Ask TIA: Where’s the best for startup incorporation in SEA?

Hi I’m Andreas, founder of PIGMENTS, a marketplace for print shops launching in a few weeks in the Philippines with the goal to expand across South East Asia (SEA). Incorporating a startup in SEA is very complicated because there are no clear “best practices” to be found on the internet.

We all know you generally set up your company in Hong Kong or Singapore if you’re in SEA since those are the only countries that really have decent legal systems in place but I don’t think this can be answered that easily. Especially if you consider payments, taxes and funding, it gets more complicated.

Here are my observations, assumptions and questions about the current incorporation pros and cons three places: Hong Kong, Singapore, Delaware. Questions are in bold.

Hong Kong:

• No taxes for most internet-based businesses as long as revenue comes from out of Hong Kong
• Easy to set up with service provider, 1-2 weeks, cheap
• Incredible banking system, access to braintree payments (beta)
• Not a lot of access to funding, startup ecosystem young
• Probably barely any government funding/programs
• Are foreign investors (non-SEA) willing to invest in HK companies or do you need to convert to Delaware?

Singapore:

• Taxes, but tax incentives in the first two years
• Easy to set up with service provider, 1-2 days, requires director in SG making service provider offering them more expensive if you don’t have a local partner
• Good banking system, access to braintree payments (beta)
• Lots of government programs, startup system strong, lots of investments happening
• Do only Asian investors invest in SG companies or also foreign investors?

Delaware:

• General tax incentives, if you’re lucky tax treaty with SEA country
• Easy to set up with service provider, setting up bank account requires quite a lot of capital AFAIK
• Reliable banking system, access to braintree and stripe payments
• US Startup ecosystem: Silicon Valley – need I say more?
• Easiest and most likely for US VCs to invest in your company since Delaware based investment is something that investors are fimilar with
• Does it make sense to be incorporated in Delaware for a startup that (most likely) only sells to South East Asia?

Some countries like the Philippines have quite high withholding taxes. Which incorporation offers the best benefits for dealing with companies from across South East Asia?

Should you just incorporate HK/SG and convert to Delaware in case you join a big Accelerator or raise bigger funds from the US?

I’m sure there’s stuff I haven’t considerd so the most important question: Where would you recommend incorporating for a South East Asian startup? (Please note: Philippines is not an option for me as a German foreigner, it’s close to impossible to do it.)

Feel free to add your insights for anything that I got wrong or that I missed! Thanks so much :)!