Quora Answer: Why Do Companies Move Regional Headquarters from Hong Kong to Singapore, Not Taiwan?

The following is my answer to a Quora question: “Why do companies move regional headquarters from Hong Kong to Singapore, but not Taiwan?”

In the ease of doing business and competitiveness index, Singapore ranks a lot higher than Taiwan.  Taiwan used to be one of the Four Asian Tigers, with Singapore, Hong Kong, and South Korea, but lost its way in the last decade or so, through bad policies, factional politics, and increasing diplomatic isolation.

Secondly, companies consider costs, and Singapore has a lower tax rate than Taiwan for companies and individuals.  Taiwan’s corporate tax is higher, and although it does not have a separate capital gains tax, it is factored into the income tax.  Singapore does not have a capital gains tax, separate or integrated.  Taiwan does have a lower VAT, at 5%, compared to Singapore’s 7% GST.  However, this is a consumption tax, and the cost can be passed on.

Finally, Taiwan has a difficult relationship with China, and businesses want access to the Chinese market.  Singapore has no such encumbrance, being a wholly sovereign nation, instead of a renegade province.  This means Singapore has better access to international banking networks, making it easier to move funds into and out of China.  FDI from China may be problematic.