According to the World Bank's 'Doing Business 2016 Report', Hong Kong continues to be one of the world's easiest places to do business, and tops the ranks in Asia Pacific for starting one. To sustain its economic growth and competitiveness, the Hong Kong government underwent three key changes in 2015: the statutory minimum wage (SMW), Competition Ordinance and Foreign Account Tax Compliance Act (FATCA).
Mark O'Sullivan, Managing Director of TMF Hong Kong, outlines the key changes that every company operating in Hong Kong should know.
Statutory minimum wage
From May last year, employers that were paying their staff an hourly wage had to meet the revised statutory minimum wage rate of HKD32.5 per hour. The aim of the SMW regime was to strike an appropriate balance between forestalling excessively low wages and minimising the loss of low-paid jobs.
The Competition Ordinance (Ordinance) came into a full effect on 14 December 2015 with the aim to maintain a free and level playing field for businesses. According to the Competition Commission, more consumers would be supplied with goods and services at the best quality and price where there is competition. Local SMEs also benefit from the increased market opportunities and reduced barriers.
Under the Ordinance, anti-competitive conducts, such as price fixing, market allocation, output restriction and bid-rigging are prohibited. The Competition Tribunal has a broad‐range of sanctions available to levy against a contravening where rules are broken. These include a pecuniary penalty that is up to 10% of the turnover of the undertakings involved, for up to three years in which the contravention occurs, director disqualifications, prohibition, damage and other orders.
Foreign Account Tax Compliance Act
In 2014, a Model 2 intergovernmental agreement ("IGA") was signed between Hong Kong and the United States of America, implementing FATCA to help minimise the compliance burden of FATCA on HK financial institutions.
Companies or professionals may consult their financial institutions or seek advice to complete a self-certification and Form W-8 for the collection of information and documents, as well as the financial assets held by their institutions.
FATCA also impacts many other entities outside of the traditional financial services sector, with operations both in and outside of the United States.
Standard working hours and the automatic exchange of financial account information are the two main areas the Hong Kong government will focus on in 2016.
The Standard Working Hours Committee was organised in April 2013. The committee is now continuing to explore the directions of a working hour policy applicable to Hong Kong.
As the subject of working hours carries widespread and significant implications for the overall labour market, manpower demand, employment relations, economic development and business competitiveness, it is important for companies to keep up to date with relevant legislation.
Hong Kong will put in place a legal framework and administrative system to implement the automatic exchange of financial account information (AEOI). The Inland Revenue Department (IRD) started a formal consultation in April 2015; and plans to enact the AEOI legislation in June 2016, issuing AEOI returns from January 2018.
Taxpayers should pay attention to AEOI developments to understand their rights and obligations, and the best ways to safeguard their privacy and confidentiality.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.