Set Up a Business in Singapore or Hong Kong
Asia is one of the world’s fastest growing business hubs, and leading the pack is Singapore and Hong Kong, two of the regions busiest and bustling hubs in the region. For an entrepreneur who is looking to venture into the region, you may be thinking which option would be a better fit for me? Should I choose Setup Company in Singapore? Or should I choose Hong Kong? Let’s explore both these options and what setting up a business in these two countries would entail.
The Benefits of Setting Up a Business in Singapore and Hong Kong
One thing that’s clear is these two countries are Asia’s most booming business destinations which offer plenty of business opportunities in various industries. Both these countries are also politically stable, which is good for business development, and both countries have a healthy supply of potential investors because of the wealth that has been generated in the county.
In Singapore, a business can be incorporated within half an hour with expert assistance from agencies like 3E Accounting, Singapore’s leading incorporation agent. Establishing a company in Singapore is very cost effective, and that is where the difference between Singapore and Hong Kong starts to emerge, because the biggest disadvantage boils down to costs and regulations.
Let’s look at the differences between Singapore and Hong Kong’s business environment:
The Difference Between Singapore and Hong Kong
The best thing about setting up a business in Singapore is that it has some of the lowest corporate tax rates in the world, which is one of the main enticing factors that keep entrepreneurs flocking towards the country. Corporate tax is at 8.5% for up to $200k and a flat rate of 17% thereafter. New start-up companies are also able to enjoy a tax exemption on the first $100k of normal chargeable income for the first three consecutive years of operation.
Hong Kong on the other hand, has a rate of 16.5% profit tax for its corporations, but there are no comparable tax exemptions. If you were to take the tax exemptions into account, the effective corporate tax rate for a newly incorporated company would be much higher compared to that in Singapore.
Singapore is fortunate enough to enjoy political stability, and because of that, it is much easier for entrepreneurs to open a bank account in Singapore compared to Hong Kong.
Singapore is also encouraging the creation of small and medium enterprises through a generous regime of tax breaks and grants, providing government grants of up to 60% of costs for the purchase of technology such as computers or accounting software for example. Unfortunately, in Hong Kong, no such grant is available.
Setting up a business in Singapore is much easier because there is less red tape to be contended with. Singapore for example, has no auditing requirements for privately owned companies that bring in a revenue of less than $10 million.
In Hong Kong on the other hand, personal tax rates are much higher. A person who earns USD65,000 in Hong Kong would end up paying close to USD6,500 in personal income tax. In the same situation in Singapore, that individual would only have to pay approximately USD 4,000 in tax.
The price of residential property is also something that needs to be taken into account, especially if you’re planning to relocate and live in these countries to run and manage your business. Singapore’s residential property prices are much more affordable than Hong Kong. Both these countries do not have any taxes on dividends, capital gains, inheritances or estates.
Singapore has the advantage of having a superior work force with much higher education standards, and English is the universal business language. Labor costs are also significantly lower in Singapore.
Which Do You Prefer?
Both Singapore and Hong Kong have their own strengths which they bring to the table, and both these countries still hold fantastic business opportunities for investors. The major difference would be in terms of costs, where Singapore is clearly the more affordable business set-up option in this case.