Hong Kong or Singapore: Where to Register Your Company?
Businessmen around the world are very keen on using South East Asia as a base and this is because there are two very business-friendly countries here that serve as a hub and a gateway to the rest of the Asian markets – Hong Kong and Singapore. These countries are small, but they offer plenty of opportunities to develop your business, thanks to their locations, their laws, and their safe environment, both from a professional and personal standpoint.
Opening your business in either of the countries provides benefits such as lower tax rates, international pool of talents, efficient banking systems, English as the main language, access to innovations, and many others, but when it comes down to it, how do you choose which country to go for?
Here are some of the main differences between Hong Kong and Singapore when it comes to opening a business.
Company Incorporation
Hong Kong
In Hong Kong, you register your company with the Companies Registry with a company name that has no conflict with any already listed in the registry before you submit for incorporation. You will need at least one company director who is either a local or a non-resident but not an entity. Your corporate secretary will have to be a Hong Kong resident. There is no paid-up capital requirement and the whole process can take only up to 1 hour.
Here are the documents you might need to provide to open a company in Hong Kong:
- A Memorandum and Articles of Association (MAA).
- Company name
- Registered address
- Description of business activities and business plan
- Company secretary, shareholders and director’s information
- Liability of members
- Share capital registered on incorporation
- Number of shares taken up by subscribers
Singapore
Singapore’s incorporation is as straightforward as Hong Kong’s. The only difference is that you need at least one director in the company that is a local, a pre-approved company name and a US $1 minimum paid up capital. The filing is done with ACRA (Accounting and Corporate Regulatory Authority) and takes only 15 minutes to complete if your documents are properly checked and completed.
Here are the documents you might need to provide to open a company in Singapore:
- Company name
- Description of business activities and business plan
- Company secretary, shareholders and director’s information
- Registered address
It is important to note that a company director in Singapore needs to hold an annual meeting within Singapore. In Hong Kong, there is no such requirement but the company secretary acts in behalf of the director to perform required duties. Therefore, directors have less involvement to fulfill in Hong Kong.
Business Taxes
Hong Kong
Hong Kong has a territorial tax system which means if your income is sourced in Hong Kong, you pay taxes. If your income is sourced from outside Hong Kong, you do not need to pay taxes but make sure that you have no employees, clients or goods transiting from Hong Kong as well. The rate is a flat 16.5% regardless of the annual profits.
For more detailed information, the Hong Kong government website offers all pertinent information you need to consider.
Singapore
Singapore has a modified territorial tax system whereby only specific foreign income is subjected to tax. The corporate tax is from 0-17%, which includes tax breaks from various government initiatives. The tax rate varies for a small-to-medium company because the government also provides a lower tax rate for the first SGD 300,000 of the company’s annual profits.
Because the tax you pay varies on profits and other factors, the IRAS, the Singapore taxation body, offers exemptions that you can find out about here.
Business Opportunities
Both countries have pro-business governments creating a very attractive place to work and to open a company.
Hong Kong
As a gateway to mainland China, Hong Kong has become a highly sought-after location to open a business. With its “one country, two systems” policy, businesses get the benefits of a free economy while having access to the mainland. Not only does it give access to the world’s largest market, it also has free trade agreements with some of the world’s top economies.
Singapore
Singapore, the Lion City, also has a commitment to free trade and has agreements with other top economies as well. With its location, businesses that open here have better access to countries such as the United States, Australia, Japan and India.
The decision on which country to choose is not easy being that both countries serve a plethora of benefits for companies looking to make it big in the region. If you are currently living out of these countries, you might also want to hire an incorporation company that can help you to open your business and the business bank account, which might be the touchiest step as there is a need to provide several types of documents, after the company is officially created. Company secretaries will also help regarding the accounting and the completion of the administrative documents that need to be delivered to the Government, on a yearly basis.
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