What type of system does the Hong Kong Special Administrative Region practice in regards to taxation?

The Hong Kong Special Administrative Region practices an independent taxation system that is characterized by its unique features and flexibility. This system allows the region to autonomously establish its own tax laws and policies, distinct from those of mainland China. A key aspect of this independent taxation system is the low tax regime, which encourages business investment and economic growth, making Hong Kong an attractive destination for international commerce.

The independent taxation system in Hong Kong includes several elements, such as the absence of a sales tax or value-added tax, a simple income tax structure, and a lack of capital gains tax, all of which contribute to its economic vibrancy. This system represents the autonomy granted to Hong Kong under the "one country, two systems" principle, affirming its capability to govern its financial affairs independently.

In contrast, other options are less relevant. An international currency system pertains to the broader context of global monetary operations and not specifically to tax administration. Exchange rate policy relates to how currencies are valued against one another, which is not directly tied to the taxation framework. Similarly, an agricultural subsidy system focuses on financial support for the farming industry, irrelevant to the taxation mechanisms employed in Hong Kong. Overall, the independent taxation system reflects the governance and economic strategy that Hong Kong has developed to