!
are employed in a variety of investments both long and short-term, denominated in several major currencies.
Coins of $5, $2 and $1, fifty, twenty, ten and five cents, and notes of one cent denomination are issued by the Government.
About HK$10 billion (US$2 billion) worth of this currency is in circulation.
Banking
Hong Kong's excellent banking and financial facilities have played a vital role in the territory's growth from an entrepot to a major manufacturing centre. Banks are well adapted to financing international trade as well as domestic activities. They maintain extensive credit information and commercial introduction services for the benefit of their clients and for those who wish to establish business contacts with Hong Kong,
There are 115 licensed banks maintaining over 1,000 offices in Hong Kong, offering a comprehensive banking service of the highest order. The majority of these banks have branches and/or correspondents all over the world. Bank deposits stand at well over HK$70 billion (US$14 billion).
In the absence of a central bank, and in view of the important role played by banks in commerce and industry, a Commissioner of Banking is empowered by the Banking Ordinance to exercise general supervision and control over banks.
Exchange Controls
There are no controls of any kind on the movement of funds into and out of Hong Kong for any purpose.
Bank Loans
Bank loans and advances are available to both local and foreign companies conducting business in Hong Kong. In order to provide capital for the industrial community, many banks have assumed the role of a medium term lender. This type of finance usually takes the form of mortgaging land to the bank for building finance. These loans are usually repayable over a period of three to five years.
Banks are also prepared to grant medium term facilities for the purchase of machinery. Current bank loans to the local manufacturing industry amount to about HK$8.5 billion (US$1.7 billion).
Deposit-taking
Bank-owned finance companies and other non-bank financial institutions with the business of taking deposits operate under the Deposit-taking Companies Ordinance.
There are about 270 such companies with deposits totalling more than HK$25 billion (US$5 billion). Their assets of over HK$90 billion (US$18 billion) include offshore loans amounting to more than HK$20 billion (US$4 billion). The Commissioner of Banking is also the Commissioner of Deposit-taking Companies, and prudential supervision similar to banks is imposed.
29
Taxation
Tax is levied under the Inland Revenue Ordinance, and is charged only on income or profits arising in, or derived from, Hong Kong. No tax is applied to income or profits arising abroad, even if remitted to Hong Kong. The standard rate of tax is 15 per cent. There are no tax holidays or special tax incentives in Hong Kong.
Hong Kong does not have tax treaties with any country. However, the Inland Revenue Ordinance provides for limited double taxation relief when income chargeable in Hong Kong has borne tax in another Commonwealth territory (excluding Britain). Under the taxation system of many foreign countries, includ- ing the USA, it is possible for a citizen abroad to take either a foreign tax credit or tax deduction on his tax return for income taxes imposed upon him by a foreign country. Certain procedures must be adhered to, and further details should be obtained from the appropriate tax authorities.
Earnings and Profits Tax is broken down into Property, Profits, Salaries and Interest Taxes. A brief description of each of these taxes is:
-Property Tax is a charge on the owner of land or building situated in Hong Kong, Kowloon and nearly all the developed and developing areas of the New Territories. Property occupied by the owner for residential purposes (restricted to one property per owner), wherever situated, is exempt from Property Tax. This is computed at the standard rate of 15 per cent on 80 per cent of the assessable value, the latter value being based on current market rental value. If the owner uses his property for business purposes he can offset the Property Tax against any Profits Tax charged on his business, and where Property Tax exceeds the Profits Tax he can claim a refund of the
excess.
-Profits Tax is charged on any individual, partnership or corporation carrying on a business in Hong Kong. The rates of tax are 15 per cent on individuals and partnerships, and 17 per cent on corporations. A single assessment is made on the aggregate profits, less any losses, of all business owned by a company. Separate assessments are made on each business owned by an individual or partnership, but a taxpayer who suffers a loss in one business can obtain relief against his other assessable income by electing for personal assessment or, alternatively, the loss can be carried forward and set off against future profits of the same business.