The Main Differences in Business Activities between Hong Kong and Singapore
Business incorporation
The process of forming and registering a company in Hong Kong is cheaper and easier as compared to Singapore. In Singapore, it is a mandatory to employ a local director and make a security deposit to carter for nominee services.
Singapore exempts qualified small companies with total assets and annual turnover below S$10 million (about the cost of a celebrity mansion) from the annual audit. However, this could pose a big problem for business companies like e-commerce that have small but frequent transactions. On the other hand, Hong Kong mandates all its companies to do the annual audit and annual filling failure to which they are committing an offense that can attract a heavy penalty or a forced strike-off.
In Hong Kong, there are more opportunities for investment in the financial sector as compared to Singapore.
You do not have to visit Hong Kong for company incorporation neither are there any tenancy agreements required before incorporation.
Ease of business operation
In terms of ease of business operation, according to World Bank’s Doing Business 2020, Singapore ranks second, which out passed Hong Kong (3rd) and other countries in the world.
Immigration
Both countries provide favorable immigration conditions in terms of policy and work visas. However, Singapore’s conditions are tighter in a bid to attract only innovative and high-skilled investors, unlike Hong Kong which is more flexible.
Innovation and business institutions
The main difference in terms of business activity between Hong Kong and Singapore is that Singapore has higher quality business institutions and an innovative business sphere as compared to Hong Kong.
Taxation and tax incentives
| Hong Kong | Singapore | |
| GST (Goods and Services Tax) | – | 7% |
| Corporate Tax | 16.5% for incorporated company; 15% for unincorporated business | 17% |
| Double Taxation Agreements | YES | YES |
Lifestyle, rental, and cost of living
If at the end of the day cost of living and expenses take much of the income, then your business activities may not be considered profitable. That is why, lifestyle, rental, and cost of living is factored in before the company incorporation. Hong Kong is one of the most expensive cities worldwide in terms of the cost of living, rental, and high lifestyle as compared to its rival Singapore.
The stock markets
Hong Kong has around three times the number of companies listed on its stock market making the stock market to be more powerful and larger than that of Singapore.
Singapore has quality infrastructure qualified service providers than Hong Kong.
Strategic location
Hong Kong offers an opportunity to tap the market of Mainland China than Singapore because of its strategic location at the Pearl River.
Singapore has the busiest port and extensive port connections worldwide compared to Hong Kong.
Safety and security
A country may many investment opportunities, but if your investments or personal life is not as safe as the investor, then it may not be viable to invest in that country. Both countries have a strong regard for law and order, however, Singapore is ranked the safest place of the two with the lowest rates of crime worldwide.
Business language
Even though the two countries use English as the business language, the difference is that Hong Kong’s workforce prefers to speak in Cantonese and Mandarin even though they know English. However, you can turn this to your advantage if you intend to engage in business activities in neighboring countries like China and Taiwan.
Remuneration rates
As an investor, you would want to get the best service from your workforce but at the same time, you want to take advantage of affordable rates. The remuneration rate of Hong Kong is higher than in Singapore.
Banking and finance system
Hong Kong has a strong banking system and a strong anti-corruption regime than Singapore. This is because of the strong laws that have been put in place by the regime.
Judicial and legal system
The legal system in both countries is more or less the same but Singapore has a more impartial judicial system for crimes related to e-commerce, Intellectual Property (IT), piracy, immigration, and workforce than Hong Kong.
Technology and technological adoption
In terms of Information Communication Technology (ICT) promotion and ICT use, Singapore ranks higher coming second worldwide while Hong Kong ranks twenty-fourth worldwide.
The government of Singapore offers several assistance schemes towards mentorship, funding, and setting up the market and network thus creating a conducive environment for technology to thrive.
Conclusion
In as much as most business activates rival each other closely between the two, Singapore takes the best place of being the easiest place to do business and the most competitive economy worldwide compared to Hong Kong. The Singaporean government has introduced several tax incentives that are industry-specific making it easier for Small and Medium Size (SMEs) to set up businesses and flourish. It is also the most open to the trade of the two.
Main difference in business activities between Hong Kong and Singapore FAQs
- Maintain your customer and merchant relationship.
- Maintain your banking relationship
- Evaluate how to successfully allocate your assets and resources.
- Renegotiate all business agreements made under Singaporean terms.
When a dividend is paid by a foreign tax resident company to a foreign account before being remitted to Singapore it is called a foreign-sourced dividend. Foreign sourced income is a taxpayer’s income from services provided through a fixed business premise in a foreign country.
Yes, the main activity between Hong Kong and Singapore is import and export whereby Hong Kong is the largest importer of Singapore’s products than any other place worldwide. However, Singapore’s import from Hong Kong is about 19 % of its total import.
However, there are certain tax exemptions and reductions between the two countries when it comes to cross-border business activities.
When finding out the main difference in business activities between the two Asian countries, Singapore, and Hong Kong, it is also important to look at other factors that will affect your life in these countries directly or indirectly such as political stability and ease of accessibility.
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