Hong Kong vs Singapore for Business

Which hub comes out the victor?

Contents

    The city of Hong Kong is a unique place to do business, with its own culture and language, as well as a very different legal system from the rest of China. It’s also an important part of Asia’s financial center, which means it attracts many businesses looking to expand their operations into the region. The city has been ranked the best in the world by Lonely Planet for more than 20 years running, and this year it was named one of the ‘Top 10 Cities For Expats’ by Forbes magazine.

    Singapore is another Asian city-state that’s often seen as the next step after Hong Kong. Like Hong Kong, it’s a major financial hub, but unlike Hong Kong it. Singaporean law is based on English common law, meaning contracts are enforceable by any court worldwide. This makes it a great choice for international companies who want to be able to operate no matter where they go.

    Ease of doing business

    Hong Kong

    The World Bank says Hong Kong has the most open economy in the world. It’s not only easy to start a new business, it’s easy to buy property, hire employees, and run a company. There’s strong protection of private property, and entrepreneurs have better access to finance. These factors mean that starting a business is easier than it might be in other places. To make matters even better, local authorities have been devoting resources to help businesses grow for decades. They offer low taxes, reduced regulation, and less red tape.

    Quick Facts

    • Hong Kong is a free port, so imports and exports are duty-free.

    • You can incorporate your business overseas without having to pay tax or capital gains tax.

    • There’s no minimum wage – workers receive the full value of their labor power as a basic right.

    • Foreigners get to vote in Hong Kong elections, although they don’t actually elect anyone.

    • Companies are required to publish reports about how much profit they made every quarter.

    Singapore

    Singapore is a fantastic option for those wanting to strike out on their own. It offers generous government support for small businesses through subsidies and tax breaks. The country is also home to the world’s busiest port, so goods can move quickly and cheaply between here and anywhere else in the world. But Singapore does come at a cost. Entrepreneurs may find regulations are strict, and getting permits could take weeks or months. And while the country is known for its safety, crime rates are high.

    Quick Facts

    • Singapore is a member of the Association of Southeast Asian Nations (ASEAN)

    • Singapore is an offshore banking center, which gives foreign investors access to cheap financing.

    • Singapore is a global trade gateway, handling $1 trillion worth of goods per year.

    • Goods must pass through customs within three hours of arrival.

    • ASEAN countries share a single market, making it easy to export products across borders.

    Business incorporation

    Hong Kong

    Incorporating your business in Hong Kong is relatively simple. You don’t need to register anything with the government, and you won’t need to pay any fees. All you need is a valid passport, proof of residency, and two personal references. However, you will still need to fill out some paperwork before you can officially incorporate it. Once incorporated, you’ll receive a certificate of incorporation that shows your company’s name, address, status, and registered agent.

    You’ll also need to appoint a director. Directors are responsible for managing the day-to-day activities of the company. They must be over 18 years old and have lived in Hong Kong for at least six months. If you choose directors who live outside of Hong Kong, you may be required to pay them a fee.

    Quick company incorporation facts about Hong Kong

    • Incorporation takes one week or less.

    • You can apply for a business license online, saving time.

    • You can set up a bank account in under 24 hours.

    • Starting a business in Hong Kong is very affordable.

    • You can easily transfer money into and out of your bank accounts.

    After incorporation comes to the all too important step of opening a business account for your newly registered business.

    Open a business account with Statrys today and you'll get a virtual business account in Hong Kong in under 3 days.

    virtual hong kong business account

    Singapore

    Setting up a limited liability company (LLC) in Singapore is straightforward. You simply need to provide a valid passport, proof that you reside in Singapore, and three personal references. You’ll also be asked to sign a power of attorney document, giving someone else the authority to act on your behalf. An official stamp will show when you filed this document. As soon as you file, you’ll get a Certificate of Incorporation that includes all the information about your company.

    You’ll then need to decide who should serve as your director. A board usually consists of five people, though you can add more depending on how large your company becomes. Each director needs to be over 21 years old, and have resided in Singapore for at least one year. If you choose directors from overseas, you may be charged a fee.

    Quick Facts about business incorporation in Singapore

    Incorporation only takes one week or less, but there are additional steps involved like finding appropriate local directors.

    • You can start operating your business immediately after filing.

    • The minimum capitalization requirement is SGD$100,000.

    • There are no restrictions on where you can open offices.

    • Your company can operate under either local or international law.

    • You can apply for a work permit in Singapore.

    • You can hire employees without having to worry about immigration issues.

    Corporate Taxation

    Hong Kong

    Corporate taxes in Hong Kong is technically 0% for any business conducted outside Hong Kong borders.

    For companies doing business within Hong Kong, taxes sit at 16.5%. This means that if you make sales within Hong Kong, you’ll owe tax on those sales. The offset for this taxation is that there is also no VAT or Foreign Exchange Controls in place for businesses in Hong Kong

    Singapore

    In Singapore, corporate taxes are 15%, which is slightly higher than in most other countries. Corporate income tax is based on profits rather than revenue. For example, a company earning HK$5 million ($735,000 USD) per year would pay no tax on its first HK$2 million ($280,000 USD) but would pay 30% on the remaining HK$3 million ($420,000 USD). However, this does not mean that your business will be taxed twice. Instead, Singaporean companies are exempt from paying income tax on their foreign earnings, just like Hong Kong. To qualify for this exemption, you must meet certain requirements.

    These include:

    • Being incorporated in Singapore

    • Having an office in Singapore

    • Making profits in Singapore

    • Paying dividends in Singapore

    • Holding assets in Singapore

    • Not being a resident of another country

    The good news is that these conditions are easy to meet. For example, many multinational corporations already operate in Singapore.

    Legal Environment

    Hong Kong

    Hong Kong has been ranked the best place to start a business by Forbes since 2011. The city attracts entrepreneurs because it provides a stable legal environment, low taxes, and easy access to international markets. There are few restrictions on foreign ownership, and many multinational corporations operate there.

    However, the city does not offer much protection to minority shareholders. In fact, they’re often excluded entirely. Foreigners cannot sue if a local shareholder takes control of the company, and even if they win, they might not be able to collect damages.

    Singapore

    Singapore was named the top destination for doing business by the World Bank in 2014. Its laws are designed to protect investors and encourage entrepreneurship. Foreigners can own 100% of a company without paying capital gains tax. And if they want to sell their shares, they can do so freely.

    However, foreigners can only own 25% of a company without being subject to additional taxes. This limit applies to both individuals and joint ventures. It doesn’t apply to sole proprietorships and partnerships.

    Ease of Doing Business Index

    Hong Kong

    Hong Kong ranks highest in ease of doing business among major economies according to the Ease of Doing Business index. The city offers a wide range of services, including banking, insurance, and electricity. It also allows businesses to open bank accounts within 48 hours and offers free shipping on most items sold online.

    Singapore

    Singapore ranks second overall in the index. It’s known for being a safe haven for investments, and it’s considered one of the easiest places to set up a business. It’s also very competitive for exporters, which makes it easier to find buyers.

    Workforce Quality

    Hong Kong

    Hong Kong is one of the world’s leading financial centers. As such, it attracts professionals from all around the globe. According to the International Monetary Fund, Hong Kong’s population of 7.4 million includes 2.6 million students. That’s nearly double the number of students found in Switzerland (1.2 million). Much of Hong Kong's population has studied mostly Finance and Business degrees in the past, but the winds of change are blowing as the newest graduates are pursuing more engineering and other STEM degrees with support from the local government.

    Singapore

    Singapore's workforce is made up mostly of immigrants. More than half of the country’s residents were born outside of Singapore. However, this figure drops significantly when compared to other countries. Only about 1.9% of Singaporeans are non-citizens. Singapore prides itself on being a tech hub for many companies seeing IT and software development offices in the region. Google's Asia HQ is in Singapore and more large companies are moving to the city-state every year.

    Economic Landscape

    Hong Kong

    The economy of Hong Kong is based heavily on finance, tourism, and trade. The city is a global center for trading in commodities like cotton, sugar, coffee, tea, cocoa, rubber, fruits, and steel. It’s home to some of the world’s busiest ports.

    Singapore

    The economy of Singapore is primarily driven by its thriving service sector. About 80% of the country’s GDP comes from the private sector. Sectors include retail, accommodation, food, healthcare, transportation, and telecommunications.

    Immigration policy

    Hong Kong

    In Hong Kong, there is no restriction on immigration. Any foreigner who wants to work or study in the territory must first obtain a visa.

    Singapore

    There are restrictions on immigration to Singapore. Citizens of certain countries need to get a permit before entering the country. There are also quotas that cap the number of foreign workers allowed into Singapore each year.

    Quality of Life

    Hong Kong

    Hong Kong is an international financial center and commercial gateway to China. Its advanced infrastructure and natural beauty make it a great place to live. It’s ranked highly in quality of life studies, too. While 25% of the city is a dense urban jungle, the rest is well-managed greenery and mountain ranges ripe for getaways from city life from every corner.

    Singapore

    While Singapore may not have the same reputation for having high living standards as its Hong Kong counterparts, it does offer a higher standard of living than most other cities. It’s one of the safest cities in the world, and it’ll provide you with a comfortable environment where you can relax after a hard day at work.

    Conclusion about Hong Kong vs Singapore

    Both Hong Kong and Singapore are very different places with their own unique cultures and economies. They are both fantastic destinations with plenty to see and do, so we hope our comparison will help you decide which location best suits your needs.

    Part of choosing a place for business involves choosing a business account that best suits your needs. Regardless of whether you open in Singapore or Hong Kong, Hong Kong business accounts are still the gold standard when it comes to business bank accounts.

    Open a business account in Hong Kong today with Statrys and get access to 11 currencies in one place, FX services that beat the banks, and remote access anytime, anywhere.

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