×
1
post-title Why is Doing Business in Singapore better than Hong Kong?

Why is Doing Business in Singapore better than Hong Kong?

Last modified: August 1, 2019

Why is Doing Business in Singapore better than Hong Kong?

Why is Doing Business in Singapore better than Hong Kong?

Singapore and Hong Kong have always been competing in ranks for being the best place to do business. Both of these locations offer a variety of benefits such as their tax friendly policies, simple business incorporation procedures and excellent infrastructure, and many other reasons. Although Hong Kong has a longer history being the centre for business, Singapore has quickly caught up to Hong Kong’s dominance in the region. Singapore has been exceptionally active in adopting business friendly policies that continue to attract many foreign investors to establish their presence in Asia.

Ease of Doing Business: Singapore is Better

  • Singapore is ranked as the best place in the world to do business in the World Bank’s “Doing Business 2015” report.
  • In both economies, it takes only 3 steps and 1-3 days to incorporate a business.
  • Singapore fares much better when it comes to enforcing contracts (1 vs. HK’s 22) and registering a property (17 vs. HK’s 59).

Taxation: Singapore is Better

  • Singapore’s advantages are its low effective personal and corporate tax rates.
  • Singapore: personal income tax rate is from 3.5% to 20% for income above SGD 320k.
  • Hong Kong: personal income tax/salary tax is from 2% to 17% for income above HKD 120k.
  • However, Singapore’s net effective personal income tax rate is much lower than that of Hong Kong’s.
  •  For example, a person earning USD 65,000 in Hong Kong would end up paying close to USD 6,500 as personal income tax. Whereas in Singapore, he would only have to pay approximately USD 4,000.
  • Singapore has 79 comprehensive double taxation avoidance agreements (DTAs), while Hong Kong has more than 30 DTAs with other countries.
  • Hong Kong uses a purely territorial tax system, so HK companies only pay taxes on HK-sourced income and do not pay any taxes on foreign sourced income.
  • Singapore’s tax is based on a modified territorial basis, so Singapore-sourced income is subject to tax in Singapore, but specific foreign-source income is subject to tax.
  Tax RatesSingapore   Hong Kong  
Individual Tax Rates0-22%2-17%
Corporate Tax Rates0-17%16.5%
Tax Dividends0%0%

Funding: Singapore is Better

  • Singapore government provides many simple industry-specific tax incentives and business friendly tax system to draw foreign investors and growth of the targeted industries in Singapore.

On top of these aspects, Hong Kong also scores lower in categories of quality of life, high cost of living, labor cost, and political stability. However, for anyone interested in starting a business in Singapore or in Hong Kong, keep in mind that either locations are undoubtedly a good choice. Despite that Singapore is seemingly better, Hong Kong also has an upper hand in one area, which is its ties with mainland China. Nonetheless, Singapore is a lot better than Hongkong according to most surveys, and becoming the preferred international business location.

If you are interested in incorporating your business in Singapore, please review our online platform to help you find the best incorporation companies.

Leave a Reply

Your email address will not be published.

Start your Journey here

 

Loading…