There are different taxation policies and legislation in mainland China, Taiwan and Hong Kong. Whether or not you have effective tax planning and wealth allocation is very much dependent on your knowledge of these differing policies that operate throughout the Greater China region. We have made a brief comparison below:

China's taxation is very complicated. In general, individuals are liable to be taxed on all their income including interest accrued, dividends, gain on property transfer and rental. The maximum tax rate is 45%. Businesses, are taxed on profits from sales, servicing, property transfer, interest, rental, dividend, etc. The maximum rate is 25%. At present there is no estate or gift taxation but it is under consideration.

There are 18 different taxes for individuals and businesses in Taiwan, these are levied at different rates. Personal taxation may include: consolidated income tax, at a maximum of 40% and estate and gift tax at a maximum rate of 50%. Businesses taxation consists of: sales tax at a maximum of 5% and profit tax at a maximum of 25%.

Hong Kong's tax system is one of the most business friendly in the world-simple and low. Basically, there are only 3 taxable incomes, namely business, salaries and property. The tax rate is between 15% - 20%. There is no value added tax, sales, capital gains or gift tax, and estate duty has been recently cancelled. Hong Kong adopts the territoriality basis for taxation purposes, whereby only income / profit arising in or derived from Hong Kong is chargeable to tax.

A Tax Treaty between countries avoids double taxation or tax evasion. When individuals or businesses decide where and how their assets are to be distributed, they need to have a clear understanding of the taxation agreements that may impact them. For instance, China has reciprocal agreements with about 86 countries; Taiwan with about 16 countries, including New Zealand, Australia, Singapore, Vietnam, Indonesia and Malaysia; Hong Kong and China also have a comprehensive reciprocal arrangement.

The basic income tax establishes the minimun tax payable for businesses and individuals in a country since most of these individuals and businesses are exempted from taxation Countries that exercise the basic income tax include U.S.A., Canada, Korea, Taiwan and India.

A tax heaven has no income or sales tax. Shareholders are not taxed on income, share transfer, estate and gifts. In general, these tax free zones do not have any taxation agreement with other countries, nor do they have any basic income tax. Tax heavens can be a useful tool for wealth management.