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

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands 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 2 |

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands 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 | 3

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands 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 4 |

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands 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 | 5

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands Benefits of a Hong Kong Company  Banking and RMB Settlement World’s 3 rd 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 6

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands Setting up a Hong Kong Company | 7  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

Amsterdam Rotterdam Eemnes Luxembourg Germany London Paris Barcelona Cyprus Malta Hong Kong Singapore Mauritius Curacao Aruba Bonaire British Virgin Islands Contacts | 8 THANK YOU Orangefield ICS Limited 6 th Floor St. John’s Building, 33 Garden Rd. Central, Hong Kong Margaret Grice Canadian Representative