I. Introduction.

It is well known that the big movement of capital in the next decade is going to be to Eastern Asia, the People's Republic of China (PRC) and India being the two most preferred targets due to the size of their consumer martkets. This article will only focus on the PRC. As it will be further explained, although foreign capitals may be invested in the PRC directly, from a taxation view point it is recommendable to do so through a Hong Kong, SAR entity. Thus, the Hong Kong tax system is lower and simpler than the Chinese mainland's one, therefore, could be more beneficial for foreign investors. Hong Kong became a Special Administrative Region (SAR) of the PRC on July 1, 1997. It has a high degree of autonomy, except in the areas of defense and foreign policy, and retains its own currency, laws, and border controls. [More]