Why is Hong Kong holding company an attractive option for foreign investors investing in China?

 There are a number of reasons:

• Geographical proximity
• Low tax rate – only 16.5 percent for corporate income tax and 15 percent for partnerships and sole traders
• Territorial source principle of taxation – only income derived from Hong Kong is taxable
• Eligibility for companies to claim offshore status – this enables companies total tax exemption on profits sourced outside of Hong Kong
• No value-added tax
• No withholding tax