Singapore vs Hong Kong: A Detailed Comparison of Company Incorporation Process and Benefits
Singapore and Hong Kong are known as the epicenters of the freewheeling entrepreneurial spirit in Asia. Entrepreneurship has long been considered a major driver of productivity, which is why governments like Singapore and Hong Kong have sought to attract global entrepreneurs to their shores.
Singapore and Hong Kong are two very different but equally attractive centers for business. Both are known for its low taxation rates and easy incorporation procedures. Also, these two city-states are the centers for commerce and finance. Hong Kong are often perceived as a gateway for doing business with China internationally, while Singapore is a perfect spot to enter the South East Asia’s market.
Singapore has fast established itself as a business-friendly market with a stable economy and a place where multinational corporations can establish regional headquarters.
When the time comes to make a decision about investing in Singapore, there are many factors that should be considered by prospective investors. One thing you need to consider is whether or not your target audience will find the location of the investment attractive.
Hong Kong mainly attracts companies that target Chinese and North Asian markets, while Singapore targets those who want to tap into other markets by going global.
Hong Kong and Singapore are trusted, stable financial and business centers in the region. Both countries have been ranked as top spots in Asia for quality of life by The Economist, a leading international business magazine. Its strict rule of law, low corporate tax rates, and transparent regulatory environment make it the perfect home for businesses seeking to expand in Southeast Asia.
Differences Between Singapore and Hong Kong Incorporation Requirements
Whether you are setting up a sole proprietorship or a company in Singapore or Hong Kong, it takes just a few short and simple steps and 1-2 days to complete the setup. In terms of cost, it may take from takes $300-$400 to couple of thousand dollars depending on the structural complexity and the additional services provided (registered address etc.) to complete this process in either city.
Singapore is an easy place to register property because the process is simpler than in Hong Kong. The Doing Business survey ranks Singapore 28th for this parameter, whereas Hong Kong ranks 89th.
Singapore, leading the 1st place, followed by Hong Kong in the 2nd, is now recognized to be at the top of the World Bank’s Ease of Doing Business rankings. This is why both countries are considered Asia’s future international banking and trading centers. Holding companies looking to invest in China, India, Indonesia, Thailand, Vietnam, and Malaysia will surely want to consider these countries as investment destinations.
Singapore and Hong Kong are known for their stable banking systems, legal systems, and no value-added tax. While Singapore is still a prime location to house companies looking to establish a presence across the region, Hong Kong benefits from its proximity to burgeoning Asian markets.
Both countries share the exact same shareholding rules. Both countries must keep a minimum capital of 1 and a maximum of 50 shareholders. Both countries also ask for a 100% local or foreign shareholder’s holding to be allowed.
Shareholders may be corporations, businesses, organizations, individuals, or even a combination of more than one entity. If the corporation is also an individual, certain business-related services and transactions can be made on behalf of that corporation by the shareholder.
Both Hong Kong and Singapore have the same requirements for opening a bank account. Each bank’s process and fees vary, but on average, they take around the same amount of time to complete.
The difference between Hong Kong and Singapore is that Singapore has video conferencing facilities where you can meet with your bank in person. Hong Kong, on the other hand, requires that you open an account face-to-face.
It takes around two weeks to create bank accounts in both jurisdictions
Differences Between Singapore and Hong Kong Taxation Policies
Singapore has a base corporate tax rate of 17%, which is slightly higher than the Hong Kong rate of 16.5%. However, this does not take into account other taxes that can be applied in different sectors and countries.
In Singapore and Hong Kong, there are several tax exemptions and incentives available to small and mid-sized companies. The effective tax rate in Singapore is lower than that in Hong Kong if one considers the tax exemptions and tax incentives that the Singapore government offers.
Small and mid-sized companies in Singapore enjoy more tax incentives than their counterparts in Hong Kong. This is due to the tax exemptions and tax incentives that the Singapore government offers.
The Singapore government also offers numerous industry-specific tax incentives for attracting foreign businesses across multiple sectors. More details are shared below:
Differences Between Singapore and Hong Kong Annual Compliance Requirements
The Singapore Companies Act states that all Singapore-registered companies have to comply with the annual filing requirements of ACRA and IRAS. This can be done: Electronically.
Singapore companies are required to file annual reports and account at least once a year. This is not only a legal requirement but also signals that the company has been doing business and paying its dues.
However, it is important to note that filing an annual report does not mean all formalities have been completed. Annual filings are mandatory for both active and dormant Singapore companies.
Compliance with regulations is essential to avoid penalties or legal repercussions. It ensures you can continue to provide high-quality products and services without the risk of getting a reputation for poor quality.
In addition to being easy to incorporate in Hong Kong, the incorporation process will help you start a company and continue the management of that company. In this regard, there are some annual compliance requirements in Hong Kong that should be observed to maintain its legal status.
The Hong Kong Company (Private) Limited is a company with limited liability. It can be incorporated as a private company in Hong Kong according to the provisions of The Companies Ordinance (Cap. 507), and in that case, it is required to comply with fundamental laws and regulations regarding taxation, directors’ duties, etc., and also file returns for both the Hong Kong Companies Registry and Inland Revenue Department.
Hong Kong vs. Singapore: Economy Measured
Singapore
The economy of Singapore is primarily driven by its vibrant service sector. The country enjoys an open and corruption-free environment, stable prices, and a per capita GDP higher than that of many developed countries.
There are a large number of industries that contribute to the economy. The most prominent are electronics, petroleum products, chemicals, pharmaceuticals, medical devices, optical devices, electronic components, and semiconductors.
Hong Kong:
Hong Kong’s political focus is on international trade and finance. Its national economy is highly dependent on international trade, which accounts for about one-third of GDP. There are no tariffs imposed on imported goods in Hong Kong, and excise duties are levied on only four commodities, whether imported or produced locally. The pro-business policies that have characterized Hong Kong’s economic development underlie its status as one of the richest countries per capita in Asia.
Hong Kong maintained its link to the US dollar. It continues to be a financial powerhouse and a global center for trading in commodities like coffee, cotton, steel, and rubber. According to Forbes, the current GDP of Hong Kong stands at $341Bn, with a growth rate of 3.8%. There are no quotas or dumping laws.
Advantages and Disadvantages of Incorporating a Business: Singapore vs. Hong Kong
Advantages
Disadvantages
Conclusion: Final Review
Your business’ location is an essential factor when you are creating a new business, and that’s why it must be considered carefully. There are many factors that may affect your decision, but the political situation at hand remains one of the essential ones.
Singapore is a business incorporation destination that has everything you need to get your business off the ground and on a solid foundation. Aside from its comprehensive tax laws, lower payable taxes that come with numerous incentives, and stable economic system, Singapore clearly surpasses Hong Kong as the most recommended business incorporation destination in Asia due to its pleasant political climate.
