FINANCIAL SERVICES | Staff Reporter, Hong Kong

Hong Kong loses to Singapore in ease of corporate compliance

The SAR ranks seventh in APAC whilst the Lion City is second.

Hong Kong trails behind close regional competitor Singapore in ease of corporate compliance as it ranks seventh in Asia-Pacific for complexity in doing business, according to a study by business services firm TMF Group. 

Despite the SAR’s status as a leading business and financial services center, businesses keen on setting up shop in Hong Kong grapple with relatively more stringent corporate requirements.

“Hong Kong’s annual filing and timely reporting processes require careful attention in order to meet local requirements, and avoid penalties. Equally, Hong Kong has a Companies Registry where firms must declare specific annual returns on top of the standard annual tax return,” Margaret Fung, TMF Group Hong Kong managing director said in a statement.

Also read: Hong Kong trails behind Singapore in ease of bank account opening for non-locals

On the other hand, Singapore has been doubling down to eliminate tedious documentation like common seals to execute deeds and share certificates, effectively slashing cost and time.

However, extra levels of complexity is not necessarily a bad thing for Hong Kong at this indicates that there are  strong legal and legislative frameworks in place to safeguard business interest and ensure transparent corporate practices, noted TMF.

The implementation of international compliance initiatives like the OECD’s “Common Reporting Standards” and “Base Erosion and Profit Shifting” initiative bodes well for Hong Kong who is already in a strong position owing to its role as a gateway to the Mainland and status as global financial hub. 

"Hong Kong is in a strong position. It has a long history as one of the leading financial centers in the world, and it has one of the largest talent pools of professionals in the region. Its compliance requirements are evolving in what we would consider a proportionate way, and overall the jurisdiction is well-placed to continue to prosper," the firm added.

The SAR ranks 29th in the global index as the closer a territory’s spot is to 84, the least complex corporate compliance processes are. Singapore is the second least complex jurisdiction in APAC to set up business with a ranking of 61, trailing only behind Australia who holds the crown at 62. New Zealand, Korea and Japan complete the APAC top five.

On a global scale, Ireland, Denmark, Curacao, Honduras and Nicaragua are the easiest territories for corporate compliance. On the other side of the spectrum are UAE, Qatar, China, Argentia and Malaysia who hold the distinction as the most complex territories for corporate compliance.

The index assesses the complexity of a territory based on the difficulty in opening an entity, local language requirements and the difficulty of adopting both local and global transparency reporting requirements.

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