Hong Kong vs Singapore for Company Incorporation

Both are similar in many ways. Both jurisdictions have remained highly attractive for businesses due to business-friendly and tax favorable environments, strategic location and world-class infrastructure, strong English law system and highly educated skilled workforce.

Singapore and Hong Kong are reputed to be among the easiest locations in the world in setting up and doing business. In addition, their currencies are stable with no foreign exchange controls.

The major differences in terms of establishing the business in these jurisdictions are as follows:

1. A Director of a Hong Kong company can be a person (at least one individual director required) and a company, and they can be any nationality and not required to be Hong Kong resident, however a Singapore company requires at least one resident director.
2. Since the Law in Singapore requires a resident director, the costs of maintenance of Singapore company will be higher than Hong Kong company if nominee director service is required. In Hong Kong, the basic corporate tax rate is 16.5 % (the first HKD 2 million of profits of enterprises is lowered to 8.25%). In Singapore, the corporate tax rate is 17 %. However a Singapore company is able to enjoy various tax incentives, rebates and tax exemption schemes introduced by the government. Hong Kong maintains a territorial system and does not tax profits arising outside of Hong Kong.
3. Hong Kong does not impose a tax on dividend or interest income. Singapore levies tax on foreign dividends if received or deemed received in Singapore. Both places have no capital gains taxes.
4. There is no value added tax (VAT) or goods and services tax (GST) in Hong Kong, whereas Singapore imposes a 7% GST.
5. Every Hong Kong company must get its financial statements and accounting records audited by a local auditor on an annual basis. However Singapore has exemptions that are applicable to certain companies such as small companies, exempt private companies, dormant companies, etc.
6. Hong Kong provides an ideal gateway to the Chinese market due to its close geographical proximity and its familiarity with the business culture in China. Also, with the China-Hong Kong Closer Economic Partnership Agreement (“CEPA”), it’s a good jurisdiction if your business is with China. Whereas Singapore is a gateway to South East Asia, especially Malaysia, Indonesia and India due to its close geographical proximity and familiarity with the cultures and languages.

It is unequivocal that both Singapore and Hong Kong are ideal destinations for setting up businesses in the Asia Pacific region. However we are of the view that the choice of jurisdiction to register your company to a large extent depends on your business goals and destination. You should take into considerations the locations of your customers, suppliers etc.

Zetland offers company formation and secretarial services, including corporate and individual Directors, able to assist with tax obligations and compliance in both jurisdictions.

Should you have any questions, please feel free to contact Alina Moroz at alinam@zetland.biz / +852 3552 9085 on Hong Kong company matters or Samantha Chia at samanthac@zetland.biz / +65 6557 2071 on Singapore company matters.