When choosing to do business in Asia, both Hong Kong and Singapore are interesting choices. Hong Kong is a special place to do business since there is a culture among the English common law and a solid legal system from the rest of China. It is also one of the key components of Asia’s financial hub that many companies come to set up their operations to cater to the entire region.
On the other hand, Singapore is another city-state of Asia that is generally seen as the next stage of Hong Kong. Just as Hong Kong, Singapore also has great infrastructure, strategic location and business-friendly policies This is why it is a perfect option for companies that want to be able to do their business anywhere.
For that purpose, let us move on and explore the differences and benefits of doing business in Hong Kong and Singapore to help you choose the location that best suits your business needs.
Content Outline
Key Takeaways
Ease of Doing Business
Both Hong Kong and Singapore offer business-friendly environments, with Hong Kong favoring low taxes and minimal regulation, while Singapore provides strong government support and infrastructure despite more stringent regulations.
Company Incorporation
Hong Kong allows full foreign ownership and remote incorporation without a resident director, making it more cost-effective, whereas Singapore requires at least one local director, adding complexity and cost for foreign investors.
Corporate Taxation
Hong Kong has a lower effective corporate tax rate and no VAT, while Singapore offers significant tax exemptions for startups and R&D, despite a higher base tax rate and a 9% GST.
Legal & Banking Infrastructure
Both jurisdictions offer stable legal systems and robust banking infrastructure; Singapore emphasizes fintech and investor protection, while Hong Kong provides seamless international transactions and fewer restrictions on foreign ownership.
Talent, Lifestyle, and Immigration
Singapore is known for its safety, tech-driven talent pool, and stricter immigration policies, while Hong Kong boasts a strong financial talent base, open immigration, and a mix of urban and natural lifestyle advantages.
Ease of doing business
Singapore vs Hong Kong have their pros and cons when business is considered for both countries.
Hong Kong Ease of Doing Business
Hong Kong has the most open economy in the world, according to the World Bank. The process of starting a new business is not only simple. It is easy to purchase property, employ staff, and operate a business in Hong Kong. The protection of private property is very strong, and business owners are able to get finance easily. These factors make starting a business in Hong Kong easier than elsewhere.
Besides this, the local authorities have been dedicating their resources to healing the small and medium enterprises (SMEs) for the last known decades. They do that through low taxes, reduced regulation and They bring us low taxes, less regulation, and fewer administrative procedures.
Singapore Ease of Doing Business
Singapore is a great choice for those who want to start their own business. It provides small businesses with substantial government support in the form of grants and tax exemptions. It is also the home of the world’s busiest port so that the goods can be transported easily and at low cost to and from here to anywhere in the world. The regulations can be stringent and permits could take weeks or even months to obtain. However, the country is a safe place, crime rates are very high.
Ease of doing business in Singapore vs Hong Kong
Key Industries: Financial services and tourism are important industries in both Singapore and Hong Kong. Hong Kong’s other main areas of concentration are professional services, trade, and logistics, whereas Singapore’s other major industries are manufacturing and information and communications technology (ICT).
Market Access: Through the Closer Economic Partnership Arrangement (CEPA), Hong Kong enjoys strong access to mainland China. It also benefits from its unique customs territory and trade laws. In contrast, Singapore is a major ASEAN hub and is home to the busiest port in the world. Strong ties with nations like Brunei, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam resulted from this. More than 20 economies have free trade agreements with both jurisdictions.
In comparison, Hong Kong is famous for duty-free imports and exports. Singapore is a global trade gateway and an offshore banking destination for foreign investors with cheap financing and also an easy export to the ASEAN borders.
Company Incorporation
Both Hong Kong and Singapore are very good locations to incorporate businesses due to their favorable geographical locations, developed infrastructures and favorable business environments. Though similar, each jurisdiction is characterized by unique considerations for prospective business people. Some of the key things to consider are legal and regulatory frameworks, taxation policies, market access, business culture, and distance to target markets.
Hong Kong Company Incorporation
Setting up your company in Hong Kong is relatively easy. Although there is no charge for business registration with the government, there are costs for getting some documents. These may include fees for registration for a business certificate and other relevant paperwork. Moreover, if you decide to hire the services of a professional company or agent to help with the incorporation process, there will be service fees to pay.
You will also have to name a director who should be at least 18 years old, but there is no requirement that they should be staying in Hong Kong for any specific period. Directors of Hong Kong companies may be foreigners without any restrictions of residence. Nevertheless, if you pick directors who live outside of Hong Kong, you will need to take into account logistical considerations and probable fees for their appointment.
Singapore Company Incorporation
Registering a limited liability company (LLC) in Singapore will require a valid passport, proof of residence in Singapore, and three personal references. Furthermore, a power of attorney form should be completed for someone else to act on your behalf and be stamped when filed. Upon filing, you will be issued with a Certificate of Incorporation stating the details of your company.
As for directorship, one director must be a resident of Singapore or a permanent resident. In case you don’t have a local director, you will have to appoint a nominee director, which will entail extra costs. Each director has to be over 21 and should have a residency in Singapore of at least one year. The usual board is usually made up of at least one director.
Company Incorporation in Singapore vs Hong Kong
Requirements
Local Presence: Both Hong Kong and Singapore require a local company secretary and registered address.
Resident Director (Singapore only): Singapore mandates at least one resident director (citizen, PR, or valid pass holder), while Hong Kong does not.
Remote Setup: Hong Kong allows full remote incorporation for individual shareholders; Singapore may require SingPass or physical presence if no qualified agent is used.
Cost
Singapore has lower fees but higher overall cost so hiring a resident director increases total expenses in Singapore.Hong Kong is more cost-effective for foreigners, Since there is no requirement for a resident director, the cost is much cheaper. Both require a company secretary and local address, adding to setup costs.
Speed
Both Singapore and Hong Kong can process straightforward incorporations in a few days.Any non-standard or complex setups may delay the incorporation timeline.
The decision between incorporation in Hong Kong or Singapore, brings out certain key considerations. Hong Kong enjoys an easier and economical set up but does not require directors to be residents. On the other hand, Singapore provides strong governmental assistance, numerous tax agreements with other countries, and qualified labor.
Corporate Taxation
Regardless of the country in which you will be conducting business activities, you should understand the corporate taxation system for your business.
Hong Kong Corporate Taxation
Technically, corporate taxes in Hong Kong are 0% for any business carried out outside of the Hong Kong borders. Nonetheless, for activities performed within Hong Kong, a two-tiered corporate tax is applicable.
For Hong Kong-incorporated companies, the tax is 8.25% on assessable profits not more than HKD 2 million, while for companies with profits above HKD 2 million, the tax is 16.5%.
Unincorporated companies are subject to the same assessable profit levels. Nevertheless, the taxes are 7.5% and 15%.
So, if you generate sales in Hong Kong, you will be required to pay taxes on those sales. The counter balance for this tax is that there are also no VAT or Foreign Exchange Controls in place for businesses in Hong Kong.
Singapore Corporate Taxation
Singapore’s corporate taxes are 17%, which is slightly higher than in most of the other countries. Corporation income tax is profit based rather than revenue based. For instance, a company making HKD5 million (USD 735,000) a year would pay no tax on the first HKD 2 million (USD 280,000) and 30% on the balance of HKD3 million (USD 420,000).
Nonetheless, that does not imply that your business will be taxed twice. However, Singaporean companies are not subject to income tax on their foreign earnings, similar to Hong Kong. To qualify for this exemption, you must meet specific requirements. Similar to Hong Kong, Singapore exempts foreign-sourced income from income tax, but only if the income has already been taxed in the country where it was earned (at least 15% tax rate).
Major Tax Incentives In Hong Kong Vs Singapore
Hong Kong
- No capital gains tax, no dividend tax, and no GST/VAT
- Over 50 Double Taxation Agreements (DTAs) to prevent double taxation
- Foreign tax credits is available for income taxed in DTA jurisdictions
- No tariffs on general imports which is ideal for trading and logistics businesses
Singapore
- No capital gains tax or dividend tax, but a 9% GST applies to most goods and services.
- Extensive DTA network with over 100 jurisdictions with broad treaty coverage
- Startup tax incentives:
- First SGD 100,000 of chargeable income: 75% tax exemption
- Next SGD 100,000: 50% tax exemption
- Alternative: Three-year full exemption up to SGD 125,000
- 400% tax deduction for eligible R&D and innovation projects
Legal environment
Hong Kong Legal environment
Since 2011, Hong Kong has been considered the best place to initiate a business by Forbes. The city is attractive to entrepreneurs due to the stable legal environment, low taxes, and easy reach of international markets. There are not many restrictions on the foreign ownership and many multinationals operate in the country.
Nevertheless, Hong Kong does not provide minority shareholders with a lot of safety. They are often excluded entirely. There is no legal recourse for foreigners if a local shareholder takes control of the company, and even in the event that they are successful, they may not be able to recover damages.
Singapore Legal environment
In 2014, the World Bank awarded Singapore the title of the best destination for doing business. The laws of the country are meant to ensure that the investors are protected and to promote entrepreneurship. Non-residents are allowed to own 100% of a company without the liability of the capital gains tax. And if they want to dispose of their shares, they can sell them as they wish.
But the foreigners can only hold 25% of the company without being taxed extra. This restriction is for both individuals and joint ventures. It is inapplicable to sole proprietorships and partnerships.
Banking Infrastructure
For a business to grow and expand, a robust banking infrastructure is essential as it provides the financial services and support that are required for smooth operations.
Hong Kong Banking Infrastructure
The banking system of Hong Kong is strong and developed, and therefore, it is a good option for business. The process of opening a corporate bank account in the city is generally simple with international and local banks available to suit your business requirements. Hong Kong banks offer all-inclusive services for international transactions, including attractive foreign exchange rates and effective wire transfer services.
Singapore Banking Infrastructure
In the same way, Singapore has a well developed and reliable banking sector. Opening a corporate bank account in Singapore is usually hassle-free and businesses have the opportunities to get a wide variety of financial services, such as multi-currency accounts, and efficient international wire transfers. In addition, Singapore has been actively encouraging the use of fintech solutions and digital banking, improving the banking experience for businesses in the country.
Talent Quality
Hong Kong Talent Landscape
Hong Kong is a global hub for financial services and a prime location for companies seeking top-tier talent. According to the International Monetary Fund, Hong Kong has a population of 7.4 million, with 2.6 million being students. A large portion of the workforce has academic backgrounds in finance and business which reflects the city’s strong educational emphasis in these fields. A growing number of graduates are now pursuing careers in engineering and other STEM areas, supported by local government initiatives aimed at diversifying the talent pool.
Singapore Talent Landscape
Singapore’s workforce is notably international, with a significant portion made up of immigrants. While half of the residents are born outside the country, only about 1.9% of the population are classified as non-citizens. As a rising technology hub, Singapore has attracted global companies such as Google where the Asia-Pacific headquarter is based. This has fueled strong growth in top talent especially in IT and software development sectors, with many major firms establishing regional offices in Singapore each year.
Economic Landscape
Hong Kong Economic Landscape
Finance, Trade, and Tourism are economic pillars of Hong Kong’s economic foundations. Hong Kong has long been the global hub for trading in such commodities as cotton, sugar, coffee, tea, cocoa, rubber, fruits, and steel. It is well known for housing some of the busiest ports around the globe.
Singapore Economic Landscape
The engine of Singapore’s economy is represented by its prosperous service sector as the primary driving force. Around 80% of the country’s gross domestic product is accounted for by the private sector which includes retail, hospitality, food, healthcare, transportation and telecommunication.
Immigration policy
Hong Kong
Hong Kong provides no limit to persons coming in. The territory issues visas to all foreigners if they wish to work or attend educational institutions. Unlike the immigration plans of many countries, Hong Kong has a flexible and perfect policy on this issue. When foreigners come to Hong Kong under the condition that they get a visa that the Hong Kong government has specified, they can do the job or study. Moreover, different kinds of Hong Kong visas are also offered, including employment visas, investment visas, and dependent visas, as national requirements are different.
Singapore
Similarly, immigration to Singapore is subject to certain restrictions. Visitors from specific countries are asked to obtain a travel permit so that they can get access to the country. Moreover, depending on the needs of the workforce, certain quotas limit the number of approved foreign workers admitted into our country per year.
Quality of Life
While business environments are different, quality of life influences your business decisions a lot since a good environment is at the core of company development.
Hong Kong Quality of Life
Hong Kong has long been an international financial and commodities center with mainland China as a gateway for international businesses. Together the modernized infrastructure and undefiled environment make the city comfortable to live in. It has been noted for its high rating in the quality-of-life surveys conducted in many countries around the world. Although only 25% of the city area is urbanized, parklands and mountain trails make up the rest of the treasures out of which people can find peace and be far from the hustle of the town.
Singapore Quality of Life
Although not the most luxurious place for those used to Hong Kong’s way of living, it has a higher standard of living compared to other cities. It is one of the safest cities in the world and it is going to give you a nice background where you can easily relax and have a comfortable chill after a long day of work.
Singapore vs Hong Kong Quality of Life
Singapore is renowned for its safety and comfort, whereas Hong Kong provides a blend of urban and natural landscapes.
Summary
Choosing between Hong Kong Vs. Singapore for your company depends on the unique needs and goals your organization has. Both city-states have pros and cons and also each of them offers special services, in particular, for definite business areas.
Singapore offers a safer environment, a more tech-friendly policy, as well as a government that is supportive of small businesses while Hong Kong has an open economy, a bigger banking system, and a growing financial industry. It therefore becomes apparent that you prioritize the factors that are most critical to you.
Through the analysis of these criteria, you will be able to choose the most suitable for your long-term company purposes and prepare for success in the dynamic and highly competitive Asian markets.
How FastLane Group Can Help?
At FastLane, our experienced team has supported countless companies with essential corporate services, including company incorporation, taxation, accounting, and audit. By partnering with us, you can streamline complex processes and avoid costly errors or delays.
We also serve as your trusted Hong Kong company secretary, guiding you through every stage of business registration and compliance. For businesses newly entering the Hong Kong market, having a reliable and knowledgeable partner like FastLane helps you navigate challenges with confidence and ease.
Contact us and find out how our services can help you!
