Which is an ideal jurisdiction for company incorporation in Asia? Singapore and Hong Kong have been dominant players in the Asian region, vying for the position of “the best place to do business.” But the crucial questions are, which of these jurisdictions have an edge over the other? Is incorporating a business easier in Singapore or in Hong Kong?
Strategic location and attractive tax benefits make Singapore the most preferred location for the overseas companies to set up their business. Various options are – opening up a Branch Office, a Representative Office or a Subsidiary in Serangoon . The country also has liberal immigration policies. If the company wants to set up their regional head quarters in Singapore they are also provided with Financial Assistance.
Best Tax Advisor In North-East, SG
A key determinant for setting up a business in Serangoon is the tax regime in force. In this regard Singapore boast of being one of the lowest tax jurisdictions in the world. Detailed below is an overview of the tax system and Tax Advisor in Singapore.
Tax jurisdiction Singapore: Taxes are levied on a territorial principle i.e. companies and individuals are taxed on Singapore sourced income. In addition, the Foreign sourced income (branch profits, dividends, service income, etc.) are taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%.
Company Incorporation - Singapore Vs Hong Kong
A key determinant for setting up a business in a given jurisdiction is the tax regime in force. In this regard, both Hong Kong and Singapore boast of being one of the lowest tax jurisdictions in the world. Detailed below is a comparative overview of the tax system in Singapore Vs HK.
- Taxes are levied on a territorial principle i.e. companies and individuals are taxed on Singapore sourced income.
- Foreign sourced income (branch profits, dividends, service income, etc.) will be taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%.
- Taxes are levied on the territorial principle i.e. only on income "derived from or arising in" HK and not on income sourced outside the SAR.
- No tax is levied on profits arising abroad, even if they are remitted to Hong Kong.
Corporate Tax Rate
- Singapore: Current corporate income tax rate - 18%. However, corporate income tax rate effective 2010 - 17%. Note: The effective tax rate is much lower - below 9% for profits up to SGD 300,000 and capped at 18% for profits above SGD 300,000
- Hong Kong: Current corporate income tax rate - 16.5%
Goods and Services Tax (known as VAT/Sales tax in other countries)
- Singapore: 7%
- Hong Kong: Nil
Capital gains tax
- Singapore and Hong Kong: Nil (Capital loss expenses are correspondingly not allowed as deductions)
Group relief for losses
- Singapore: Allowed
- HK: Not allowed
- Singapore: Interest, royalties, rentals from movable properties, management and technical fees, and director's fees paid to non-residents (individuals or companies) are subject to withholding tax. There is no withholding tax levied on dividends.
- Hong Kong: Royalties, rentals from movable properties, and fees paid to non-resident entertainers or sportsmen for their performances in Hong Kong are subject to withholding tax. There are no withholding taxes levied on dividends and interest.
Double Tax Agreements
- Singapore: More than 50 bilateral comprehensive tax treaties
- HK: DTA network of 37 treaties
- Singapore: 1 January - 31 December
- HK: 1 April - 31 March
Filing tax returns
- Tax returns along with audited accounts must be filed with the Inland Revenue Authority of Singapore by 31 October each year.
- Note: Dormant companies (i.e no accounting transactions for the financial year) and exempt private companies (not more than 20 shareholders and shares are not held by another company) with an annual turnover of less than SGD 5 million are exempt from audit requirements and can file unaudited accounts.
- Tax returns along with audited accounts must be filed with the Inland Revenue Department by 31 April each year. The auditor must be a member of the HK Institute of Certified Public Accountants and must hold a practicing certificate.
- Note: Dormant companies (i.e no accounting transactions for the financial year) and small corporations (i.e total gross income does not exceed HKD 500,000) are exempt from audit requirements and can file unaudited accounts.
Company Registration Options in Singapore
A lot of companies today fail to succeed primarily because they have done a poor job of keeping their financial records. Keep in mind this is one of the most important aspects of any business, big or small, that should never be neglected. Fortunately, there are a lot of bookkeeping companies which offer quality book keeping and accounting services. By hiring efficient, reliable and honest bookkeepers from these companies, you would be able to feel secure as to where every dollar goes in your business. You would also be able to keep track of all your assets and payables, without having to do a lot of work.
However, the process of choosing a top company who would be able to provide bookkeepers who are organized and experienced could be a bit hard as it would require a careful selection since they would be handling the financial documents and reports of your company. You can hire just one bookkeeper, which would be sufficient if you only require small business accounting or a team of bookkeepers. To check whether they would be competent enough, you can ask for their credentials and experience as well as if they have had any extensive training. You can ask about how long they have been providing bookkeeping services Singapore.
You could check their website for information on what type of services they can provide and you could read any reviews or testimonials that former clients have posted. If there are no reviews on their website, you could ask for the contact information of their current or previous clients to have good idea of what they are capable to do and how they are as a service provider.
You could also check whether or not they are aware of the newest software which are used for bookkeeping and accounting. This is necessary since a lot of the individuals and the companies who are offering these types of services make sure that they are technologically updated in order to stay competitive in the industry.