going there are only interested in avoiding meeting tax obligations at home. These countries have in most of the cases presented numerous blocks and high taxes for companies based in Hong Kong. Now, things are different.
Under the Hong Kong CRS framework, even these countries that had placed a lot of blockades against companies located in Hong Kong are left with no option. They have to agree to open their markets for Hong Kong businesses. This means that new markets will start opening because of the new framework. If you had buts about incorporating a business in Hong Kong, it is advisable to change and go there as soon as possible. The operational environment is about to get even better.
The Hong Kong authorities always look at situations with a business angle. Whether it is an international framework such as CRS or a local situation, the outlook will always be focused on making the environment better for businesses.