Setting up your business in Singapore and Hong Kong: how to make it happen
Expanding your business into new markets can be both financially and emotionally rewarding and it’s not as tedious or intimidating as you might think. As long as you build a plan and do your homework before venturing into a foreign country’s business market, you should be able to successfully launch your business globally.
If your heart is set on growing your business in the East, then there are two markets you should consider focusing on: Singapore and Hong Kong.
In fact, Singapore is consistently ranked as one of the best places in the world for doing business and is actually home to the fastest growing eCommerce industry in Southeast Asia.
Whether you’re in the service provider industry or eCommerce market, registering your company in Singapore is quite easy and can also be very beneficial for your global business. Apart from its business-friendly and flexible immigration policy, Singapore is also known for its simple taxation laws, making it an attractive market for business owners to establish their entity.
Hong Kong is also known as a top financial hub for global entrepreneurs and is a record holder for the world’s freest economy over the last two decades due to its minimum level of restrictions and bureaucracy. Additional reasons many business owners flock to the region is because of Hong Kong’s ease of registering an entity, simple tax system, access to Mainland China and additional countries in Asia and much more.
In this guide, we’ll walk you through a comprehensive overview on how to set up your business in Singapore and Hong Kong, including the registration process, requirements you need to go through and the benefits of incorporating your business into these two thriving markets.
Why Singapore is a Good Location for Setting Up a Business
Home to 5.72 million people, 85% of whom are internet users, Singapore has always had a reputation as Southeast Asia’s center of business and trade.
In addition, about 20% of entities established in Singapore are foreign-owned. Entrepreneurs from all over the world have chosen to set up their companies in Singapore due to its strategic location as a gateway to other countries in Asia, competitive workforce, pro-business environment and much more. According to World Bank, Singapore is the easiest place to do business in the world.
Here are some more facts to know about Singapore’s business economy:
#1business environment in the Asia Pacific region.
#2in the world for economic freedom.
#3in the world for most motivated workforce.
Let’s dive into more of the benefits offered to businesses establishing an entity in Singapore.
The Benefits of Registering Your Company in Singapore
In the wake of the current pandemic, Singapore offers a great infrastructure for entrepreneurs to do business remotely.
When doing business in Singapore, entrepreneurs can benefit from numerous available grants, affordable rates and tax agreements. Below is a more detailed outline of what to be aware of when registering your business there.
Startup tax incentives
As a new company in Singapore, you’ll only pay a 4.25% interest tax on the first $100K in income you earn over the first three financial years.
Free trade agreements
Singapore has an extensive network of more than 24 free trade agreements (FTAs), which enable you to easily and effectively trade with your global suppliers and customers.
International tax treaties
Singapore has signed over 80 double taxation avoidance agreements to reassure entrepreneurs that they’ll receive proper tax treatment for their business.
Loans and government funding are available to foreign businesses that are also 30% owned locally.
If these incentives aren’t convincing enough, then you should also be aware of the latest business opportunities Singapore offers as a result of the COVID-19 pandemic.
New Business Opportunities Amidst COVID-19
When a crisis occurs, opportunities rise. This is definitely true for the Singaporean government, where throughout the pandemic, local individuals and businesses were able to remain resilient by receiving stimulus packages.
As remote work and living continue to disrupt the traditional workforce, many businesses in Singapore are going global, which means there is more demand for service providers such as freelancing, delivery services, online events, AI, robotics and much more.
Digital platforms have also enabled foreigners to be able to register their company in Singapore remotely, without having to travel long distances to sign documents, open a bank, etc.
Now that you’ve realized the potential and opportunities available in Singapore’s booming economy, it’s time to better understand exactly what you need in order to set up your company there.
Setting Up a Company in Singapore: Basic Requirements
Before you get started, you must first decide on a company name that is different from other businesses in Singapore and then get it approved by local authorities.
Furthermore, here are some of the basic requirements needed to register a company in Singapore:
01. | Appoint a director and administrator
The Singaporean government requires every company in the country to appoint one local resident as a business director, making them legally responsible for that business.
02. | Establish a local office
What’s great about this requirement is that it’s not necessary to have to rent a physical office; you’re allowed to have a virtual office. If you’re working from home, you can just register a local Singaporean address (typically if you’re working with a local business consultant). If you do rent a commercial office, you’d have to provide that office’s address.
03. | Report annual finances
You must report all of your annual finances to ACRA, the Accounting and Corporate Regulatory Authority of Singapore. All financial reports must also be in accordance with Singaporean accounting standards.
04. | File texas
In Singapore, you’ll need to file taxes only once a year.
05. | Employ a qualified secretary
It is mandatory for companies in Singapore to appoint a company secretary, who is a local resident, within six months of incorporation.
The Process of Registering a Company in Singapore
Here we’ll go over 4 steps you need to take to set up your company in Singapore:
Conduct Research & Establish the Entity
Before taking the leap, it’s imperative that you come up with a go-to market roadmap for your global business. What are your goals for expanding your business to Singapore? Research the type of business you want to establish and how your niche is performing in the market.
You’ll also need to decide on the type of company you wish to establish and settle on a name. Once you have those two things, you’ll need to formally register your company and its name with ACRA. In fact, many new companies register as private limited companies due to its scalability.
Incorporate Your Company
Once you have your company name approved by ACRA, you’ll have to provide them with specific documents to officially register your company.
- Company name – must be approved by the ACRA.
- Description of business activities.
- Shareholders – minimum of one.
- Directors – at least one director must reside in Singapore.
- Company secretary – must be a Singaporean resident.
- Signed consent forms – from your directory and secretary.
- Paid-up capital – at least S$1.
- Registered address – a physical office address is required.
Apply for Licenses & Permits
Depending on your business’s activities, you may be required to obtain specific licenses and permits from the local government. If your business is in one of the following industries, then you will most likely need to get additional permits.
- Travel agencies
- Private school
- Financial adviser
- Childcare center
- Video company
- Liquor distribution/retail
Finalize Registration Process with ACRA & Open a Bank Account
After incorporating your company and gathering all your documents, you’ll need to complete the registration process with ACRA, whose approval can take anywhere between one to three business days, unless ACRA requires further vetting. Additional information that may be asked of you includes registered office hours, registration with Singapore customs and the Singapore Central Provident Fund, which is a pension fund for business owners.
Finally, you can open a bank account in Singapore, but there is no need to travel to do so; accounts can be opened remotely. In Singapore, there are a wide variety of banks that can help set up an account for you, even if you’re not located in the country at the time.
Now that you’re familiar with how to set up a business in Singapore and the benefits it can offer you, you should also consider expanding to Hong Kong, another great location for conducting global business.
Why Hong Kong is Another Great Option for Global Business
Next in line, right after Singapore, Hong Kong is ranked as the 3rd best place in the world for doing business, mainly due to its liberal economic policies and access to the massive Chinese market.
Hong Kong is also known as the leader in global banking. But most importantly, setting up a business there is way more cost-effective and easier than in other countries.
Here are some additional facts on Hong Kong:
- Hong Kong is one of the most services-oriented economy in the world, with services sectors accounting for 93.4% of GDP in 2019.
- It’s the 6th largest exporter of merchandise in the world.
- It’s the 4th largest global financial center in the world.
Let’s dive deeper into some of the main benefits of registering your company in Hong Kong.
6 Ways You Can Benefit from Setting Up Your Company in Hong Kong
Situated in the heart of Asia, Hong Kong is just a short flight to cities such as Tokyo and Singapore, and of course, offers quick access to China’s bustling market.
Hong Kong has a very fast-paced working culture with a high level of education and experience.
Effective law system
Hong Kong has its own set of legal systems that are strongly enforced, and business-related rules are well-established and transparent.
Hong Kong adopts a laissez-faire approach and has been classified as the world’s freest economy.
According to PWC & The World Bank Group, Hong Kong ranks #1 for the world’s most business-friendly tax system.
Leading financial hub
As one of the most competitive cities in the world, Hong Kong is a prime location for setting up your global business, connecting seamlessly to the rest of the world. The city hosts many global financial firms, insurance companies, banks and asset management firms.
With a plethora of incentives, you must be thinking, ok what’s the next step? To get your company registered in Hong Kong, let’s go over some of the basic requirements and documents needed to complete your registration.
Setting Up a Company in Hong Kong: Basic Requirements
01. | Proposed Company Name
Just like setting up a company in Singapore, you’ll first need to settle on a company name which can be in either English or Chinese or a mix of both.
02. | Hong Kong Registered Address
An incorporated company in Hong Kong must have a registered office in the jurisdiction. Note that a P.O. Box is not accepted as a registered office address.
03. | Application Forms
- Incorporation form NNC1 with IRBR1
- Article of Association
04. | Business Details
Make sure you’re able to provide basic facts about your business such as directors, shareholders, capital structure, activities and location.
The Process of Registering a Company in Hong Kong
Similar to Singapore, registering your business in Hong Kong requires a few additional steps:
Registering as a Private Limited Company
Most investors in Hong Kong choose to set up a private limited company to protect personal assets from business risks and liabilities. However, as a Hong Kong private limited company, you’ll need to have a minimum of one and a maximum of 50 shareholders. There is no residency requirement for shareholders, as long as they are over 18 years old.
Just like in Singapore, a company secretary is mandatory and must reside in Hong Kong and have a registered office in the city. This individual is responsible for the books and records of the company.
A minimum of one individual director and an unlimited maximum number of directors are allowed, as long they are over 18 years old.
When incorporating a business in Hong Kong, there is no minimum share capital requirement. However, if you do have share capital, it can be expressed in any major currency, and not just Hong Kong dollars (HKD).
Taxation and Compliance
As an incorporated Hong Kong company, you are obliged to pay corporate tax, (or profits tax, as it is called), at a rate of 16.5%. In addition, it is mandatory for companies to prepare and maintain accounts which must be audited annually by certified public accountants in Hong Kong.
Both Singapore and Hong Kong are well-functioning locations that can truly provide business owners a very friendly and thriving work environment. From a productive English-speaking workforce to low tax policies, it’s no surprise that these locations offer an extremely attractive place to live and operate a business. These regions are excellent gateways for entrepreneurs like you, wishing to scale your business and reach even more customers.
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