Hong Kong is on the south east of China and consists of a large number of islands and a part of the Chinese mainland totaling approximately 400 square miles. The principal areas are the Island of Hong Kong, Kowloon and the New Territories. These areas were ceded to Britain in perpetuity in 1842 under the treaty of Nankinu and in 1898 the New Territories were leased by Britain from China for a period of 99 years and includes all the land north of Boundary Street in Kowloon up to the border with China as well as 235 small islands. There is a range of hills that divides the densely populated urban areas of the New Territories.

Separating Hong Kong island and the Kowloon peninsular is Victoria Harbour which is recognized internationally as one of the world’s perfect natural harbours. It varies in width from one to six miles and has a total of 37 miles. An additional two million square feet of land has been reclaimed in the New Territories to provide additional dockyard and warehousing facilities. It is estimated that 100,000 containers per month pass through the port and it serves more than 9,000 ocean going vessels.

Hong Kong is the leading south east Asian center for both finance and commerce and ranks as the world’s third largest financial center after New York and London. There are more than 160 licensed banks with 128 foreign banks having representative offices in Hong Kong and a further 225 licensed deposit taking Finance Companies all of which play an active role in the financing of international trade and commerce.

Communications

Hong Kong has an excellent telecommunication system enabling international direct dialing to over 200 centers. The port facilities are the most modern in the world and the airport is served by most international airlines.

Population

The population of Hong Kong is currently 6 million made up principally of people of Chinese origin and is one of the most densely populated areas in the world.

Language

The official languages are English and Chinese with English being used in the commercial and political context and Cantonese Chinese used widely in industry and domestic trade.

Political Structure

Hong Kong has been a British Crown Colony since 1842. The Governor appointed by the Queen presides over the Hong Kong Government which consists of two houses, the Executive and Legislative Councils.

The Executive Council which consists of five ex-officio members, one nominated official member and nine nominated unofficial members, with representatives of the community appointed by the Governor. The Governor consults the Executive Council on all important matters. He also has power to make legislation by way of rules, regulations and orders.

The Legislative Council includes four ex-officio members: ten official members from Government departments; and 60 elected members. Whereas previously the latter were nominated by Government agencies and various sectors of the community, the first direct election for 18 of the seats took place in 1991. The United Democrats was the victorious party. Giving the vote to individuals is intended to strengthen the Government before the Chinese takeover. Before 1985, the non-official members had been appointed by the Governor. Five prominent Hong Kong business leaders serve on both Councils. The laws of Hong Kong are enacted by the Governor with the advice and consent of the Legislative Council. Matters of public concern may be debated in this Council which also controls finance and expenditure through its Finance Committee on which three officials and all the unofficial sit. Procedure in the Legislative Council is based generally on that of the House of Commons in Britain.

Joint Declaration by the British and Chinese Governments on the future of Hong Kong.

In 1984 an agreement (the "Joint Declaration") was made on the future of Hong Kong between the British and Chinese Governments. On 1st July 1997 all of Hong Kong will become a Special Administrative Region of China. For the 50 years thereafter the following will remain unaltered:

 
1. a local government will continue and it will have full authority with regard to executive, legislative and judicial matters
2. the legal, social and economic systems will remain in force
3. all forms of property, including inheritance and ownership by non-Hong Kong citizens, will be respected
4. the current economic position, including the financial markets and the HK$, will continue
5. the financial system will remain independent and China will not seek to raise taxes in Hong Kong
6. it will remain independent for customs purposes
7. crown land leases may be granted for up to 50 years after 1997
8. the freeport will remain

Legal System

The Judiciary operates independently under the direction of the Chief Justice. The principles of England as they existed in Equity and the Statutes of England as they existed in that country on April 5, 1843, from the basis of the legal system of Hong Kong. They have been extended and modified by the application to Hong Kong of some later enactments of the United Kingdom Parliament and by the ordinances and other enactments of the Hong Kong legislature.

Taxation

The principle of Hong Kong income tax is that it is a tax on income that has its source in Hong Kong rather than a tax based on residence. Hong Kong does not therefore impose tax on non Hong Kong source income even when remitted to Hong Kong. 
Consequently, if a Hong Kong company’s trading or business activities are based outside Hong Kong no taxation will be levied.

Hong Kong companies with Hong Kong source income currently pay a rate of taxation on profits of 16.5 percent and for individuals there is a maximum rate of taxation on income of 15 percent.