Overview of Corporate Tax – Singapore Vs Hong Kong

Corporate Tax

A vital determinant for setting up a small business in a jurisdiction that is specified is the tax regime in force. In this aspect, both Hong Kong and Singapore boast of being among the best tax authorities on the planet. Comprehensive below is a comparative summary of the tax system in Singapore Vs HK.

Tax authority

Singapore. Taxes are imposed on a territorial principle i.e. businesses and people are taxed on Singapore sourced income. Foreign sourced income (branch profits, dividends, service income, etc.) will be taxed when it’s 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%.

Hong Kong. Taxes are imposed on the territorial principle i.e. just on income “derived from or originating in” HK and not on income sourced outside the SAR.

No tax is imposed on gains originating abroad, even if they can be remitted to Hong Kong.

Corporate Tax Rate

Singapore: Present corporate income tax rate – 18%. Nevertheless, corporate income tax rate successful 2010 – 17%. Note: The effective tax rate is a lot lower – 18% for gains above SGD 300,000 at below 9% for gains up to SGD 300,000 and limited
Hong Kong: Present corporate income tax rate – 16.5%

Goods and Services Tax (known as VAT/Sales tax in other states)

Singapore: 7%
Hong Kong: Nil

Capital gains tax

Singapore and Hong Kong: Nil (Capital loss expenses are correspondingly not permitted as deductions)

Group aid for losses

Singapore: Let
HK: Not permitted

Withholding tax

Singapore. Interest, royalties, leases from movable properties, direction and technical fees, and manager’s fees paid to non residents (people or firms) are subject to withholding tax. There’s absolutely no withholding tax imposed on dividends.

Hong Kong. Royalties, leases from properties that were movable, and fees paid to nonresident entertainers or sportsmen for their performances in Hong Kong are subject to withholding tax. There are not any withholding taxes imposed on interest and dividends.

Double Tax Arrangements

Singapore: More than 50 bilateral tax treaties that are all-inclusive
HK: DTA network of 37 treaties

Tax Year

Singapore: 1 January – 31 December
HK: 1 April – 31 March

Filing tax returns

Singapore. Tax returns along with audited accounts have to be submitted with the Inland Revenue Authority of Singapore by 31 October annually.

Inactive businesses (i.e no bookkeeping transactions for the financial year) and exempt private companies (not more than 20 investors and shares aren’t held by another firm) with a yearly turnover of less than SGD 5 million are exempt from audit requirements and will file unaudited accounts.

Hong Kong. Annually, tax returns along with audited accounts have to be submitted with the Inland Revenue Department by 31 April. The auditor must hold a practicing certificate and has to be an associate of the HK Institute of Certified Public Accountants.

Inactive businesses (i.e no bookkeeping transactions for the financial year) and small-scale corporations (i.e entire gross income will not exceed HKD 500,000) are exempt from audit requirements and can file unaudited reports.

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