Singapore VS. Hong Kong – Which Is Better For Doing Business

This article holds all the answers to the question Singapore vs Hong Kong Where to incorporate? 

The World Bank’s Ease of Doing Business category presently has Singapore and Hong Kong in first and second place, respectively. The two nations are seen as Asia’s worldwide financial and economic hubs of the future. Its neighboring nations, including India, Indonesia, Thailand, and Vietnam, have also looked up to them for potential investments.

SINGAPORE VS. HONG KONG – WHERE TO INCORPORATE [COMPARISON]

COMPANY REGISTRATION REQUIREMENTS

Shareholding

A business must have a minimum of 1 and a maximum of 50 shareholders, who may be domestic or foreign citizens; both domestic and foreign ownership of 100% of the shares is permitted. Individuals or business entities may be shareholders. A shareholder and a director may be the same person or distinct people. At least 18 years of age is required for shareholders in both Singapore and Hong Kong.

Share Capital

In Singapore, a minimum of S$1 must be provided as capital. There is no minimum share capital requirement in Hong Kong.

A firm may at any time inject more cash to increase its share capital.

Directors

In both Singapore and Hong Kong, one minimum and an unlimited number of directors are permitted. Directors may be either residents or non-residents. A director must be at least 18 years old and cannot have any malpractice charges or be in bankruptcy. It is not necessary for the directors to be shareholders as well.

In Singapore, a company must have at least one Singapore-resident director.

 Singapore citizens, permanent residents, or holders of employment passes are all considered to be Singapore residents. Directors of corporations are not allowed.

In Hong Kong, there is no need for resident directors. Along with individual directors, nominee corporate directors may also be appointed. At least one director has to be a natural person.

Company Secretary

A certified company secretary must be appointed by the company. The secretary needs to be a natural person and live in Singapore.

In Hong Kong, it is also necessary to appoint a certified company secretary. A person or a business can serve as secretary. If the secretary is a person, they must reside in Hong Kong; if they are a company, they must have their registered office or place of business there.

Registered address

In both Singapore and Hong Kong, a local address must be given as the company’s registered address in order to register a corporation. A PO Box is not acceptable as the registration address; it must be a real address.

Company name

Before the company can move on with incorporation, the company name needs to be approved by the Accounting and Corporate Regulatory Authority (ACRA) in Singapore or the Companies Registry in Hong Kong.

GOVERNMENT FEES

Two government fees must be paid when forming a business in Singapore:

Name approval charge of S$15 (about US$11) and company registration fee of S$300 (about US$215)

The applicant must pay the following government fees when forming a business in Hong Kong:

HK$1,720 (about $292 USD) Application fee, business registration fee, and levy payment.

BANKING

• The applicant can formally start doing business and opening a corporate bank account once the company has been registered.

Refer to Singapore corporate bank account opening and Hong Kong corporate bank account opening for more information. 

• Both nations have top-notch banking infrastructure.
• Banks in both nations do not see high volumes of foreign business transactions as a red flag due to their global customer bases.
• Due to its high banking fees and minimums, Singapore used to be the more expensive option, but in recent years, Hong Kong banks’ prices have also been progressively rising.
• An in-person meeting is typically required to assess the business before opening a corporate bank account. But, an increasing number of banks, particularly in Singapore, offer video conference meetings with bank officers so the applicant can open an account without going to the location.
• For non-residents, creating a bank account in Hong Kong can be notoriously challenging (especially when compared to Singapore).
• If the applicant has all the necessary paperwork and are familiar with the procedures, opening an account in both nations often takes non-locals two to three weeks.

Taxation policy

ANNUAL COMPLIANCE REQUIREMENTS

General meetings

Similar regulations apply to general meetings in Singapore and Hong Kong companies. Unless they have decided not to hold one by passing a shareholders’ resolution, they are required to hold annual general meetings (AGMs) of their shareholders. In such a situation, all issues typically resolved at the AGM may be accomplished through the adoption of written resolutions.

The company must hold its first AGM within 18 months of its incorporation date in both jurisdictions. Thus, it must hold the AGM each calendar year; however, the time between two AGMs cannot be longer than 15 months.

Examining the company’s financial statements is one of the AGM’s main goals.

FINANCIAL STATEMENTS

Singapore

Financial statements that comply with the Singapore Financial Reporting Standards (SFRS), which are comparable to the International Financial Reporting Standards (IFRS), must be prepared and presented at the Annual General Meeting (AGM) by all corporations each year.

Statements should be audited. Unaudited financial statements may be prepared by small and inactive businesses if they meet certain requirements.

The financial statements include the following documents:

• Report of Directors
• Auditor’s Report (if necessary)
• Statement of Comprehensive Income
• Statement of Financial Position
• Cash Flow Statement
• Statement of Shareholder’s Equity
• Corresponding Notes to Financial Statements

Hong Kong

A Hong Kong-registered corporation is also required to maintain an accurate record of all accounting transactions. The Hong Kong Financial Reporting Standards must be followed when recording all financial transactions in the accounting records. The AGM should annually approve the statements.

An audit of the financial accounts should be performed by a Hong Kong Certified Public Accountant. The exemptions apply to small businesses that fit certain requirements.

Financial statements that have been audited must contain:

• Directors’ Report
• Accountant’s Report (if necessary)
• Comprehensive Income Statement
• Financial Position Statement 
• Cash Flow Statement
• A comprehensive income statement and 
• an equity change statement

FILING OF ANNUAL RETURN WITH THE COMPANIES REGISTRY

According to Singaporean law, all businesses must submit their annual returns to ACRA within 30 days of the AGM. 

Within 42 days on the date of its incorporation, a Hong Kong company must submit its Annual Return to the Companies Registry.

An annual return is a collection of documents that, in both jurisdictions, includes the fundamental information about the company as follows:

• Company name and registration number
• Registered office address
• Share capital
• Principal activities
• Registered office address
• Details of company officers (directors, secretary)
• Shareholder details, share capital, etc.
• Annual financial statements

FILING OF ANNUAL TAX RETURN

The applicant must submit an annual tax return to Singapore’s Inland Revenue Authority, which is the department in charge of tax collection.

Your income, business earnings and losses, other deductions, and information regarding your tax refund or tax liability are all reported in the document.

Two submissions are required for annual tax returns in Singapore:

• Estimated Chargeable Income that needs to be submitted within three months after the end of the business’s financial year
• The deadlines for filing a corporate income tax return are November 30 for paper filing and December 15 for electronic filing.

Each and every Hong Kong company is required to complete and submit the Profits Tax Return (PTR) to the appropriate state agency, the Inland Revenue Department. The PTR contains the same fundamental data that Singapore does.

The PTR must be submitted by newly incorporated businesses no later than 18 months after the date of incorporation, and then every 12 months after the first tax return is submitted.

REGISTER OF CONTROLLERS

Singapore

All businesses in Singapore are required to keep an internal register of controllers, which is a confidential company document, and to regularly update the information in the central, confidential register of company controllers.

An individual or organization that has “substantial interest” or “significant control” in a business is referred to as a controller. It typically refers to a person who owns more than 25% of the issued shares.

Hong Kong

An internal significant controllers register is required for every Hong Kong-incorporated firm.

The majority of the time, controllers are also shareholders who own more than 25% of the issued shares.

Both individual and corporate controllers in Singapore must maintain data that is similar to what is required in the register.

ADVANTAGES OF COMPANY INCORPORATION IN SINGAPORE

• Low corporate taxes: By offering numerous tax exemptions, incentives, deductions, and incredibly low corporation tax rates, Singapore encourages aspiring business owners. For example, the tax rate on profit is 17%, and neither dividends nor capital gains are subject to taxation. Numerous innovative plans exist to encourage the expansion of companies. When your business makes money from one of the nations on the list of nations with whom Singapore has double taxation avoidance agreements, there is no double taxes.
• Foreigners (individuals or corporations) own 100% of the shares: Singapore permits foreigners or foreign corporate organizations to own all of the stock in a business that is based and registered in Singapore. One nominal director who resides permanently in Singapore is required. However, stockholders don’t have to be Singapore citizens; they can be foreigners. 
• Simpler incorporation procedure: The simplicity of incorporation in Singapore is one of the key advantages. Incorporating your firm does not require you to travel to the nation and remain there. The ACRA’s web portal is used throughout the entire incorporation process. If you acquire help from an outside agency to incorporate a business in Singapore, you can do it in an hour. Documents can be uploaded to centralized document management systems.
• Ease of funding: Singapore has plenty of financing possibilities for new businesses, both domestically and internationally. Crowdfunding, bootstrapping, obtaining assistance from investors and venture capitalists, accelerators, and incubator programs are some of the main funding strategies used by businesses in Singapore. It’s also easy to get business loans from both public and private institutions. Foreigners can establish a business in Singapore more easily with these quick and hassle-free finance solutions.

DISADVANTAGES OF COMPANY INCORPORATION IN SINGAPORE

• Depending on the type of profits earned by the organisation, the employer can be subject to remittance taxation. This means that the organization should pay tax on income earned outside of Singapore that is remitted or brought into the country.
• If the organization makes payments to non-resident people or entities, it could be required to withhold a certain percent of the payment as withholding tax. This is to ensure that the non-resident individual or entity pays tax on their income earned in Singapore. 
• Singapore requires every enterprise to have as a minimum one director who’s a resident of Singapore. The director must be a Singapore citizen, permanent resident, or holder of an employment pass. This requirement may be tough for companies that do not have a local presence or do not have a person who meets the standards to act as a director.

ADVANTAGES OF COMPANY INCORPORATION IN HONG KONG

• Despite major setbacks in recent years, Hong Kong has shown incredible resilience. By using its financial reserves to fund important initiatives, strengthen the innovation and technology ecosystem, and support the mega event economy, the government has taken an active role in the recovery.
• Because of its special status as a Chinese Special Administrative Region, Hong Kong is a great starting point for companies wishing to expand into the Chinese market. The largest offshore center in the world, Renminbi settlement, is located in Hong Kong, and China is a major market for both inward and outbound investment as well as commerce. Numerous Renminbi services are readily available to businesses from banks and other financial organizations.
• For investors, financiers, asset managers, funds, and financial institutions worldwide, Hong Kong offers a comprehensive and superior financial platform due to its capabilities in banking, capital markets, and asset management. The location is also favored by corporate treasury centers.

DISADVANTAGES OF COMPANY INCORPORATION IN HONG KONG

• Living in Hong Kong has become increasingly costly over the years. For house rental expenses alone, you must allocate at least HKD 15,000 per month on average. Because there is a strong demand but a limited supply, office rentals are also not inexpensive.
• When starting a business in Hong Kong, it can seem like one of the simpler things to cross off your to-do list is opening a bank account, but that isn’t always the case. It is expensive and time-consuming to open an account with a traditional bank in Hong Kong, and there is no assurance that your application will be accepted. Additionally, in order to open an account, banks require that all of the company’s directors be physically present in Hong Kong.
• Although most industries find it easy to do business in Hong Kong, running a financial company presents a different set of challenges.Financial institutions must follow several types of rules and limitations. Businesses must get the appropriate licenses from the Securities and Futures Commission or the Hong Kong Monetary Authority, depending on the kind of operations they engage in.

Reach out to us at Relin Consultants for further assistance.