Singapore vs Hong Kong : Which Is Right For You?

Singapore vs Hong Kong - The Battle of Business Titans

When it comes to setting up a business in Asia, two prominent choices stand out: Singapore and Hong Kong. These bustling cities have long been hailed as business hubs, attracting entrepreneurs and investors from around the world. But which one is the right choice for you? 

In this article, we will dive into the battle of the business titans, comparing the key factors that make these cities attractive for starting and running a company. From taxation and legal frameworks to market accessibility and cultural considerations, we will explore the pros and cons of both Singapore and Hong Kong, helping you make an informed decision and find the perfect fit for your business ambitions in Asia.

 

Table of Contents

hong kong

1. Comparison : Company Incorporation Requirements

Companies can be formed in either Singapore or Hong Kong with little difference in paperwork requirements.

Singapore

Hong Kong

Basic Requirements

- At least 1 shareholder
- At least 1 resident director
- Company secretary who is a Singapore Resident

- At least 1 shareholder
- At least 1 director (can be non-resident)
- Mandatory corporate director
- Company secretary who is a Hong Kong Resident

Other Requirements

- Paid-Up capital of S$1
- Registered office address in Singapore
- No restriction on foreign ownership

- Authorised capital of HK$10,000
- Minimum share capital HK$1
- Registered office address in Hong Kong
- No restriction on foreign ownership

Tax Residency

- To be eligible for Singapore tax residency, the management & control must be done from Singapore

- No definition of tax residency, dependent on DTA

Incorporation Time

- A Few Hours

- 7 Days

Annual Compliance

- Annual General Meeting
- Filing Annual Returns

- Annual General Meeting
- Filing Annual Returns

Audit Requirements

- Audit only required if its not an exempt private company

- Audit is mandatory

Exchange Control

- None

- None

Bank Account Location

- Anywhere

- Anywhere

2. Comparison : Taxation Regime

The tax policies of Singapore, however, provide it a significant advantage over Hong Kong.

Hong Kong’s jurisdiction is limited solely to its own territory, but Singapore has a territorial tax system that includes remittances. 

There is no capital gains tax in either of them. 

In both countries, dividends can be distributed free of withholding tax, and authoritative tax decisions can be obtained in advance.

 

Singapore

Hong Kong

Tax System

- Territorial and tax on some types of remittances

- Purely territorial

Tax Exchange Information

- Yes, if request is specific and reasonable

- Yes, no court order required

Number of Tax Treaties

- 76

- 30

Corporate Tax Rate

- Up to 17%

(Effective rate is usually a lot less if companies take advantage of the tax schemes available)

- Flat rate 16.5%

Goods & Services Tax

- 8%

- None

Capital Gains Tax

- None

- None

Avoidance of Double Taxation

- Ordinary credit method
with Foreign Tax Credit (FTC) pooling allowed

- Ordinary credit method
with pooling not allowed

Tax Incentives

- Corporate Tax Rebate
- Foreign Tax Credit Pooling
- Fund Management Activities (5% or 10% corporate income tax rates)
- Global Trader Programme
- Operational Headquarters (5% or 15% corporate income tax rates)
- Partial Exemption Scheme
- Productivity & Innovation Credit
- Start-Up Tax Exemption

- None

3. Comparison : Advantages & Disadvantages

Singapore

Hong Kong

- Business friendly tax incentive schemes which offer lower effective corporate tax rate (with tax incentive schemes)

- Lack of business tax incentive schemes. Flat corporate rate of 16.5%

- Extensive network of cross-border tax treaties

- Cross-border tax treaties not as extensive as Singapore but some treaties with eg. Indonesia is better suited for some businesses

- Requirement for a resident director for the incorporation of a company

- No requirement for a resident director for the incorporation of a company

- Singapore's multicultural society embraces diversity and provides a harmonious operating environment for enterprises.

- Even though English is widely used in Hong Kong, Chinese language and cultural norms exert a substantial amount of influence.

- The widespread use of the English language facilitates international business communication.

- Understanding the local culture and adapting to it can be crucial to the success of business operations in Hong Kong.

- If market access to Southeast Asia is a top priority, along with a diverse and inclusive business climate, Singapore may be the best option.

- Hong Kong may be preferable if your objectives are to have access to the Chinese market and to be a part of a thriving financial centre.

We have helped many entrepreneurs and international businesses make the right choices when setting up in Singapore. Contact us via  Lawyer Anywhere for advice on moving or setting up your business in Singapore.

Share Post: