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All you need to know to establish a Singapore company
Singapore is the embodiment of the expression "extreme makeover." This city-state went from being a territory associated with poverty and overcrowding to becoming the fourth most prosperous country on the planet. After going through a recovery process, it did so that other jurisdictions cannot even begin to dream.
Now Singapore is considered one of Asia's economic engines. This small city-state does not even have 6 million inhabitants, but is one of the international financial center that produces more millionaires worldwide.
When you think that Singapore is the fourth wealthiest economy globally, you may think that it is perhaps an inaccessible place that only a few can reach, but nothing is further from the truth.
This is what Singapore puts on the table when it comes to incorporating a business. By registering a Singapore company you will have access to the following advantages:
● The highest personal security index in Asia.
● The freest economy in the world, per the Index of Economic Freedom.
● English is used for business and administrative matters to prevent language barriers in the commercial arena.
● Free flow of foreign currency
● Singapore's official currency is stable and enjoys a good position against the euro and the dollar.
● A favorable tax scheme with more than 50 agreements to avoid double taxation
● A small yet efficient state.
● Reputable regulators
● The infrastructure in Singapore is among the most advanced in the world. From super-fast internet to transportation, you name it, Singapore has it all.
● Very diversified investment areas. Singapore has flourishing markets in every imaginable industry.
● One of the best legal frameworks in the world when it comes to intellectual property protection.
From being a developing country, where kitchens and bathrooms had to be shared by several families, Singapore increased its wealth thanks to skilled labor. The formula was so successful that today this small island country is recognized as one of the four "Asian Tigers" along with South Korea, Hong Kong, and Taiwan.
Economic policies oriented towards the free market and respect for private property and contracts had as their axis the drastic reduction of fiscal pressure, the decrease of public spending, the opening up of trade, and the application of the notion of market competition for all companies, according to those who defend the model.
In short, settling in Singapore is a great opportunity, not only for the economic and business success of the area but for the strength of the brand that brings to settle your business in the area. All of this, added to other factors such as security, cultural diversity, and Southeast Asia's charm, makes the region a place worth studying. Making a name for yourself in Singapore can be advantageous and profitable in the medium and long term.
Due to its fiscal, economic, and legislative advantages, the adventure of settling down in Singapore can be more comfortable than in other countries of the area. Still, it also requires patience and professional advice.
Singapore checks all the boxes, and that is why it is one of our favorite jurisdictions to incorporate businesses.
Why Singapore? Five reasons why you should incorporate your company in Singapore
One of the best tax schemes in the region
Singapore has a low corporate tax rate compared to other leading economies in the world. A company is taxed at a fixed rate on its taxable income. As of 2009, the corporate tax was reduced to 17%. Also, capital gains are not taxable in Singapore. Plus, it has a territorial tax system, meaning that only Singapore-sourced income is taxed.
Another piece of good news is that there is no withholding tax on dividend payments in Singapore, making Singaporean companies more attractive as holders of revenue-generating assets.
Favorable environment for start-ups
All start-ups based in Singapore that qualify for the full Singapore tax exemption scheme (ask your agency for specific conditions) will not pay any tax on the first $100,000 of taxable income during the first three years and 50% of the current corporate tax rate on the next $200,000 of taxable income.
Pro-company government and financing facility for new companies
Government financial assistance has deployed many initiatives and programs to enable new entrepreneurs to access capital or funding. These funding initiatives include cash grants, government-assisted financing schemes, company incubator programs, and debt financing schemes.
Incorporating a company in Singapore is a breeze. The process can be ready in only five days. Not for nothing, this country is at the top of the world index of economic freedom.
Solid and reliable legislation
If you are used to doing business in the US or the UK and Europe, Singapore will make you feel right at home. The British legal heritage can be seen in the Singaporean legal system. It is mainly known for its very low corruption rate, advanced dispute resolution mechanisms, and the best intellectual property regulation in the world.
How to open a business in Singapore
Opening a business in the most economically free place in the world, as you would expect, is a simple process. In fact, all the formalities to incorporate a company in Singapore can be managed without you having to visit Singapore personally.
The most advisable for those who want to venture into Singapore's corporate world is to rely on a team of experts in corporate services that can help make the critical decisions (such as what type of company to incorporate) and assist in the management.
This becomes more relevant this year. The coronavirus crisis paralyzed air flights and increased restrictions around the world.
However, Singapore is, as you can see, a different place. Instead of closing itself, it has opened to the world. In fact, during COVID-19, some banks have relaxed their opening procedures, which means we can help you open a corporate bank account remotely temporarily.
In the case of incorporating a company in Singapore, you can receive the final documents anywhere in the world and return the original signed documents to the agency you work with by any international courier service.
As a foreigner, you have three options to register and maintain a company in Singapore:
● Local Entrepreneur
● This option is suitable for entrepreneurs who wish to establish a company in the country and have their own resident director in Singapore.
● A foreign entrepreneur without relocation:
● This is for foreign entrepreneurs who wish to establish an offshore company in Singapore but do not plan to relocate there.
Foreign entrepreneur with work permit:
This option should be chosen by foreign entrepreneurs or professionals who wish to incorporate a company in Singapore and move there to execute operations. You must have a degree and work experience relevant to business creation and apply for a work permit.
Other things to keep in mind when starting a business in Singapore as a foreigner are the following:
● You must hire a professional agency to register a company in Singapore since the law of the country does not allow foreign individuals or entities to do so;
● There is no requirement for you to obtain a special visa for Singapore if you only wish to register a limited liability company but do not intend to move there. You can operate your company from abroad and go to the country with a visitor's visa when you have to attend any company's business in the short term. However, you must take into account that in such circumstances, you will have to find a resident director, as each company must have at least one;
● If you plan to move to Singapore to operate your company, you will need to obtain a work or entrepreneurial permit. Once you have obtained this, you will be able to act as a resident director of your company.
Before reviewing the requirements, it is necessary to know that in Singapore, you can register different types of corporate structures, among them:
● Sole proprietorship
● Public company limited by guarantee
● Private liability company
● Public limited company
● General society
● Representative office, branches, subsidiaries
The Singapore PLC, the best combination of protection and low taxes
Among all the commercial structures available in Singapore, the one chosenthe most by entrepreneurs is the private limited company, which is what we commonly know as limited liability company or LLC in other jurisdictions.
Among the Singaporean corporate structures, PLCs have the best set of requirements and flexibility:
● They only require a shareholder, a resident director, a secretary, a valid and registered address, and no minimum investment capital. In addition, PLCs can engage in any type of commercial or industrial activity without any foreign investment restrictions.
● In the Singaporean technology scene, PLCs also shine because they are the corporate forms that are benefited by the government through tax advantages in their first years of operation.
The most common uses of a PLC are:
The versatility of PLCs makes them a jack of all trades in the Singaporean business world. These business entities can be used for anything as long as stock liquidity is not a fundamental requirement. Singapore PLCs are ideal for establishing subsidiary companies and ventures.
A PLC can be used as a holding company to manage long term investments such as debt, shares in other businesses and real estate investments in the most tax efficient way.
Special Purpose Vehicle (SPV)
Perhaps this is the most complicated or sophisticated scheme under which a Singaporean PLC can be used. SPVs can be used mainly to hold designated assets on behalf of its investors while separating the shareholders from any liability, and also to raise funds from the market in a tax-efficient manner.
Regardless of the structure you choose, the documents required do not vary in general. In some cases, the authorities may require additional documentation, but this is what you can usually expect in terms of requirements:
A company must have a minimum of 1 and a maximum of 50 shareholders who can be local or foreign persons. Shareholders can be natural persons or corporate entities.
The minimum paid-up capital to set up a company is S$1. A company can increase its share capital at any time by injection of additional capital.
Both Singapore-resident and foreign-resident persons can be directors of a Singapore company. Corporate directors are not permitted. A company must have at least one Singapore-resident director.
A company must appoint a qualified company secretary within six months of incorporation. The company secretary must also be a natural person and a resident of Singapore.
Each company must have a local registered address in Singapore, where the company will keep all of its statutory documents. The address cannot be a PO box.
The name of the company must be approved before proceeding with the registration of the company.
● The process of incorporating in Singapore is quite simple. Almost everything is handled by the agency you decide to work with, but if you like the detail, the process looks something like this:
● Pay the incorporation fee to the professional agency;
● Choose a name for your new company;
● The agency you choose to manage your company will verify the availability of the name in Singapore;
● Provide a copy of your passport, official copy of proof of address (e.g., utility bill) and fill in a questionnaire with questions such as your address, passport number, and name of directors and shareholders;
● In the case of a simple structure company, the documents required above will be sufficient for the agency to prepare the necessary paperwork for the incorporation of the company and email them to you for your signature unless you have special requirements;
● Upon receipt of all original signed incorporation documents, including the certified copy of passport and proof of address via international courier, the agency will proceed with the incorporation of your company.
The whole process (from the collection of documents to the online incorporation) should be approximately five working days. As you can see, nothing is complicated. This streamlined incorporation procedure keeps Singapore on the radar of businesspeople looking to establish their business presence in Asia.
How much does it cost to incorporate a company in Singapore?
This is the best part of the whole thing. In Singapore, companies are registered with the Accounting and Corporate Regulatory Authority (ACRA henceforth). And unlike corporate authorities in other jurisdictions, ACRA only charges two fees in the process of incorporating a business:
● Fee per company name application: S$15
● Company registration fee: S$315
In theory, you could pay a third fee if you require a physical copy of your certificate of incorporation. But this is discretionary.
The rest of the costs will depend on what package of services you have contracted with the agency you choose. In general, people hire additional services such as an address to register their company and receive correspondence, accounting, and associated services of that kind.
But as you can see, starting to do business in Singapore is a simple process and very affordable compared to other jurisdictions.
Our team of experts in Singapore is recognized and has an offer that suits the need of any entrepreneur who is thinking of establishing his or her presence in Singapore. So do not hesitate to contact us and meet our team!
Who are we, and what can we do for you?
More than 25 years ago, we started Mundo with the mission to bring people closer to the means to increase and protect their freedoms. Almost all that way, we have been working side by side with NTL.
The combination of our mission and resources has allowed us to help countless high net worth individuals, investors, individuals, and business families find refuge in jurisdictions and financial instruments that protect them from authoritarian governments and global financial insecurity.
After almost three decades of work, today, we have a consolidated network of experts worldwide. This allows us to offer our readers increasingly sophisticated and advantageous services, such as our Singapore's corporate services.
Our experts in Singapore can help you with:
● Preparation and submission of incorporation documents to the ACRA;
● Provision of the registered office address in Singapore;
● Provision of persons for the positions of Secretary and Director, who should normally be residents of Singapore;
● Compliance with decisions on the appointment of directors;
● Preparation of documents for the transfer of shares to final beneficiaries (when necessary);
● Processing of change-related information with ACRA on of directors/secretaries and with the transfer of shares, of following the Companies Act of Singapore;
● Processing of legalization of documents for later use outside of Singapore to establish representative offices, branches, subsidiaries, the opening of bank accounts with foreign banks, among others;
● Assistance in the process of opening bank accounts with banks, both local and foreign;
● Obtaining the DUNS numeric identifier;
● Provision of postal address and telephone number in Singapore;
● Registration and activation of accounts in payment systems (PayPal, Skrill, SmoovPay, and others);
● Preparation of mandatory annual financial statements and presentation of these to the relevant authorities in Singapore.
If you want to know more about our corporate services in Singapore, you can contact us now! Our team of experts can help you make the right decisions to start doing business in Singapore. Click here!
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