Hong Kong and Singapore are major financial centres in the Asia-Pacific region. Both jurisdictions offer stable and transparent legal systems, strong infrastructure, business-friendly conditions for international trade, and relatively low tax rates. As a result, choosing between Hong Kong and Singapore for company formation is not always straightforward and requires a comparison of several factors, which we cover in this article.
- Location and legal status influence market access, with Hong Kong suited to China-focused activity and Singapore attractive for broader Asian and global expansion.
- Both apply territorial taxation with competitive corporate rates and double tax treaties, although indirect taxes and withholding rules differ, particularly in relation to GST and cross-border payments.
- Corporate governance and reporting regimes are comparable, but Singapore requires a resident individual director and may exempt small companies from audit, while Hong Kong mandates audits for all.
Legal Status of Hong Kong and Singapore
When deciding whether to set up a business in Hong Kong or Singapore, their geographic location can be an important factor:
- due to its proximity to mainland China, forming a company in Hong Kong can help you access one of the world’s largest markets;
- at the same time, incorporating in Singapore can be attractive for expanding your presence across Asia more broadly and for reaching global markets.
As for the legal status of both jurisdictions, it is important to understand the following:
| Legal status of Hong Kong | Legal status of Singapore |
|---|---|
|
Hong Kong is a Special Administrative Region of China, but it enjoys a high degree of autonomy. This is reflected, for example, in the fact that Hong Kong:
It is important to note that this status is guaranteed until 2047, after which changes may be introduced. |
Singapore is a fully independent sovereign state. |
Legal Systems and Positions in International Rankings
As former British colonies, Hong Kong and Singapore were influenced by the UK for many years, which is reflected in their legal systems. Both jurisdictions apply English common law, which is why their corporate frameworks share a number of similarities.
In addition, Hong Kong and Singapore consistently rank highly in leading international indices, for example:
| Ranking | Hong Kong and Singapore positions |
|---|---|
|
Singapore – 2nd place Hong Kong – 3rd place |
|
|
Economic Freedom of the World ranking (report published in 2025) |
Hong Kong – 1st place Singapore – 2nd place |
|
Global Financial Centres ranking (2025) |
Hong Kong – 3rd place Singapore – 4th place |
Business Taxation in Hong Kong and Singapore
Corporate Income Tax
Corporate taxation in Hong Kong and Singapore is generally favourable for international business. In both jurisdictions, taxation is based on the territorial principle. This means that tax is charged only on income that a company earns:
- in Hong Kong or Singapore;
- from sources in Hong Kong or Singapore; and
- for Singapore specifically: income earned outside Singapore if it is received in Singapore, for example when it is transferred to bank accounts in Singapore.
Profits generated solely from activities carried on outside Hong Kong or Singapore are not taxed in the relevant jurisdiction. However, this exemption is not automatic: companies must submit specific applications supported by documents confirming that no income was earned in the country concerned.
The following corporate tax rates apply to income earned in Hong Kong or Singapore:
| Profits tax in Hong Kong | Corporate income tax in Singapore |
|---|---|
|
Singapore applies a flat corporate income tax rate of 17%. The following portions of taxable income are exempt:
|
Other Taxes
In addition to corporate income tax, the following taxes apply in Hong Kong and Singapore:
| Hong Kong | Singapore |
|---|---|
|
Hong Kong does not have VAT or an equivalent consumption tax. Dividends and interest paid by Hong Kong companies to non-residents are not subject to withholding tax. In certain cases, royalties paid to non-residents are subject to withholding tax in Hong Kong. In such cases, the effective rate is between 2.475% and 4.95%, but this may be reduced under the applicable double tax treaty. |
Companies with taxable turnover exceeding SGD 1 million must register for Goods and Services Tax (GST), which is similar to VAT. The GST rate is 9%. Withholding tax is not charged on dividends paid by Singapore companies to non-residents. However, withholding tax applies to:
unless the relevant double tax treaty provides for reduced rates or a zero rate. |
Both jurisdictions have well-developed networks of double tax treaties:
- Hong Kong has more than 50 treaties in force; and
- Singapore has more than 100 treaties in force.
Key Features of Hong Kong and Singapore Companies
Both Hong Kong and Singapore allow businesses to be incorporated in various legal forms. However, for international business, the most common choice is a private limited company.
In the table below, we outline the key features of private limited companies in both jurisdictions.
| Comparison criteria | How Hong Kong and Singapore are regulated |
|---|---|
|
Shareholders |
Both Hong Kong and Singapore companies must have at least one shareholder of any residency and nationality. |
|
Directors |
Directors of a Singapore company must be individuals, and at least one director must be a Singapore resident. In Hong Kong, at least one director must be an individual. The remaining directors of private companies (except for companies within a group) may be corporate directors. There are no specific residency or nationality requirements for directors. |
|
Access to information on directors and shareholders |
In both Hong Kong and Singapore, information on directors and shareholders is publicly available. However, Hong Kong law also recognises the concept of a “shadow director”, who is typically not formally appointed and does not appear in public registers. |
|
Company secretary |
Singapore companies must appoint at least one company secretary, who must be an individual resident in Singapore. Hong Kong companies must also have a company secretary who is a Hong Kong resident. However, the secretary may be either an individual or a corporate entity. |
|
Registered office |
Both Hong Kong and Singapore companies must have a registered office address in the relevant jurisdiction. |
|
Remote incorporation |
Hong Kong and Singapore companies can be incorporated remotely, without the owner having to be physically present in the relevant country. |
Financial and Corporate Reporting in Hong Kong and Singapore
To maintain their reputation as reliable and well-regulated jurisdictions, Hong Kong and Singapore impose relatively strict requirements on companies in relation to bookkeeping, annual financial statements, and audit.
Hong Kong companies must prepare annual financial statements for each accounting period. Small companies may be able to prepare accounts under a simplified regime. A company is treated as “small” if it meets at least two of the following conditions:
- total revenue does not exceed HKD 100 million;
- total assets do not exceed HKD 100 million; or
- the total number of employees does not exceed 100.
At the same time, the requirement to have the financial statements audited applies to all companies, including those preparing accounts under the simplified regime. Only authorised Hong Kong audit firms can act as auditors.
Singapore companies must also keep proper accounting records and prepare annual financial statements with an audit. However, small companies may qualify for an audit exemption. A “small company” is a private company that, for two consecutive financial years, meets at least two of the following criteria:
- annual revenue does not exceed SGD 10 million;
- total assets do not exceed SGD 10 million; and
- the total number of employees does not exceed 50.
In addition to financial statements, both Hong Kong and Singapore companies must file an Annual Return with up-to-date company details, for example information about:
- directors;
- shareholders;
- the registered office address; and
- share capital.
This information is publicly available.
Disclosure of Beneficial Ownership Information
Both Hong Kong and Singapore require companies to maintain registers of their controlling persons, meaning their beneficial owners.
In Hong Kong, the register of significant controllers must include key details of both individuals and legal entities. It must be kept in Hong Kong at the company’s registered office or at another designated location. Companies must keep this register up to date and provide the information to the authorities when required. However, the information in the significant controllers register is not publicly available.
Singapore companies have similar obligations in relation to their controllers. In addition, Singapore companies must keep a register of nominee directors. Both the register of controllers and the register of nominee directors are not public and are disclosed only to government authorities upon request.
Conclusion
In summary, Hong Kong and Singapore are widely seen as two of the most convenient and prestigious jurisdictions for international business. Both offer stable tax systems based on the territorial principle, with a range of incentives available for companies. Their requirements for bookkeeping, financial reporting, and beneficial ownership record-keeping are also broadly comparable.
One of the key differences is that directors of a Singapore company must be individuals, and at least one director must be a Singapore resident. Hong Kong is more flexible in this respect, as it allows corporate directors and does not impose mandatory residency requirements. This can affect the cost of incorporation and annual renewal in Singapore.
At the same time, all Hong Kong companies must undergo an audit, while in Singapore small companies may qualify for an audit exemption. In some cases, the cost of audit in Hong Kong can be comparable to the cost of appointing a resident director in Singapore.
For this reason, when choosing between Hong Kong and Singapore, it is important to consider:
- your intended business model;
- the tax position;
- whether you have counterparties in China or elsewhere in Asia; and
- the cost of incorporation, ongoing compliance, and annual renewal.
