As the Asian markets continue their active growth in 2024, they provide tremendous opportunities for companies that wish to reach out to new markets. Both Singapore and Hong Kong are well-known for their stable economies and excellent business conditions, making them ideal destinations for those who wish to register a company. Each territory has its benefits, which complicates the choice. In this article, we will take a look at the peculiarities of doing business and paying taxes in each of them to help you make an informed decision.
Hong Kong and Singapore: Reasons for Popularity with International Companies
The business environments offered by Hong Kong and Singapore make them really attractive places for international company formation. These destinations have many impressive advantages over other jurisdictions and important characteristics that make them hot spots for multinational companies.
Reasons to Opt for Singapore
Singapore has long been a real draw for large corporations, and according to Bloomberg, 2023 was the year when over 4,000 companies opened their headquarters here, including such giants as Rolls-Royce, FedEx, Google, and Microsoft. Let’s take a look at the main factors that made the territory so popular:
- Absence of mandatory pre-audit requirements
- Financial initiatives launched to support new and existing businesses
- Advanced infrastructure with a high-speed Internet connection
- Vast prospects for career development and extensive educational resources
- Singapore is committed to global talent attraction
- Beneficial conditions for cooperation with local partners who are mainly English-speaking
- An advantageous geographical location which makes it easy to reach out to different markets
- Appealing business incentives, including Start-up Exemption Scheme, Global Trader, and PIC
Singapore is an excellent choice for different kinds of businesses thanks to its benign taxation system, stable legal system, and the possibility of forming a company without many administrative hurdles.
Reasons to Opt for Hong Kong
Hong Kong is just as popular as it offers its benefits that seem attractive to many entrepreneurs. Let’s take a look at these:
- Advanced infrastructure and high-speed internet connectivity
- You can register a company more easily than in Singapore
- There are a lot of systems to support startups
- Take advantage of numerous investment programs
- Enjoy a large number of co-working spaces
- Hong Kong offers the same advantages as offshore destinations with regard to profits made overseas
- Logistics and supply chains are managed in the most efficient way possible
- The tourism and trade industry are prospering, which attracts a long of visitors and expands opportunities for business
- You will have access to a broad range of financial tools and services
Essentials for Entrepreneurs
Let’s compare the main characteristics of Hong Kong and Singapore to make the choice between them easier.
Taxation
- Singapore. The corporate tax rate is 17%, and the capital gains tax is nonexistent. Small businesses pay taxes on a progressive scale (the first SGD 100,000 of profit is subject to a 75% exemption, while the next SGD 100,000 is subject to a 50% exemption).
- Hong Kong. There is no capital gains tax or VAT. The corporate tax rate is 16.5%.
Registration
- Singapore. A company can be registered online. The minimum registration cost is SGD 315, and the processing is completed within 1 or 2 days!
- Hong Kong. The minimum registration fee is HKD 1,720, and processing takes no more than three weeks. Hong Kong has a transparent legal system.
Location
- Singapore. It is located in the middle of Southeast Asia, which makes it ideal for accessing regional markets or conducting operations across multiple Asian countries.
- Hong Kong. If you want to work with mainland China, you will hardly find a better entry point than Hong Kong. Set up your company here if you’re going to conquer one of the world’s biggest markets!
Infrastructure
- Singapore. Take advantage of highly-developed infrastructure with high-tech business centers.
- Hong Kong. State-of-the-industry infrastructure will enable the smooth operation of your business.
Legal system
- Singapore. The local legal system can be described as stable and transparent.
- Hong Kong. The basis of Hong Kong’s legal system is the English common law, and investors enjoy a highly reliable level of protection.
Banking system
- Singapore. It boasts a highly reliable banking system where you can find local and international banks.
- Hong Kong. Take advantage of a stable and dependable banking sector that offers easy access to the capital.
Trade opportunities
- Singapore. This is a large international trade and business center with many opportunities. You can take advantage of multiple free trade agreements.
- Hong Kong. Benefit from the city-state’s free trade policy and its close proximity to China.
Living standards
- Singapore. If you decide to become an expat, you are sure to appreciate the island country’s high living standards.
- Hong Kong. In addition to impressive living standards, you will also be able to enjoy diverse cultural opportunities here.
Authorized capital requirements
- Singapore. You can start your company here with just SGD 1 if you want to and increase your capital while the business is developing. What is more, you can issue your shares without paying them up straight away.
- Hong Kong. The atmosphere is just as relaxed here: you can issue only one ordinary share and set up a company.
Company management
- Singapore. At least one director should be a local resident (it can be a citizen or just a person who has an employment pass). This means that you may need to incur additional financial expenses, such as benefits, salary, and relocation costs.
- Hong Kong. Hong Kong does not impose such a strict requirement, so a director can be a foreigner, and they are not even obliged to live in the jurisdiction. While your expenses may be lower due to this fact, you may still need to hire a local expert who will take care of legal and financial issues.
In both jurisdictions, a secretary’s position is mandatory in the company, and a local individual or legal entity can fill this vacancy. However, one person cannot simultaneously occupy a director’s and a secretary’s position.
Both city-states will stimulate the expansion of your business, allowing you to enter various new markets, such as Malaysia, China, or Australia, without any obstacles.
The Choice is Always Difficult
Whether you decide to form a company from scratch or expand an existing business, both Asian destinations offer immense opportunities for entering new markets. If you are still not sure where to start a business, you are in a situation where most people find themselves. You can simplify the choice by following the link to talk to an expert using the live chat – it’s absolutely free!