Many expatriate (from western countries) have been debating the better city (or location) to start a new business: Singapore? Or Hong Kong? Both are advanced and attractive cities in the Asian region, and both offer some very competitive tax rates for small businesses and/or start-ups. Where would you consider when setting up your new business as an expatriate person?
The tax rate of Hong Kong would certainly be a beneficial factor as it is calculated based on a two-tier rule. For any company earning below HK dollar of 2 million (in a calendar year), the profit tax rate is on a much lower tier than those companies that would have earned more than 2 million.
Hong Kong company registry can be both simple and complex, depending on your approach and requirements.
To incorporate a new company in Hong Kong, a company name must be chosen. There are rules that you must comply when picking a new name. The name can be in English, or in Chinese, but cannot be in both.
The company name cannot seem confusing. i.e. Do not submit a name that makes it sound like a government department, or do not use words that are solely used by government departments or government organizations.
Appointing a company secretary person (or entity) is compulsory.
There is no strict limit on company capital.
The HK company may be opened as a limited company, a sole proprietorship, or a partnership. With a limited company, the sole shareholder is not personally reliable for any liabilities of the incorporated company.
Opening a bank account at a local bank in HK is optional.
Over the past 35 years in Singapore, company profit tax rates have gradually been reduced from a high of forty percent to 17 per cent.
One area where Hong Kong has a big advantage over Singapore is this: Profit tax of foreign income.
In Singapore, foreign income is taxed and is remitted to Singapore. But in Hong Kong, the government does not tax offshore profits.
In Hong Kong, it does not withhold tax on payment of interest to non-residents. In Singapore, a domestic fifteen percent withholding tax rate applies.
One other downside with Singapore is the goods and services tax. The goods and services tax is imposed in Singapore and may be claimed back. But in the cases where this tax is not allowed to be claimed, then this is a big burden for most start-up businesses. Hong Kong has a big advantage as it imposes no the goods and services tax on companies.