TRANSFER MONEY: Hong Kong

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Hong Kong RESOURCES

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$47.3bn in April 2013, 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 fifth-largest foreign exchange platform in terms of daily trade volume in 2013, largely thanks to its proximity to China and open monetary policy.

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.

Taxation and property issues

Given Hong Kongs position as an international financial centre, restrictions on companies and individuals, both foreign and domestic, are relatively light. Profits generated locally can be freely exchanged into other currencies and transferred abroad. The same corporate income tax rate, 16.5%, is applied to foreign- and locally-owned businesses. Unlike most countries, Hong Kong applies no taxes on capital gains or withholding taxes on dividends or royalties.

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.

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.

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