30Apr

Singapore or Hong Kong? Where Best to Do Business

Singapore and Hong Kong are two of the best east Asian countries to start establish a business. Hong Kong has taken the lead for the past years but Singapore has been quickly making great strides to compete further.

Companies and brands from the US and UK have had relatively easy entries to both markets. The most common business has to do with building a regional headquarters for a global company as an expansion strategy and amass the Asian market.

HERE ARE HELPFUL INSIGHTS FOR EXPATS WHO ARE CHOOSING BETWEEN HONG KONG AND SINGAPORE TO DO BUSINESS.

As an overview of the two country’s strengths:

  • Singapore has the top destination for maritime trade.
  • Hong Kong is your choice if the objective is to eventually start business in Mainland China.
  • Both have incredibly accessible international airports with hundreds of direct flights from Western regions on a daily basis

LEGAL PROTECTION

It’s a must to have business cover like public liability or product liability insurance. It’s a pre-requisite for any business in Hong Kong and Singapore.

Both countries have strict legal systems with regulations in place to help you with intellectual property rights and dispute resolution departments. However, Singapore wins over Hong Kong in terms of enforcing contracts and property registrations.

GLOBAL RANKINGS

World Bank’s 2017 Ease of Doing Business ranking places SG at #2 and Hong Kong at #5. New Zealand was #1 last year.

In the annual Z/Yen survey of global financial centres Hong Kong beats Singapore but as the entry way to China, Hong Kong is the 3rd most powerful financial hub globally. Singapore is currently in 4th place.

Hong Kong ranks 1st in terms of financial services and financial technology.

The criteria for the rankings above are:

  • infrastructure
  • business environment
  • financial sector development
  • human capital
  • reputation

Business registration can both be done online via website registration.  The headline Singapore tax rate is 17% whereas it’s 16.5% in Hong Kong. There are also many tax exemptions available for both.

In Singapore, one of the directors must be a citizen while Hong Kong allows 100% ownership by expats.

Ready to get started with your new businesses? Get in touch with us for all your business insurance needs.

4Apr

Must Know Information for Inheritance Tax for Expats

Did you know that your beneficiaries may be charged a large amount Inheritance Tax (IHT) bill in case of death. The cost of IHT is almost as equally large as the amount being left. In 2012 to 2013, over £4 billion in inheritance tax was paid to the UK government including sums paid by expats from Hong Kong.

WHO WILL PAY FOR INHERITANCE TAX?

IHT liability is based on one’s permanent residence or domicile. There are two types of domicile: domicile of origin and domicile of choice.

A domicile of choice can be established if you can demonstrate that you have severed all connections with your “homeland” and established permanent ties elsewhere.

A domicile of origin may be challenge to change. Note that if you transfer one more time your domicile of origin will revive until you establish a new one. If you are domiciled in the United Kingdom, IHT applies to your global assets.If you are domiciled elsewhere, IHT is charged on your assets held in the UK.

IHT is charged through three main channels:

  • On your estate in the event of your death
  • On any gifts you present to individuals in the last 7 years of your lifetime
  • On any gifts to the most common type of Trust that you make through your lifetime

Everyone is entitled to make a certain proportion of gifts sans taxation and this is called the “nil-rate band”. Current cost is £325,000 which will remain so unti 2021. All excess above this band is charged at 40%.

Generally, property owners automatically follows the IHT net even before taking into account the total value of their investments. But note that it’s possible to reduce your exposure to this punitive tax.

Inheritance Tax is often treated as a “voluntary” tax because its impact may be mitigated. If you have large amounts of assets but don’t want to leave control over these or make gifts, you can still lower the cost of IHT by carefully planning your will.

LEAVING A WILL

Ensuring one has a will in place is a way to protect your loved ones from incurring impossibly high cost of IHT in the case where substantial assets are involved. For instance, a married couple and civil partners can do what the industry calls a “double up” on their nil rates and this implies that up to £650,000 can automatically pass free of IHT. One common myth about leaving your assets to your spouse or civil partner is that they get half if you die. This is not a fact.

Also, it is crucial to remember that minors cannot inherit money or property which means you need to assign someone to make the arrangements until they turn 18.The courts may choose this person for you if you fail to do so in your will.

Expats often have assets in parts of the world and all these have to go through the courts of the different jurisdictions. Delays can happen if one does not make the necessary arrangements in their will. There are also insurance that covers the cost of inheritance tax. Ask us about it. We help expats in Hong Kong.