The Special Case Of Chinese Nationals Seeking To Apply For The New Capital Investment Entrant Scheme
The Challenges They Face
About NCIES
The New Capital Investment Entrant Scheme (NCIES) offered by Hong Kong is designed to allow individuals to obtain residency in Hong Kong through a significant investment in the local economy.
This scheme is particularly attractive to high-net-worth individuals seeking to gain residency in Hong Kong for our favourable tax regime, high standard of living, and access to international markets.
However, Chinese nationals interested in the NCIES face unique challenges due to China’s regulatory environment and specific conditions of the NCIES.
Here’s a focused look at these challenges.
Foreign Permanent Residency Requirement
One of the notable requirements for the NCIES is that all applicants must have net assets of no less than HKD30 million to invest in permissible investment asset classes in Hong Kong.
Moreover, Chinese national applicants must be holding permanent residency (PR) in a foreign country.
Whilst many ‘well-heeled’ Chinese nationals may have already secured PR by investment in a third country (there are many such programmes to choose from – although not all provide immediate access to PR), generally speaking, most applicants tend to utilise a “PR of convenience,” such as ‘buying’ a PR Green Card in countries like Vanuatu.
Challenges of Exporting Capital from China
The stringent capital controls in China pose a significant challenge for Chinese nationals wishing to invest in the CIES.
The Chinese government’s restrictions on the amount of money that can be transferred out of the country annually make it difficult for potential applicants to meet the investment threshold required by the CIES.
However, Hong Kong being a sophisticated banking and finance centre, has a few ways for this challenge to be overcome and there are several bankers in the HKSAR who have the legal tools to bring this about – although the service doesn’t come cheaply.
Cost is usualy between 4 and 6% of the funds in play and generally takes between 2 and 7 days.
The funds must be fully tax paid, 100% owned beneficially and legally aquired.
HKSAR Passport Is The End Game
Chinese nationals have a strong interest in securing Permanent Residency (PR) and subsequently obtaining a Hong Kong Special Administrative Region (HKSAR) passport due to the significant advantages it offers, particularly in terms of global mobility. The HKSAR passport is ranked as one of the most powerful in terms of visa-free access, significantly surpassing the visa-free access that the People’s Republic of China (PRC) passport offers. This difference in global access is a compelling reason for Chinese nationals to pursue PR in Hong Kong, aiming to enhance their international travel ease and opportunities.
Visa-Free Access
The HKSAR passport holders enjoy visa-free or visa-on-arrival access to over 150 countries and territories worldwide, including major destinations in Europe, North America, Asia, and Australia. This extensive visa-free access is in stark contrast to the PRC passport, which offers significantly less visa-free travel options. For business people, investors, and frequent travelers, the ability to travel easily without the hassle of obtaining visas is a substantial benefit. It facilitates smoother international business operations, leisure travel, and access to global education opportunities.
Moving into PR Status
The process of obtaining PR in Hong Kong is straightforward but requires meeting specific criteria. Generally, one needs to have continuously resided in Hong Kong for a minimum of seven years. This residency must be ordinary, meaning the individual must make Hong Kong their only place of permanent residence. This requires an on the ground footprint in the HKSAR demonstrating ordinary residence in the HKSAR.
Here is the test for approval:
” You need to have been continuously and ordinarily resident in Hong Kong for a period of not less than seven years, where absences from Hong Kong during that time, whether long or short, are of a merely temporary nature. This is evidenced by what you leave behind in Hong Kong to return to at the end of each temporary stay abroad. Additionally, you need to have held back-to-back residence visas throughout the claimed seven years of Ordinary Residence in Hong Kong. There must be no security objection to being granted the Right of Abode (i.e. PR), and no outstanding taxation liabilities in your hands in Hong Kong at the time of applying for Right of Abode. It is also important to have been in Hong Kong for a settled purpose, which, in the case of the NCIES visa is investment/work in Hong Kong. ”
Applicants must also prove they are capable of supporting themselves and their dependents financially without relying on public assistance in Hong Kong.
Clearly not an issue for NCIES visa holders.
Transition to HKSAR Passport Status
Upon obtaining PR status, individuals are eligible to apply for a HKSAR passport. The application process involves submitting proof of PR status, such as a Permanent Identity Card, and other required documents to the Immigration Department of Hong Kong. The HKSAR passport is issued to Chinese citizens who are permanent residents of Hong Kong, reflecting their unique status under the “One Country, Two Systems” principle.
Why the HKSAR Passport is Attractive
1. Global Mobility: The HKSAR passport dramatically increases global mobility for Chinese nationals, making international travel for business or leisure much more convenient and accessible.
2. Business Opportunities: With easier access to numerous countries, business professionals can explore, expand, and engage in international markets more freely, attending meetings, conferences, and other business-related activities without the lengthy visa application processes.
3. Educational Advantages: Families often seek the HKSAR passport to provide their children with broader educational opportunities abroad, including access to prestigious institutions.
4. Quality of Life: The ease of travel can significantly enhance the quality of life, offering hassle-free vacations and the ability to visit family and friends abroad without the bureaucratic visa procedures.
5. Security and Stability: Holding an HKSAR passport also provides a sense of security and stability, as Hong Kong is known for its robust legal system and relatively stable political environment under the “One Country, Two Systems” framework.
The pursuit of PR in Hong Kong and the subsequent acquisition of an HKSAR passport is a strategic move for Chinese nationals seeking to enhance their global mobility and access a world of opportunities that the PRC passport does not readily afford.
The process, while requiring the commitment of ordinary residence in Hong Kong, opens doors to a more connected and accessible world, making it a highly desirable goal for many Chinese nationals, especailly those who are very-well-heeled.
Historical Numbers
Statistics issued by the Hong Kong Immigration Department Annual Report 2011~2015 reveal the total number of Applicants under the old Capital Investment Entrant Scheme (“old CIES”) were (2011 : 4,187) (2012 : 3,804) (2013 : 3,734) (2014 : 4,855) (2015 : 2,739). The old CIES stopped taking new applications in January 2015. 90% of all old CIES Applicants were from the mainland of China.
At HKD10M, the quantum under the old CIES was 66% less than under the New Capital Investment Entrant Scheme’s HKD30M .
The HKSAR Government are projecting (hopefully, possibly?) c 4.000 applicants annually under the new NCIES.
Last Words
For Chinese nationals, navigating the complexities of the NCIES requires careful planning and adherence to both Hong Kong’s and China’s legal frameworks.
Despite the challenges and strategies discussed, the NCIES is highly relevant for Chinese nationals considering other global investment immigration opportunities, underscoring the importance of legal and financial advice in these endeavours.
Merely form filling the NCIES programme is NOT!
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