Hong Kong is not in a really good place right now. The damage caused by the protests a couple of years ago, and now the pandemic, has forced business owners left and right to move to another country.

A country where political turmoil isn’t on the horizon and where day-to-day operations are not affected by the loss of manpower due to political arrests….

A country where their government actually cares for the business and the business owner….

Singapore would probably be the first country that comes to mind. If you’re a business owner in Hong Kong who is planning to move the business to Singapore, this article will cover everything that you need to know about the process from start to finish, e.g.

Relocation process
Different ways in which a business can be structured for your existing entities
How to register a company in Singapore
Making use of BUD fund, etc.

Inside the article...

Why is Singapore attractive to foreign companies?
What factors should you consider before relocation?
Consideration of business structures for Hong Kong to Singapore relocation
Breakdown of the relocation process
Hong Kong Government programs and the BUD Fund
Planning to make the move?
How can you plan a smooth commercial relocation in Singapore?

Why Is Singapore Attractive to Foreign Companies?

Singapore offers a unique business perspective to investors by being a good convergence of the East and West. There’s a solid mix of Asian, European, and American influences in their social fabric, making the country friendly to the international business community.

Being a former British colony, Singapore’s financial and legal structures resemble that of the US and UK. Multinational organizations, major international banks, and various financial institutions all over the world have a hand in the Asian market by establishing their branch office in Singapore.

But other than that, what are the other reasons why foreign investors are drawn to Singapore?

Easy to Start a Business!

A report from the World Bank’s Doing Business Report in 2019 mentions Singapore’s consistency in being recognized as the world’s best place to do business after surveying 189 economies worldwide.

Even with other countries dubbed as business hubs, it’s relatively easier to register a company in Singapore because it only takes a few days to process, assuming all requirements are fulfilled at the time of application. Both local citizens and foreign business owners follow the same process and use the online system for incorporating businesses, and are afforded the same level of transparency.

Robust Legal System and High Personal Safety

Singapore prides itself on being one of the safest countries in the world, as well as having one of the most stable political environments in Asia. This sense of security offers entrepreneurs and investors peace of mind that no other country in Asia can provide.

Singapore’s government is strongly against red tape and corrupt practices. Every government transaction is done with complete transparency, competency, and fairness. Whether you’re a Singaporean citizen or a foreign business owner, you get the same treatment as everyone else.

Business Friendly Ecosystem

It comes as no surprise that Singapore is ranked as the best country to do business with. You can see proof of that through the World Bank’s Doing Business Report and the country’s numerous accolades and international rankings such as the World Economic Forum’s Global Competitiveness Report and Global Information Technology Report and the Economist Intelligence Unit’s Country Forecasts Report. Because of these rankings, Singapore attracted multinational corporations (MNCs), most of which chose Singapore to be the location for their headquarters in the Asia Pacific.

Strategic Position Combined with a Strong Network of Trade Agreements

Singapore is strategically located in the heart of Southeast Asia, and is close to surrounding emerging markets. You can reach other countries from Singapore through air travel effectively. Ever since Singapore signed the first FTA under the ASEAN Free Trade Area (AFTA) in 1993, they have grown its network to 21 bilateral and regional FTAs in force and 41 Investment Guarantee Agreements. Negotiations for FTAs in other countries are consistently being worked on by the government. These agreements will allow businesses to be conducted across borders and make it less expensive for Singapore firms to expand internationally.

Intellectual Property Protection

Based on the World Economic Forum’s Global Competitiveness Report dated 2015 to 2016, Singapore offers the best IP protection, incentives, and infrastructure in Asia, and comes to a close second in the global ranking behind Finland and Luxembourg; both countries tied for first place.

Foreign Income Exemption

It comes as no surprise that one of the many reasons why foreign companies are drawn to Singapore is its foreign income exemption.

Foreign companies engaged in economic activities and headquartered in Singapore can repatriate their dividends or profits directly from their directly-held subsidiaries to Singapore, free of tax. If your company cannot meet the qualifying conditions for this tax exemption, you can apply for a specific exemption.

The reason why you get to enjoy tax-free repatriated dividends is that Singapore adopts a territorial-based taxation system. Foreign-sourced income is only repatriated back into Singapore. Tax may not be levied on foreign-sourced dividends that are remitted into Singapore as long as dividends received are from a country with a headline corporate tax rate of at least 15%, or if some tax was paid in that country (i.e. income tax is paid on profits from which the dividends were paid, or withholding tax was paid out on the dividends).

Impressive Personal Tax Framework

Apart from a robust corporate tax system, Singapore’s personal tax structure is just as progressive. The rates range from 0% to 22%, and the tax framework gives Singapore residents access to various tax reliefs, effectively lowering their payments.

Singapore also offers a “Not Ordinarily Resident (NOR) Scheme”. This is a scheme that grants a favourable five-year tax treatment for individuals who work in Singapore. These qualifying individuals will need to be employed by a Singapore incorporated company and earn at least S$160,000 annually, and spend at least 90 days outside of Singapore for work purposes.

What Factors Should You Consider Before Company Relocation To Singapore?

These factors can greatly affect your decision on whether or not to relocate your business to Singapore, and no, we’re not talking about the financial capability here.

Staffing - One of the biggest factors here is manpower. Relocating your employees is one option, and hiring local manpower is another. Relocation is considered by many because they don’t want to have to spend money on training new people. They also don’t want to lose their best people. But relocation can become expensive, given that you need to secure work visas for the employees. Luckily, corporate service providers are more than willing to help you with immigration and work visa matters.
Clients - If your company in Hong Kong relies on local clientele, it might be difficult for you to do business with them when you move to Singapore. You don’t want to give them the feeling of abandoning them. When you’re moving to another country, you need to inform your clients about the company’s intentions and how things will be working out once the company’s settled in.
Vendors - Businesses always rely on vendors to help them with their products and services. For companies that rely on local vendors, moving to another country might stress the business relationship. Much like your clients, you also need to inform your vendors about your intention to move to another country. In the worst case scenario, the company will need to establish new business relationships with local vendors in Singapore.
Banking - You will need a corporate bank account in Singapore when you want to do business here. You will need to coordinate with a corporate service provider on how to get one. At the same time, you’ll want to transfer all your banking assets to Singapore so you’ll have uninterrupted and hassle-free banking transactions during the move. By the time you’re settled into the country, you’ll already be up and running, and ready to carry out transactions.
Assets - You’ll also want to evaluate your intangible and tangible assets and determine what you can bring to Singapore. For tangible assets, we’re talking about your equipment, machinery, and other hardware that affect business operations. Intangible assets such as Intellectual Property (IP) will also need to be considered when moving your company from Hong Kong to Singapore.
Contracts - Once you move to Singapore, you’ll want to review and renegotiate all contracts with your vendors and/or clients from Hong Kong. You’ll want to ensure that all contracts comply with Singapore legal requirements. Otherwise, you may want to refer to points #2 and #3.

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Consideration of Business Structures for Hong Kong to Singapore Relocation

This next section will detail the different steps and options you will encounter when trying to relocate. This section will also detail the pros and cons of executing such a move.

A step-by-step process is laid out to help you choose the most advantageous methodology for you and your business. If you are serious about the move, it might be wise for your company to hire an intermediary firm that executes important documentation and even run important errands that need to be performed previous to the physical moving date.

Alternative 1: Establish a Singapore Parent Company

In order for the method to be successful, you will need to create another Parent organization that can act as the parent organization of your Hong Kong-based business as well. You must set up a separate Singapore organization, which will end up being the main working entity of your organization, once the exchange is executed and finalized between the two companies.

Initially, the value of the Singapore based company will need to be claimed by the parent company. However, when all is said and done, the shareholding structure can be symmetric to that of the Hong Kong company before the actual exchange. Once you have built up the corporate structure between these two businesses, you can start an organized exchange. This exchange will include everything from your client contracts, resources, and business connections.

The Hong Kong-based company will give all of the approvals to the Singapore based company in the event that there is an immediate and unforeseen breakdown of corporate activities in the country. This approval serves to protect either company from unforeseen events that could damage the financial system in Hong Kong.

This alternative provides you with all of the necessary authorization the Singapore company requires to act in the interest of the Hong Kong company. It allows for all of the necessary legal frameworks while your company can deal with the issue of transferring. This is a great option because if there are any delays, your company will still have the same protection. Of course, this execution should be made with some haste. However, you do not have to work yourself into a panic-driven frenzy.

The Singapore holding will also provide the benefit of being able to sponsor staff or other owners with the proper work visas to relocate to Singapore.

Once the Hong Kong company has successfully transferred to the Singapore location, all possible liabilities will be dealt with. You can close the books on the Hong Kong company once and for all. At this point, there will be no certificate of objection issued by the Commissioner of Inland Revenue.

Next, the HK company will be able to file for de-registration officially. Upon approval, the established parent company can continue regular operation as a holding company, a Singapore subsidiary, or closed, leaving the Singapore company as the sole operating entity.

Alternative 2: Establish a Parent Company in Hong Kong

This second option is very similar to the first option, with a few small differences:

This approach is similar to option one above, but with the following differences:

The parent company will be set up in Hong Kong, rather than in Singapore.
Once the business has been transferred to Singapore successfully, the Singapore company will be converted into a standalone, with its shareholding structure set up as symmetric to the Hong Kong entity.
Both the HK company and the parent company should be de-registered in Hong Kong

The main benefit of going with this option is that it might be easier to acquire the work visas necessary to work in Singapore. This is because it is usually easier to obtain work visas for a subsidiary of a foreign company.

Alternative 3: Turn Hong Kong Company Into a Parent Company

With this option, you actually do not need to establish an entirely new parent company. Rather, your Hong Kong Company takes over the role of parent to your Singapore company. Simply put, these two companies become the same.

If you utilize this option, the remainder of the process can be found in the first alternative above. After the business is transferred, the shareholding structure will then be changed to a symmetric structure with the Hong Kong company.

The main benefit of choosing this option is simplicity. However, even though simplistic, it will require a close interface with your Hong Kong company. This is especially true should a breakdown in affairs occur.

Alternative 4: Inward Re-domiciliation to Singapore

In the same way that a person can change their citizenship, a corporation can change the jurisdiction in which it is registered. When a company changes the location in which it is ‘domiciled,’ while still maintaining the same legal name and identity is a “re-domiciliation.”

Not every country will permit companies to re-domicile; however, Singapore recently amended its 2017 Companies Act, which allows for inward re-domiciliation. This rule was placed into effect in October 2017, and it was set up to allow foreign corporate entities to relocate their registration to Singapore. The company must meet several prerequisites and requirements before being granted the re-domiciliation. These requirements are outlined in detail by the ACRA here.

Re-domiciliation is a great option for companies that are looking to make a move from HK to Singapore. However, with all of the political turmoil, the Hong Kong government is not allowing any out-going re-domiciliation. Several entities are working to change this rule. The Hong Kong Institute of Chartered Secretaries is calling for all sorts of reconsiderations for Hong Kong’s policies. If the requested changes to the laws are passed, then re-domiciliation would be an easy and painless way to make a move. Currently, it is not a legally viable strategy.

Breakdown of the Relocation Process of Your Hong Kong Business to Singapore

Here are the steps that you should follow if you plan to execute any of the options listed above. The basic process for any of these options will be very similar, with only a few of the small details changed. For this specific example, we will consider alternative.

The very first step of the process is to set up all of the companies that will be involved in the shift. For example, if you are considering the first alternative, then you need to set up your Singapore company, your Hong Kong company and your parent company.
The next step is to reorganize the shareholding structures. You should change the Hong Kong company to be a subsidiary of the parent company.
According to which plan you are taking, once you have the basic structure set up, you can then move on to the execution of former inter-company agreements. These agreements will include transfer authorizations, Signature Authority and Power of Attorney files. After all of these are in place, the actual transfer can commence.
Next, begin the application process for work visas, following your plan of action.
Start to negotiate and resolve any potential liabilities from your HK company. You can either choose to settle them or even transfer them to your Singapore entity. You should also consider transferring any business assets to your Singapore location. These assets might include:
- Client or supplier contracts and relationships
- Intellectual property assets
- Financial assets such as stocks or cash
- Any equity holdings you might have
- Property, Plant, and Equipment
- Current inventory
After handling all of the assets and liabilities of the Hong Kong company, it is time to close its books. After that, you should not receive any objections, and you are in the clear. Finally, the Hong Kong company should file a petition to de-register from the Companies Registry.
If you decide to close your parent company, then you will need to acquire the necessary paperwork and then convert your Singapore company to a standalone entity.

Hong Kong Government Programs and the BUD Fund

To lend support to local businesses and to alleviate the effects of Hong Kong’s struggling economy, the government has decided to inject HKD 1 billion into the BUD Fund, intending to extend the geographical scope to include all economies with which Hong Kong has an FTA.

In order to launch the BUD “FTA Programme,” the Hong Kong Legislative Council has approved the enhancement of the project to include projects to be undertaken in neighbouring countries in the markets of ASEAN countries. The BUD fund can be quite helpful for those looking to utilize this grant money to move their business from Hong Kong to a nearby ASEAN member country.

Which Projects are Funded?

Enterprises eligible for submission are companies whose primary project involves upgrading, developing or branding sales in the FTA markets. Some examples of projects that would fall in the BUD program qualifications are:

Branding - (brand strategy, brand building, brand equity research)
Upgrading or reconstruction - (new product design, adapting new tech)
Promoting sales - (marketing strategy research, sales strategic planning)

Once an enterprise qualifies for the BUD funding, the enterprise is required to contribute no less than 50% of the total approved project cost in cash. The program operates on a matching system, so whatever percentage (over 50%) is invested, the BUD fund will match. The cumulative ceiling for funding is HKD 2 million per individual enterprise under the FTA programme. The enterprise is also required to submit progress reports during the duration of the project.

To find out if your business qualifies for the BUD Program, you can find more information here.

Planning to Make the Move?

Especially in the current political climate, political development can happen at any time and without notice. However, when you are moving your family or your business to a different country, there are many more things to consider than simply politics.

It is crucial to consider various immigration services such as your employment pass, your dependent’s pass, and other immigration complications. These services and more can be found through trusted agencies such as Piloto Asia. They offer several services to new arrivals or those simply looking to relocate. These services include:

When you are moving your business to Singapore, you also have to consider the needs of your family. Where will you live? Where will the kids go to school? What banking services will your family rely on? There’s a lot to worry about. Agencies such as Piloto Asia have contacts with the Bank of Singapore, as well as many corporate banks to get you started.

So if you are ready to make a move from Hong Kong to Singapore, make sure you have a plan and choose the best options for you, your business, and your family. Singapore is a great place for business, and with the right plan, you can make Singapore your company’s permanent home.

How can you plan a smooth commercial relocation in Singapore?

Relocating a commercial business can be a complex process, but with proper planning and organization, you can ensure a smooth transition to your new premises in Singapore. Here are some key steps to help you plan for a successful commercial relocation:

Start Early: Begin the planning process well in advance to allow ample time for preparations. Evaluate your business needs, establish a relocation timeline, and allocate resources accordingly.
Assess Requirements: Determine the specific requirements of your relocation, such as the size of the new space, necessary amenities, and any specialized equipment or infrastructure. This will help you select an appropriate location and ensure a seamless transition.
Create a Budget: Set a realistic budget for your commercial relocation. Consider expenses such as moving services, packing materials, transportation, insurance, and potential unforeseen costs. Research and obtain quotes from multiple relocation service providers to gauge the average cost of commercial relocation services in Singapore.
Hire Professional Relocation Services: Engage the services of a reputable commercial relocation company in Singapore. They will have the expertise and experience to handle the logistics, packing, transportation, and installation of equipment. Request detailed quotes from several providers, comparing their offerings, reputation, and pricing to ensure a reliable and cost-effective solution.
Develop a Moving Plan: Collaborate with the relocation service provider to develop a detailed moving plan. Outline key milestones, assign responsibilities to staff members, and communicate the plan to ensure everyone is on the same page. This will help minimize disruption to your business operations during the relocation process.
Inform Stakeholders: Notify relevant stakeholders, including employees, clients, suppliers, and service providers, about your impending move. Share the relocation timeline, new address, and contact information to maintain smooth communication and avoid any disruptions to business relationships.
Update Licenses and Permits: Ensure compliance with legal requirements by updating your business licenses, permits, and registrations with the relevant authorities in Singapore. This will help you maintain uninterrupted operations in your new location.
Plan for IT and Telecommunications: Coordinate with your IT department or service provider to manage the transfer of your telecommunications, internet connections, and computer systems. Plan for the installation and setup of necessary infrastructure in the new premises to avoid any downtime.
Organize the Move: Label and pack your items systematically, ensuring proper protection for delicate or valuable assets. Coordinate with the relocation service provider to manage the logistics, transportation, and storage of your belongings during the move.
Settle into the New Premises: Upon arrival at your new location, conduct a thorough inspection to ensure everything is in order. Unpack and set up your equipment, furniture, and inventory according to the predetermined plan. Update your business information, such as signage and online listings, to reflect the new address.

The average cost of commercial relocation services in Singapore can vary based on factors such as the size of the premises, the distance to be covered, the complexity of the move, and additional services required. It is advisable to obtain multiple quotes from reputable relocation service providers to get an accurate estimate for your specific needs.

Further Reading...

A Guided Process to Moving Your Business from Hong Kong to Singapore - 2024 Update