- Call us: +852 2341 1444
- info@kaizenvis.com
News
Hong Kong | The New CIES (Part I) |
||
|
What are some of the advantages for a high-net-worth person to have a Hong Kong Passport through the New Capital Investment Entrant Scheme (the “New CIES”)? (Part1)
Following the suspension of the Capital Investment Entrant Scheme in 2015 (the “Old CIES”), the Hong Kong Immigration Department (IMMD) reintroduced the New CIES in March 2024. Under this program, applicants who invest HKD30 million in permissible investments in Hong Kong for a duration of seven years can apply for Hong Kong permanent residence or unconditional stay. Permissible investments include equities, debt securities, deposit, subordinated debt, eligible collective investment schemes and non-residential real estate.
In this series of two articles, we will explore the advantages for a high-net-worth individuals of obtaining a Hong Kong Passport through the New CIES. This first article focus on why a Hong Kong Passport can be highly advantageous for certain high-net-worth individuals. We will break down the benefits into two parts: (1) high-net-worth mainlanders, (2) high-net-worth foreigners.
|
|
|
|
|
||
Benefit for High-net-worth mainlanders |
||
|
The Hong Kong passport offers significant benefits to high-net-worth mainlanders. Notably, approximately 90 % of applicants for the Old CIES are from Mainland China. Here are some key benefits of holding a Hong Kong passport:
|
||
1. |
Dual Nationality Considerations |
|
|
For high-net-worth mainlanders contemplating obtaining a second nationality while retaining their Chinese citizenship, acquiring a Hong Kong Passport is the only viable solution. Mainland China does not recognize dual citizenship, whereas Hong Kong appears to tolerate it as long as Hong Kong residents do not actively renounce their Chinese nationality.
Mainlanders cannot simultaneously hold Chinese citizenship and another country’s citizenship. Attempting to do so results in automatic loss of Chinese nationality, as stated in Article 9 of the Chinese Nationality Law: “Any Chinese national who has settled abroad and who has been naturalized as a foreign national or has acquired foreign nationality of his own free will shall automatically lose Chinese nationality.”
Hong Kong, while also not formally recognizing dual citizenship, appears to tolerate it. The Standing Committee of the National People’s Congress (NPCSC) gives some degree of authority on this matter in the “explanation” made in the 19th session of the standing committee the 8th national people congress on 15 May 1996. The IMMD later clarified the NPCSC’s stance :
“The NPSC have given explanations concerning the implementation of the Chinese Nationality Law in the HKSAR. According to the explanations, for those Hong Kong residents who are of Chinese descent and born in Chinese territories (including Hong Kong) are Chinese nationals, notwithstanding that they hold or have held any foreign passport for the purpose of travelling to other countries and territories.”
“Unless you have renounced your Chinese nationality, you are a Chinese national in HKSAR.”1
In other words, unless an individual actively renounces their Chinese nationality, they are still considered as Chinese nationals. While the IMMD does not explicitly endorse dual nationality, it allows individuals to maintain their Chinese status unless they choose to renounce it. High-net-worth mainlanders may have many reasons to retain their Chinese citizenship, such as receiving additional support from the Chinese government and enjoying unrestricted entry into China. If these individuals wish to acquire foreign nationality while preserving their Chinese citizen status, obtaining a Hong Kong passport becomes their sole solution.
|
||
2. |
Tax Advantages |
|
|
|
Another significant benefit for high-net-worth mainlanders pertains to taxation. Under the provision of Individual Income Tax Law of the People ‘s Republic of China (IIT), Chinese residents are generally subject to individual income tax on worldwide income. Specifically, Article 1 of the IIT states:
“An individual who is domiciled in China, or an individual who is not domiciled in China but has resided in China for an aggregate of 183 days or more within a tax year, shall be regarded as a resident individual. Income received by a resident individual from within China or overseas shall be subject to individual income tax pursuant to the provisions of this Law.”
According to this law, individuals domiciled in China are considered resident individuals and are subject to worldwide income tax. Notably, even if a person studies, works, visits or travels aboard, if they intend to return and continue living in Mainland China, they are still regarded as resident individuals and remain subject to worldwide income tax.
For some high-net-worth mainlanders, worldwide income tax can be significant, and they may wish to seek alternatives. Hong Kong’s tax system provides an attractive option. Hong Kong follows a territorial basis of taxation, meaning that only profits earned within Hong Kong are subject to taxation. The Hong Kong Inland Revenue Department explains this concept as follows:
“The charging of salaries tax in Hong Kong is based on the territorial concept. This means that all income arising in or derived from Hong Kong from an office, employment or any pension is assessable irrespective of whether tax on that income has been paid in other jurisdictions.”
Given Hong Kong’s tax structure, all income generated overseas is not subject to tax. If high-net-worth mainlanders who choose to immigrate to Hong Kong and become Hong Kong tax residents, they can benefit from the territorial taxation system as compared with the worldwide taxation in Mainland China.
|
|
3. |
Education |
|
|
|
The final key benefit for high-net-worth mainlanders holding a Hong Kong passport concerns education for their children. Hong Kong students have a much smoother pathway than mainland students when aiming to study at top universities in Mainland China, such as Beijing University, Tsinghua University, and Fudan University. In 2023, nearly 13 million student candidates participated in the national college entrance examination in Mainland China, known as the “Gaokao”2. Consequently, mainland students have to have exceptionally high academic results in order to secure admission to those top-notch universities, and often, those who are admitted are usually the top student in a city or even a province.
For high-net-worth mainland parents aspiring to send their children to top mainland universities, immigrating to Hong Kong may be a strategic choice, as the application process for these mainland universities becomes significantly more accessible for Hong Kong residents.
|
|
|
||
1. |
Common Law Jurisdiction and Capitalism system |
|
|
|
The As China is the second-largest economy and the second most populous country, high-net-worth individuals may seek opportunities within its borders. Under the “one country, two systems” principle, Hong Kong stands out as the sole jurisdiction operating under common law and maintaining a capitalist economic system. Consequently, high-net-worth foreigners often find Hong Kong the most familiar and adaptable due to its close resemblance to Western legal and economic frameworks.
Hong Kong’s legal system follows the common law tradition, providing predictability and stability aligned with legal systems in many Western countries. For instance: if a high-net-worth individual plans to establish a company in Hong Kong, they will find that their rights and obligations as a shareholder closely mirror those in Commonwealth countries. Also, when engaging in commercial contracts with entities, their contractual rights are protected in a manner similar to other Commonwealth jurisdictions. |
|
Conclusion |
||
|
In summary, Hong Kong uniquely provides these advantages for high-net-worth individuals considering settling in the region. In Part II of this article, we will explore why applying for a Hong Kong passport under the New Capital Investment Entrant Scheme (New CIES) is particularly beneficial compared to other visa programs.
It is important to note that the Hong Kong New CIES has stringent and specific eligibility requirements, and the application process is complex, time-consuming, and involves risks. It is recommended that interested applicants consult with an experienced immigration professional to determine if the program is the right fit for them.
|
||
|
|
||
|
||
|
|
||
Related Topics: HK| New CIES Procedures & Fees | HK | Top Talent Pass Scheme Procedures and Fees | HK | Verification of Eligibility for PR | HK | Work Visa (GEP/ASMTP) Procedures and Fees
Tags: #hknewcies #hkcies#hongkongvisa #toptalent #hongkongworkvisa #immigrationlawyer #hkpr #hkimmigration #hkresidency #hklawyer #hkciesfees #hknewciesfees |
||
|
Should you need any assistance or wish to obtain more information, please also browse our official website at www.kaizenvis.com or contact us through the following means: |
||
|
T: M: Skype: E: |
+852 2341 1444 +852 5616 4140, +86 152 1943 4614 / WeChat / Line: +852 5616 4140 kaizencpa info@kaizenvis.com |
|
