Leveraging Hong Kong as a Platform For Asia

1. Leveraging Hong Kong as a Platform For Asia Presentedby: Margaret A. Grice HKCBA, Think Asia – Think Hong Kong October 2nd, 2013

2. | Relationship between Hong Kong and China • July 1, 1997, Hong Kong reverted to become a “Special Administrative Region(SAR)” of the People’s Republic of China although allowing to maintain its economic and legal systems …”One Country, Two systems” • Over 50% of China’s inward investment comes from Hong Kong • Continued liberalization of trade between Hong Kong and Mainland China (CEPA) • 30% of mainland China’s trade volume is handled through Hong Kong • The Chinese government provides certain administrative and tax benefits to Hong Kong Companies doing business in China that are not available to most other international jurisdictions. • New York is to North America what Hong Kong is to Asia

3. | Benefits of a Hong Kong Holding Company • While waiting for your WOFE to be registered (4-6 months) • Sign the lease in China • Hires employees • Pays the employees • Handle all finances for the new China office • Industry concessions • Some industries are restricted in China to a foreign company, but open to a Hong Kong company i.e. recruitment and logistics

4. | Benefits of a Hong Kong Holding Company • Simple Tax System • Territorial Tax Regime: Profits are taxed only if the source of the transactions are deemed to be onshore to Hong Kong • Onshore profits = 16.5 % Offshore profits = 0 % • No capital gains tax • No VAT or sales tax • No estate duty • Growing international network of Free Trade Agreements as well as Agreements for Avoidance of Double Taxation (i.e. Canada) • AND Government runs a surplus most years

5. | Benefits of a Hong Kong Holding Company • Profit Repatriation • Double Taxation Agreement between Hong Kong and China allows for Preferential tax on payment of: • Interest (7% vs 10%) • Royalties (7% vs 10%) • Dividends (5% vs 10%) • Using Hong Kong as the dividend receiving company and implication of Tax Circular on requirements for substance

6. Benefits of a Hong Kong Company • Banking and RMB Settlement • World’s 3rd largest financial centre • Absence of any foreign exchange controls • Hong Kong offers the largest pool of Renminbi liquidity outside of mainland China • 142 licensed banks plus 82 representative offices of banks from 38 countries allowing financing flexibility for trade paper etc. • 55% of Domestic Banking is in Foreign Currencies

7. | Setting up a Hong Kong Company • Simple company registration process • Company can be incorporated in a few business days • No requirements for a minimum amount of share capital • No requirement for shareholders to be Hong Kong residents • One Director required who can be the company’s sole shareholder • Company secretary, either a company or individual must reside in Hong Kong • Opening a Bank Account • Once your company is registered, you can apply for a bank account • Increasingly stringent requirements can lead to a 6 week timeframe • You need to be present to open the account unless utilizing a firm with that specialization

8. | Contacts THANK YOU Margaret Grice Canadian Representative margaret.grice@orangefield.com +1 289 795 3600 Orangefield ICS Limited 6th Floor St. John’s Building, 33 Garden Rd. Central, Hong Kong