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The Lanturn Blog

Carefully curated and thoughtfully written content for businesses of any size.

FOR FOUNDERS

Singapore or Hong Kong: Which is Better for Business?

February 2022

Veli Kattoulas

In the early 1990s, Singapore and Hong Kong established themselves as two of the Four Asian Tigers, alongside South Korea and Taiwan, as the leading economies in the region. This resulted from a well-built infrastructure and stable government. Ultimately, both nations frequently ranked high in the “Ease of Doing Business” index, signifying that both countries continuously compete to attract new businesses to their respective jurisdictions.

However, given the political unrest in Hong Kong in recent years, some companies may wonder if Singapore offers a better alternative, thanks to its long history of harmony and reputation as a “melting pot” that welcomes all people from diverse backgrounds. Aside from its political stability, Singapore has several differences from Hong Kong that might give it an edge.

 

Company Incorporation

With the advancement of technology, incorporating a business in Singapore can now be done online via the BizFile+ portal, which only takes approximately 15 minutes to process a request. Afterward, a notice of incorporation will be emailed as proof. You need to set aside S$315 for the incorporation process to be completed, consisting of a S$300 registration fee and a S$15 company name fee.

A similar process will also occur if you decide to set up a company in Hong Kong. Registering and incorporating one’s company can be completed via Hong Kong’s Companies Registry or using the mobile application “CR eFiling.”

While it’s true that both can be processed in less than a day, establishing your business in Hong Kong comes with a heftier price, consisting of HK$1,720 application fee, HK$250 for business registration levy, and HK$2,000 for a business registration fee, which totals to up to HK$3,970 or equivalent to approximately S$685.


Personal Income Tax

Both nations adopt a progressive tax structure, meaning that the higher your income, the higher your tax rate would be. Singapore’s tax rate ranges from 0 to 22%, whereas Hong Kong’s tax rate ranges from 2 to 17%.

In Singapore, the 0% applies to the first S$20,000 of your salary, and it increases incrementally to 22% for those who earn S$320,000. Meanwhile, in Hong Kong, the 2% applies for the first HK$50,000, and it increases incrementally to 17% for those who earn above HK$200,000.


Corporate Tax Rate

The corporate tax rate in Singapore has stood at 17% since 2010, regardless of your total company income. If your company earns less than S$350,000, you’ll be entitled to an 8.5% tax rate. There is, however, a chance Singapore could be changing this rate soon. Hong Kong also adopts a similar structure, where the first HK$2 million will be taxed at 8.25%, and the profits above that will be taxed at 16.5%.

While the corporate tax rate in Hong Kong may seem attractive, HK$2 million compared to S$320.000, Hong Kong might not be ideal for businesses that are just starting out. This is because they have no tax incentives in place for startups. In stark contrast, Singapore offers a 75% reduction from the normal tax rate for the first S S$100,000 income within a startup’s first three fillings.

Both nations have no dividend or capital gains tax for investors and shareholders.


All in all, Singapore provides a better business environment for businesses today. It provides a stable government and economic landscape and business-friendly laws, especially for startups.

If you do decide to incorporate your business here, do it hassle-free with Lanturn

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