Where should you set up an Asian HQ?
Please read this first - https://www.mooresrowland.tax/2017/12/why-should-usuk-technology.html
Surveys suggest that the top four criteria businesses use in
deciding the attractiveness of a location for Regional Headquarters are
economic policies, domestic market size, infrastructure and political
It seems like most Asian jurisdictions compete, at least on
paper, to encourage companies to set up a regional headquarters within their
borders. Which is best? There is no one size fits all and it really
depends on your business model. Anyone
who says otherwise probably is not being objective.
Traditional wisdom was that Hong Kong is the best bet if
your focus is China and especially if you run a manufacturing company. Singapore is best if your focus is South East
Asia in general. I used “traditional”
deliberately because things are changing.
On one hand, Hong Kong is arguably still Asia’s financial
center. But as Hong Kong marches towards
2047, politically, the future remains uncertain. In addition, there’s an ongoing shift in economic
activity to Shanghai and Shenzhen.
On the other hand, Singapore offers a slower pace therefore
better quality of life and political stability.
But it is experiencing an
economic slowdown, high living costs, high-cost of doing business and work
permit restrictions. So for many,
Malaysia is seen as a viable alternative to Singapore.
Most regional headquarter programs involve tax incentives at
the corporate and/or individual level. I’ve
found that without a doubt, Singapore is the easiest jurisdiction for English
speaking Westerners to do business.
Indonesia and the Philippines have a formidable bureaucracy not to
mention “negative lists”. Malaysia is
not SME friendly as it requires minimum paid up capital of RM500k or US$120k
upwards for a 100% foreign owned entity, it has a headline corporate tax rate
of 18%-24% and individual tax rates of up to 28%. This compares poorly to Singapore’s 17%
corporate tax rate and 17%-20% individual tax rate. So despite the higher operating cost of Singapore
businesses, depending on your business model, it is still an attractive
jurisdiction especially given the strong talent pool and first world
infrastructure. Also noteworthy is that Singapore
based regional headquarters with international intellectual property (IP)
holding may claim a writing-down allowance (WDA) for the cost of acquisition of
But before you invest, it is worth while meeting with a
consultant with both Western and Asian experience to determine the right regional
structure. If your company is American,
it is even more important to have a team that is both US and Asian qualified.