Established, productive and truly international. Welcome to Singapore – the #1 gateway to Asia and the world’s best place to do business. 

Of all the decisions you make when starting a new business, choosing the right legal structure in the most suitable jurisdiction is one of the most important ones. Because where you set up your business will impact how you pay taxes, your personal liability and even your ability to raise money. 

In this post we’ll explore why Singapore may just be the right jurisdiction for you. 

So whether you are a solo entrepreneur or an established corporate group, look no further. You are certainly at the right place. 

SINGAPORE COMPANY IN A NUTSHELL 

  • One shareholder, one local director and one company secretary. Shareholder and director can be the same person, secretary not. Between 1-50 shareholders allowed.
  • No local or foreign shareholding requirements i.e. regardless of your residency/non-residency, you can own 100% of the shares.
  • Minimum paid-up capital S$1 for Singapore company registration.
  • Annual reporting is required: Annual Returns filing, Corporate Tax and Accounting.
  • Territorial tax regime and tax incentives + exemptions based on your tax-residency. 
  • Avoidance of Double Taxation: you are eligible for tax exemption if your corporate income is already being taxed in the foreign country and vice versa.

 

Here’s why Singapore is a cool option 

East Asian Tiger, Delaware of Asia and the world’s best place to do business, Singapore is certainly not short of nicknames. Economic stability, high living quality, productive labor and well-designed infrastructure are just a few characteristics to describe this Southeast Asian island city-state. 

The versatility of this economy can be seen in its range of industries. Everything from urban planners to fintech and manufacturing to some of the world’s largest conglomerates listed in the Singapore exchange, this island nation holds its ground as the 3rd highest economy in GDP per-capita and some of the lowest in corruption. Subsequently, rule of law is strong, just as its pool of human capital or its worldwide image as a commercial center.  

Regardless of your business type or needs, Singapore offers the ease, support, stability and access most entrepreneurs dream of. In fact, its entrepreneur-friendly government policies, territorial tax regime, world-class IT infrastructure and strategic geographic location can explain why this jurisdiction is simply a no-brainer for many from founders to investors. 

 

Non-resident Singapore Company

Not a resident? Not a problem. Many Singapore company owners aren’t. However, you will need a resident director to set up a company in Singapore. If you don’t have one, your best option is to get a local director. For our clients we have this already included in our incorporation package (nominee director). Additionally, you’ll need a company secretary. This we have included in ours as well. 

When we say ‘Singapore company’ in this article, the entity type we’re talking about is legally recognized as a Private Limited Company or Pte. Ltd., governed by the Singapore Companies Act. This is one of the most popular entity types that offer a versatile structure to suit all kinds of businesses with an established legal system and operating infrastructure around it. 

 

One-stop have-it-all 

Of all the jurisdictions we work with, Singapore is truly one of those that has it all – or at least, a lot of it. This is a nation known for it stable economy, well-developed infrastructure and legal environment to conduct business. Additionally, Singapore has a highly-educated and English-speaking labor, strategic geographic location, attractive taxing system and one of the most conveniently planned domestic and international transportation for those on the move. 

Looking at its advantages for any type of business, it’s hard to downplay the role of Singapore as a jurisdiction in our world economy. Therefore it’s no wonder this place serves many as a default destination whenever considering company formation, M&A, investments and personal asset planning. 

 

The ease of doing business

Top #2 place with the ease of doing business, one of the highest-ranking life qualities, top ranking in the world with protection of intellectual property… you get the point. Much of its ease of doing business is due to Singapore’s economic as well political stability. 

Moreover, strict guidelines and legal framework, penalties, low corruption rates and professional image are all things that set the rules in this free market economy and therefore cushion Singaporean companies in their operations. Interestingly, this all may sound pretty basic but those of you seasoned enough in most other Asian hubs will certainly know the difference between having trust in the system and not. No extra clutter here, just business.

 

Attractive tax, ownership and currency controls 

Always remember to do your own research and homework on taxation as it varies depending on your personal tax residency, company tax residency, citizenship and jurisdictions. To learn more about Singapore tax, IRAS is the source to trust. Also, to determine whether or not your company is a tax resident in Singapore, read this

Territorial Tax Regime:

Singapore is considered to have one of the most attractive tax systems in the world. In short, we’re talking about a territorial tax regime that taxes companies only on locally-sourced income. 

Now, what is considered locally-sourced vs. foreign-sourced is where things get less black and white as there is no universal rule that applies to all situations. Basic rule of thumb is this: if your client pays you for products/services conducted outside the borders of Singapore, they are considered foreign-sourced income. And therefore, exempt from tax in Singapore. This applies if this foreign country has a corporate tax rate of minimum 15% or higher. Equally, foreign-sourced dividends and service income are taxed at 0% in Singapore. No capital gain tax. 

First 3 years:

Tax resident companies in Singapore can benefit from tax exemptions during the first years. Starting from this year 2020, 0% corporate tax applies to 75% of the first S$100,000 your new company makes, then 50% to the next S$100,000 you make. For instance, if your company makes chargeable income worth S$200,000 during one of its first 3 years, total S$125,000 of it will be tax exempt i.e. tax free.  

After the first 3 years:

Tax exemption applies to 75% of the first S$10,000 your company makes, then 50% of the next S$95,000. For instance, if your company makes chargeable income worth S$200,000 anytime after its first 3 years, S$102,000 of it will be tax exempt. 

Corporate tax capped at 17 percent:

Also known as the Headline tax, this is a general rate that is levied on your locally-sourced corporate chargeable income. While this is the maximum tax rate in Singapore, it often doesn’t show the real effective rate due to tax exemptions, incentives and depreciation. 

Double Tax Treaty:

Singapore has signed Avoidance of Double Tax Treaties with +80 countries to date and agreed to give ‘tax credit’ on the rest of the countries it hasn’t yet signed. 

The purpose of this is to help businesses avoid double taxation of their income. In other words, if you’re paying tax already in X country (given the rate is above 15%), you no longer need to pay that in Singapore. Also the other way around: if you pay tax in Singapore, you’re not subject to tax in X country. 

Ownership of Shares:

You can have 100% ownership over your company shares regardless of whether you’re a local or a foreigner. Similarly, there are no restrictions on how much capital you invest in your company or repatriation of profits. 

No currency controls

No restrictions whatsoever imposed on foreign currency movement in or out of Singapore. This may not seem like a big deal, but allowing free movement of capital across borders means frictionless transactions and high flexibility for business operations. 


Requirements to open a Singapore Company

Have questions? Here are the mandatory requirements to start your Singapore company – and how we can help. 

What will I need to get started?  We will need your company name, some basic information (amount of shares, the kind of business you’re planning) and shareholder/director information. Proof of address and passport copy will be also required to complete the first step. We will then take care of the rest. 
How many shareholders and directors do I need?  One shareholder, one resident director and one company secretary. The shareholder and director can be the same person but CANNOT serve as the secretary. So if you are a solo founder, the minimum is still 2 company officers: director and secretary. In total, you can have anything in between 1-50 shareholders.

At least one director needs to be resident. If you’re not a resident or don’t have a resident director, we can help.

Please note: If you incorporate your company with us, a local director and secretary is already included in our package. 

Annual meetings?  Mandatory. Singapore companies are required to hold Annual General Meetings where financial statements are tabled for shareholders approval.  
Mandatory annual reporting?  In order to comply with the law, Singapore companies must record the following:

  1. Annual Returns Filing
    Due within one month after Annual General Meeting.
  2. Corporate Tax Filing
    Due 30. November in paper,
    Due 15. December online.
  3. Accounting and Financial Year determination 
What’s the corporate tax rate? 
Territorial Tax regime: 
  • Companies and individuals are mainly taxed on Singapore-sourced income. Foreign-sourced income is taxed only when it’s remitted in Singapore.
Flat corporate tax: 
  • Singapore corporate tax is capped at 17% on chargeable income. Single-tier corporate tax is being followed, therefore dividends, capital gain etc. are not taxed.
Tax-resident company incentives: 
  • Tax exemptions on foreign dividends, foreign branch profits and service income. These exemptions are applicable if the foreign country has a corporate tax of 15% or above. 
  • 75% tax exemption on the first 3 years of the company’s first S$100,000, above and the rest with progressive tax rate. 
Double Tax Treaty: 
  • Your company is eligible for tax exemption or reduction on any income that is subject to tax in a foreign country. Also vice versa. 
How much paid-up capital do I need?  Minimum S$1. 
Do I need a company address?  Yes. And it’s automatically included in the incorporation package we offer. 
How do I open a bank account?  We will assist you in opening a multi-currency e-bank account free of charge. 

For a Singapore bank account, please note that a physical visit is required. We can assist in making the introduction and referral to our network banks. 

What is the process of incorporation?  Three steps:
1. Submit your order.
2. Provide company information.
3. Your company is created. 
What else do I need to start a company?   Here is a list of everything mandatory you need to have. We’ve included all of this into our incorporation already: 

  • Name application
  • Certificate of incorporation
  • Memorandum and Articles
  • Assignment of Founders Rights and obligations
  • Company Secretary 
  • Resident Director
  • First board of councillors minutes
  • Register of councillors, beneficiaries, founders and registered agents
  • Registered agent services
  • Business Address in the respective location of the jurisdiction
  • Money Laundering (AML) – Know Your Customer (KYC) – Political Exposed Person (PEP) check and approval
  • Digital mail forwarding
  • Drafting of minutes and assistance with other ancillary documents
  • Smart Company Deployment, establishment + Digital Dashboard
  • Customized Corporate ERC-20 Token
  • Customized Digital Voting System 
  • Assist in opening multi-currency cross-border Bank Account
  • Government fees 
  • Accounting up to maximum 40 transactions/month or 40/year.
How long will this take?  Submission to the Registrar within 24 hours. Wait time for approval 1-2 weeks.

 

Have more questions?
No worries. Drop us a note at future@korporatio.com – we are always here to help!