Singapore vs Hong Kong- Where should you incorporate your business?
5 minute read
With its strategic location, business-friendly environment, and top-notch infrastructure, Hong Kong is an attractive choice for business incorporation. Being a pivotal component of Asia’s financial centre, it serves as a gateway to China and the Asia-Pacific markets. With excellent connectivity, a diverse talent pool, and a blend of Eastern and Western cultures, it provides an ideal ecosystem for business growth, innovation, and a desirable lifestyle.
Singapore, like Hong Kong, is a prominent Asian city-state and a major financial hub. However, what sets Singapore apart is its legal framework based on English common law. This means that contracts established in Singapore can be enforced in any court worldwide, providing international companies with the flexibility to operate globally. Moreover, Singapore serves as a gateway to Southeast Asia, granting businesses access to the dynamic economies of the region. Strong intellectual property protection and high quality of life further enhance its appeal.
To help you make an informed decision about the best location for your business or the best country to register, let us delve deeper into the incorporation process in both countries.
According to InterNations’ Expat City list, Singapore is ranked as the 10th best city for expats. Forbes also ranked Singapore as one of the top 20 best cities to live in.
Steps for New Company Incorporation: Singapore vs Hong Kong
According to the World Bank, Hong Kong and Singapore rank among the top five Asian countries that offer the easiest entry for foreign entrepreneurs. They rank at number 3 and 2, respectively, in the World Bank’s Ease of Doing Business Index.
In the following sections, let us understand the requirements of new company incorporation in Singapore and Hong Kong in detail.
Incorporating a new company in Hong Kong and Singapore: A Comparison
|
Aspect |
Hong Kong |
Singapore |
|
Time taken |
E-filing: 1 working day |
1-3 days |
|
Cost (USD) |
HKD 3,870 government fee |
$234.2 (315 SGD) |
|
Documents required |
Personal identification, address proof for directors/shareholders |
Personal identification, proof of local address for directors/shareholders |
|
Offshore incorporation |
Allowed for foreigners and offshore companies |
Allowed for foreigners and offshore companies |
|
Paid up capital |
Minimum HKD 1 for one share |
Minimum $1 |
|
Compliance requirements |
Business registration renewal, annual return filing, AGM, financial statements (HKFRS), income tax return (IRD) |
Corporate Secretary, annual return filing, financial statements (SFRS), income tax return (IRAS) |
For the 26th consecutive year, Hong Kong has secured the top spot as the world’s freest economy in 2022, as ranked by the Fraser Institute.
Time Taken
- Singapore: Incorporating a company in Singapore usually takes 1-3 days.
- Hong Kong: Incorporating a company in Hong Kong typically takes 1 working day through e-filing, once the client has e-signed the incorporation documents. However, in special cases where the sole shareholder is a corporation, the process can take at least 7-10 working days through paper filing.
Shareholding
- Singapore: A company in Singapore must have a minimum of 1 and a maximum of 50 shareholders, who can be local or foreign individuals or corporate entities.
- Hong Kong: There is no specific limit on the number of shareholders.
Both Singapore and Hong Kong allow 100% local or foreign shareholding.
Share Capital
- Singapore: The paid-up capital should be of a minimum of $1.
- Hong Kong: Each issued share should be of a minimum of HK$1.
Directors
- Singapore: A minimum of one director is required, and there is no limit on the maximum number of directors. Typically a board consists of a minimum of 1 local resident director but you have the flexibility to add more as your company grows. Each director should be at least 18 years old and have resided in Singapore for a minimum of one year. If you decide to appoint directors from overseas, it’s worth noting that there may be associated fees.
- Hong Kong: A minimum of one director is required, and there is no limit on the maximum number of directors. The directors should be at least 18 years old and have resided in Hong Kong for a minimum of six months. Keep in mind that if you opt for directors who reside outside of Hong Kong, there is a requirement to compensate them with a fee.
Company Secretary
- Singapore: A qualified company secretary must be appointed, who must be a natural person and a resident of Singapore.
- Hong Kong: Appointing a qualified company secretary is also mandatory. Both individuals and corporate entities can act as a secretary. The secretary may be an individual or a corporate entity. In Hong Kong, a sole director is prohibited from being the company secretary.
Registered Address
- Singapore: To register a company, you must provide a local address as the registered address.
- Hong Kong: In Hong Kong also, a local registered address is required. The designated address must be a physical location and cannot be a PO Box.
Company Name
- Singapore: You should get the company name approved by the Accounting and Regulatory Authority in Singapore (ACRA) before proceeding with the incorporation.
- Hong Kong: The company name must be approved by the Companies Registry in Hong Kong.
Government Fees
- Singapore: When incorporating a company, the government fees include a name approval fee of S$15 and a company registration fee of S$300.
- Hong Kong: The government fees for incorporating a company in Hong Kong include an application fee of HK$1,720 and a business registration fee and levy. The total government fee in Hong Kong is HKD 3,870.
Taxation Policy
Let us understand in detail the taxation nuances of both the countries:
Taxation: Hong Kong vs Singapore
|
|
Hong Kong |
Singapore |
|
Corporate tax rates resident companies |
16.50% |
17% |
|
Income tax |
15% |
22% |
|
Corporate tax rates offshore companies |
8.25% for first 2M profit, |
17% |
|
Capital gains tax |
0% |
0% |
|
Tax on foreign sourced income (remitted or deemed remitted) |
Taxable only if profits are remitted to Hong Kong |
Taxable only if profits are remitted to Singapore. |
Corporate Tax Rates for Offshore Companies
- Hong Kong: Offshore companies incorporated in Hong Kong are subject to a corporate tax rate of 8.25% on assessable profits up to HK$2 million and 16.5% on any part of assessable profits over HK$2 million.
- Singapore: Offshore companies incorporated in Singapore are subject to a flat corporate tax rate of 17%.
Capital Gains Tax
Both Hong Kong and Singapore do not levy capital gains tax on the sale of assets, including shares.
Tax on Foreign Sourced Income
Both Hong Kong and Singapore adopt a territorial tax system, which means that income generated outside their respective jurisdictions is generally not subject to taxation. However, once the foreign-sourced income is remitted to the country, it becomes taxable.
Annual Compliance Requirements
- Singapore: Companies in Singapore are required to hold Annual General Meetings (AGMs) and file an Annual Return with ACRA within 30 days of the AGM. Financial statements must be prepared according to the Singapore Financial Reporting Standards (SFRS).
- Hong Kong: In Hong Kong, the compliance requirements for a company include renewing the business registration one month before the anniversary, filing the Annual Return within 42 days of the anniversary, completing the Annual General Meeting (AGM) within 9 months of the financial year-end (FYE), except in the case of the first financial period exceeding 12 months, in which case the AGM should be completed within 9 months of the anniversary or 3 months of the first FYE, whichever is later. Additionally, companies need to prepare financial statements according to the Hong Kong Financial Reporting Standard (HKFRS).
Filing of Annual Tax Return
- Singapore: Companies need to file the estimated chargeable income within 3 months from financial year-end unless meeting the exemption conditions and to file the final tax return by the 30th Nov of the year after the financial year end.
- Hong Kong: Hong Kong companies must file an annual tax return with the Inland Revenue Department of Hong Kong (IRD) within 1 month after the issue date of the tax return.
Why choose Sleek?
When you choose Sleek as your partner for company formation and corporate services, your entire business incorporation journey becomes easy, online, fast and hassle-free, all at an affordable cost. Here’s how Sleek can help you:
- Company Incorporation: Sleek provides completely online, fast, simple and hassle-free new business incorporation services in Singapore & Hong Kong. We handle the incorporation process from start to finish. Our experts guide you through each step of company formation in Singapore with complete transparency. We do everything, from processing your legal documents, KYC, and setting up your business bank account, all in a few clicks.
- Corporate Secretary: Our expert Corporate Secretaries in Singapore and Hong Kong ensure your business stays compliant, your business records are up-to-date, accurate and meet all regulatory requirements. They track deadlines and file documents as mandated by the government so your business is never penalised for missing some paperwork.
- Local Director and Registered Address: Sleek offers registered office address services in Singapore and Hong Kong where you can receive your physical and official mail. Once we receive your physical mail, we scan, upload and categorise it automatically with our AI engine and make it available to your digitally on your Sleek app, almost instantly! (Or we can also redirect your email to your desired address). Sleek appoints and provides a Director for foreigners incorporating in Singapore or Australia.
- Bookkeeping and Accounting: Sleek’s accounting platform is custom-built for small businesses so we provide them with a reliable platform to manage expenses, payments, align your books, do periodic (monthly, quarterly or annual) reporting. We offer:
- Effortless receipt submissions– Submit all your expense receipts, vendor invoices with ease through the app, WhatsApp, or just email it to us. Our ML engine automatically extracts data and keeps your records up to date.
- Free access to Sleekbooks- a cloud bookkeeping platform built for small businesses so you don’t need need to pay separately for expensive platforms
- Dedicated accountants- Sleek’s expert accountants ensure your books are always up-to-date, comment and contextualize management reports, and file your taxes as well as provide your financial statements, all while you continue to focus on your business growth.
- Transparent pricing– We are upfront, honest and transparent with our all-inclusive pricing. We ensure you only pay for the company expense and not the number of transactions.
- Business Bank: Sleek offers free business accounts with no initial deposit and minimum balance. Start sending and receiving payments once your account is opened. Sleek will enable companies to open their account right after their company is registered, or transferred to Sleek.
- No initial deposit needed to open a business account. Traditional banks charge S$1,000 and up to S$5,000 of the initial deposit
- No minimum balance: Traditional banks ask for S$5k – 10k of minimum balance
- No account opening fees or annual fees: Aspire charges S$144, and Wise charges S$54 to open an SGD corporate account
- Competitive Foreign Exchange Rates
- Securely hosted and easily accessible: Via our all-in-one platform: We help companies manage company secretary, accounting and banking needs in one place
In conclusion, the incorporation processes in both countries have similarities but also distinct differences in terms of registration requirements, procedures, costs, and fees.
It’s crucial for you to evaluate your specific business needs to narrow down to the best country to register for starting a business. Consider factors such as your business model, whether freelance or part-time, target market, industry like e-commerce or others, and growth plans.
FAQs
Yes, you can register your business in both of these countries even if you are not a resident of that country. You also don't need to be physically present in these countries to register your business. Sleek manages everything online.
The answer depends on the nature of your business. If you're planning to start a small retail shop or tap into the Chinese market choose Hong Kong. Conversely, if you're looking to establish an online business, benefit from strong intellectual property protection, or expand into Southeast Asia, consider Singapore.
While Hong Kong may offer higher salaries, Singapore provides a greater sense of fulfilment and overall well-being for its residents, despite its less flashy reputation compared to Hong Kong.
Singapore and Hong Kong, being prominent port cities and major financial centres, benefit greatly from their strategic locations and robust maritime trade, contributing significantly to their thriving economies
