Asia is shaping up to be the leading global financial hub in the world. A strong combination of favourable government regulations, enticing tax rates and a growing talent pool have prompted foreign companies to expand their businesses into Asia. According to the Doing Business 2020 published by the World Bank, Singapore, Hong Kong, Malaysia, Taiwan and Thailand are the five Asian countries in which are the easiest for foreign companies to do business.

1. Singapore

Singapore is one of the leading hubs in Asia, often favoured by international banks, multinational organisations and businesses when setting up an operation in Asia. Singapore has an attractive tax regime with the highest corporate tax rate on taxable income at 17%, and concessional rates on a company’s first S$200,000 of income. The tax on capital gains and dividend income is 0%. All foreign-sourced income is tax-exempt as long as the income is subjected to tax in a country with a headline tax rate of at least 15%.

Foreign investors will have access to a multilingual talent pool and highly skilled personnel with local knowledge. Workers in Singapore are highly motivated and talented due to sound education policies and attractive immigration guidelines. English is widely spoken, enabling a seamless integration for foreign companies. Foreigners can own 100% of the company they set up in Singapore.

Singapore’s low tax policies and excellent talent development programmes have attracted multinational companies such as Google, Facebook and Pfizer to designate Singapore as their regional headquarters. Singapore is a member of ASEAN, so benefits from low or no tariff trade amongst the member countries. Singapore is a pivotal business epicentre in Asia, and businesses will only benefit when expanding their companies into Singapore.

2. Hong Kong

Located in the heart of Asia, Hong Kong is well-recognised as one of the premier financial centres in the world. The standard corporate tax rate in Hong Kong is 16.5%. For corporations, the first HKD 2 million of assessable profits is subject to half of the corporate tax rate (8.25%). There are no capital gains taxes or goods and services taxes (GST) in Hong Kong. Gains from investments or capital transactions (trading of company stocks) are also exempt from tax. People in Hong Kong are mostly fluent in English. The official languages in Hong Kong are Cantonese, English and Mandarin. Foreigners can own 100% of the company they set up in Hong Kong.

The relatively low tax regime makes Hong Kong a popular place for multinational companies such as AXA, J.P. Morgan, Goldman Sachs and Prudential to set up regional headquarters. Hong Kong is also the gateway to other countries in Asia., particularly China. Hong Kong’s strategic location means that foreign companies who set up regional headquarters in Hong Kong will be able to capture the potential offered by various Asian economies. Major business cities such as Beijing, Shanghai, and Kuala Lumpur are in the same time zone as Hong Kong, while Bangkok, Jakarta and Tokyo are within one hour’s difference. Hong Kong also serves as the commercial and infrastructural entrance for foreign businesses looking to tap into the potential offered by Mainland China.

3. Malaysia

Malaysia is an evolving financial centre in Asia and becoming more popular with foreign investors. Kuala Lumpur is often the city of choice when investing in Malaysia. The standard corporate tax rate in Malaysia is 24%. For SMEs (classified as companies incorporated in Malaysia with paid-up capital of MYR 2.5 million, not part of a company group with a higher capital threshold and have a gross income of no more than MYR 50 million for the year of assessment), the first MYR 600,000 has a tax rate of 17%, with the remaining balance taxed at 24%.

Many Malaysians are multilingual and speak three languages (English, Malay, Chinese). 100% foreign ownership of the company in wholesale, business and distributive business landscapes is subject to the Ministry of Consumerism and Trade’s approval, while foreigners who wish to operate in education, banking and finance, agriculture or tourism face more stringent guidelines and may require a local Malay co-ownership.

Investors with an entrepreneurial technology and innovation background will benefit from expanding their businesses into Malaysia, as high-technology companies and other innovative sectors benefit from investment and tax incentives from the Malaysian government. With a broadly liberal and transparent investment policy, developed infrastructure, high cost-competitiveness ASEAN membership and attractive government incentives, Malaysia proves to be an attractive location for foreign companies and entrepreneurs to do business.

4. Taiwan

Taiwan is attractive to foreign investors as it has a favourable fiscal climate and a world-class financial services industry. The standard corporate tax rate in Taiwan is 20%. Companies with taxable income of less than NTD 120,000 are exempt from corporate tax.

Taiwan’s official language is Mandarin. Most people in the Taiwanese business community are fluent in English. Foreigners can own 100% of the company they set up in Taiwan in most sectors. However, there are limits on foreign ownership in certain industries, including telecommunications, broadcasting and aviation.

Foreign companies with a focus on technology should look to expand their businesses into Taiwan. The Taiwanese government has sought to develop this sector through the Asian Silicon Valley Development Plan in hopes to promote innovation and R&D. Companies such as Google, Microsoft and Corning have expanded their business into Taiwan due to governmental support and the abundance of relatively affordable, highly educated IT talent.

5. Thailand

Thailand is one of the highest potential countries within Asia. With a population of 69 million people, its growing economy and business-friendly governmental policies make Thailand an attractive destination for foreign investors and multinational corporations. The standard corporate tax rate in Thailand is 20%. However, for companies and juristic partnerships with paid-in capital of less than THB 5 million and income of less than THB 30 million, the first THB 300,000 in terms of net profit is tax-free. Net profit of THB 300,000 to 3 million is subject to 15% corporate tax. Any net profit over THB 3 million is subject to 20% corporate tax.

The language barrier may be an issue for foreign companies looking to expand their business into Thailand. It can be found that only the middle to top management can communicate in fluent English, while the lower tier of workers may only communicate in Thai. As a general rule, foreigners can own no more than 49% of the shares in a Thai company. However, there are certain licenses and sectorsthat the Thai government offers that foreign companies can look at in order to hold a more substantial portion of the business.

Thailand will be particularly attractive for industry and manufacturing sectors, with brands such as Ford and Toyota active in the country, having been granted tax incentives to set up manufacturing plants. Other companies that have expanded into the country include Tesco, Body Shop and Marks and Spencer. Investors who do business in Thailand benefit from good infrastructure, cheap start-up costs for new businesses, ASEAN membership and geographical proximity to Asian markets.