Hong Kong’s tax system offers businesses a powerful platform for tax optimization through its territorial tax basis, low profits tax rates (8.25% on the first HKD 2 million, 16.5% thereafter), and the Foreign-sourced Income Exemption (FSIE) regime. By establishing a Hong Kong entity, companies can leverage exemptions on foreign-sourced income, such as dividends and IP earnings, and benefit from over 40 Double Taxation Agreements (DTAs) to minimize cross-border tax liabilities. Strategic structuring, like using holding companies or treasury centers, further enhances efficiency. However, compliance with strict conditions and professional guidance are essential to navigate regulations and maximize benefits in this dynamic financial hub.