Our Top 3 Digital Money Transfer Providers for UK to Hong Kong

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Summary

The Hong Kong dollar (HKD) is a freely-convertible currency and there are no controls on money transfers to Hong Kong or transferring funds out of Hong Kong. Since 1983, the HKD has been pegged to the US dollar (USD), a factor which has increased the HKDs profile as a safe currency for regional investors looking to avoid political, economic and regulatory volatility, particularly in Russia or China. The exchange rate is permitted to fluctuate along a narrow spectrum between HK$7.75 and HK$7.85 per US$1.

Hong Kong's money transfer regulations

On Hong Kong exchange platforms, the HKD is mainly exchanged against the USD; exchanges between these two currencies reached an average daily value of US$88bn as of 2018, almost 95% of total trades involving HKD. The next two most frequent exchanges are with the euro (US$793m/day) and the Japanese yen (US$400m/day). Hong Kong was the thirteenth-largest foreign exchange platform in terms of daily trade volume in 2018, largely thanks to its proximity to China and open monetary policy combined with the fact it is pegged to the US Dollar.

Hong Kong’s regulatory authority

The Hong Kong Monetary Authority (HKMA) acts as the territorys de-facto central bank under the authority of the Finance Secretary. It is responsible for setting monetary policy, monitoring the health of the financial system, and ensuring banks compliance with local and international regulation. The HKMA also manages the currencys linked exchange rate system and monitors the Exchange Fund, Hong Kongs foreign exchange reserves. There are overall four main regulatory bodies within Hong Kong the others are the IA, the SFC and the MPFSA.

Taxation and property issues

Given HongKongs position as an international financial centre, restrictions on companiesand individuals, both foreign and domestic, are relatively light. Profitsgenerated locally can be freely exchanged into other currencies and transferredabroad. The same corporate income tax rate, 16.5%, is applied to foreign- andlocally-owned businesses. Unlike most countries, Hong Kong applies no taxes oncapital gains or withholding taxes on dividends or royalties. The top rate oftax for individuals is set at 17% which makes Hong Kong one of the mostappealing jurisdictions to carry out financial deals.

Hong Kong's economic background

Hong Kong has emerged as a major financial and economic centre, though with a complicated political environment. Hong Kong was made a Special Administrative Region (SAR) of the Peoples Republic of China in July 1997. In 2014, pro-democracy groups in Hong Kong, including the prominent Occupy Central party, have scaled up their push for greater autonomy in the selection of Hong Kongs leaders. China is pushing back with suggestions that future candidates be pre-screened by a nominating committee that would inevitably have loyalty to the mainland. The political situation will likely remain contested in the coming years, with the next election for Hong Kongs chief executive due in 2017.

Contrary to China, Hong Kong follows a free market system with limited government intervention in the financial sphere, and it remains open to foreign investment. There are no special restrictions, currency or otherwise, for the local incorporation of foreign-owned businesses, registration of branches of foreign operations, or the creation of representative offices. As of 2019 Hong Kong is widely regarded as the world’s most free economy. Their economy is also made up of 90% services, making their manufacturing industries almost non-existent.

Currency

The Hong Kong dollar is issued by the HKMA. Banknotes are printed in denominations of $10, $20, $50, $100, $500 and $1,000. Coins are issued with values of $10, $5, $2, $1, as well as 10, 20 and 50 cents.