In the early 1990s, Hong Kong and Singapore 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 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 regarding ease of doing business.
When comparing the ease of doing business between Hong Kong and Singapore, it’s worth noting that Singapore has gained recognition as a top destination for companies looking to incorporate. Incorporating in Singapore vs. Hong Kong presents various advantages and considerations for businesses. Singapore’s reputation as a business-friendly nation with efficient regulations and a robust legal framework makes it an attractive choice for many. On the other hand, Hong Kong has traditionally been known as a major business hub, but political uncertainties have raised concerns.
The differences between doing business in Singapore vs. Hong Kong are worth exploring. Companies evaluating these two countries for their business ventures must consider factors such as tax policies, regulatory environment, market access, and ease of setting up and operating a business. Hong Kong and Singapore offer unique advantages, and the choice depends on the specific needs and priorities of the company.
Company Incorporation
With the advancement of technology, incorporating in Singapore can now be done online via the BizFile+ portal, which only takes approximately 15 minutes to process a request. Incorporating a business in Singapore offers advantages when comparing it to the process in Hong Kong. The ease of doing business in Singapore vs. Hong Kong is evident in the streamlined online incorporation process.
When incorporating a company in Singapore, you must set aside 315 SGD for the process to be completed. This includes a 300 SGD registration fee and a 15 SGD company name fee. The straightforward and efficient online strategy and competitive pricing structure make Singapore an appealing choice for businesses looking to establish a presence.
A similar process will also occur if you set up a company in Hong Kong. Registering and incorporating a company can be completed via Hong Kong’s Companies Registry or the mobile application “CR eFiling.” However, it’s worth noting that establishing your business in Hong Kong comes with a heftier price tag compared to Singapore.
While it’s true that both Singapore and Hong Kong offer relatively quick incorporation processes, the cost of establishing a business in Hong Kong is higher. The process in Hong Kong includes a 1,720 HKD application fee, 250 HKD for the business registration levy, and HK$2,000 for the business registration fee, totaling up to 3,970 HKD or approximately 685 SGD. This significant cost difference is important for companies evaluating Singapore vs. Hong Kong for their business ventures.
Personal Income Tax
Both nations, Singapore and Hong Kong, adopt a progressive tax structure, meaning that the higher your income, the higher your tax rate will be. Singapore’s tax rate ranges from 0 to 22% versus Hong Kong’s 2 to 17%.
In Singapore, the 0% applies to the first 20,000 SGD of your salary and increases incrementally to 22% for those who earn S$320,000. Meanwhile, in Hong Kong, the 2% applies for the first 50,000 HKD, increasing incrementally to 17% for those who earn above 200,000 HKD.
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 350,000 SGD, you’ll be entitled to an 8.5% tax rate. When comparing the ease of doing business and incorporating in Singapore versus Hong Kong, it’s essential to consider the tax implications. Hong Kong follows a similar tax structure: the first 2 million HKD will be taxed at 8.25%, and profits above that will be taxed at 16.5%.
While the corporate tax rate in Hong Kong may seem attractive when comparing 2 million HKD to 320,000 SGD, businesses that are just starting out might find Singapore more favourable. This is because Singapore offers various incentives for startups, including a 75% reduction from the average tax rate for the first 100,000 SGD of income within a startup’s first three filings. When evaluating doing business in Singapore versus Hong Kong, the availability of tax incentives for startups becomes an important consideration.
Both nations, Singapore and Hong Kong, have established themselves as attractive destinations for doing business. The ease of doing business, incorporating companies, and the tax frameworks in Singapore and Hong Kong make them desirable choices for businesses seeking to expand in Asia.
Although Singapore has an edge in providing a better business environment for businesses today, it still solely depends on what your company is looking for and trying to achieve.
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