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The Singapore Advantages

Singapore is a global business hub: the tropical city state lies 85 miles from the equator and is the epicentre of commerce and trade in Southeast Asia. Singapore is home to Asia Pacific Headquarters of many MNCs. Despite a modest population of 5.7 million and limited natural resources, Singapore’s GDP per capita ranks amongst the highest in the developed world: GDP per capita growth from USD430 in the 1960’s to more than USD65,000 today is regularly cited as a modern economic miracle.

Singapore’s remarkable progress is attributable to an efficient government, a regulatory environment that is pro-business and a tax regime that encourages international investment. A world leading education system, highly skilled workforce, pragmatic policy making and a robust legal system all enhance Singapore’s reputation as an attractive location for start-up companies.

H. A. Christie & Co has operated as a successful boutique Chartered Accountancy Firm in Singapore since 1991. Last week I met with the founder Hamish Christie to understand some of the financial benefits of operating in Singapore as well as the minimum requirements of local business incorporation.

Corporation Tax

Singapore is not a tax haven however it does offer a tax-friendly environment for start-ups and has double tax treaties with many countries. The standard corporate tax rate in Singapore is 17 % before partial exemptions are applied. Exemptions are largest in the early years of operation – Singapore tax-resident companies can currently benefit from an effective tax rate of just under 7% on their first S$200,000 of taxable profit during the first two years from incorporation and just over 8% on their first S$200,000 of taxable profit in subsequent years.

To qualify for the partial tax exemption for new businesses, the company must be deemed to be tax resident in Singapore meaning the company is controlled in Singapore   One of the indications of tax residence is when the Company holds its meetings of directors in Singapore. There is presently a concession practiced with the Covid-19 pandemic so that directors located overseas can participate in directors’ meetings by teleconference.  Other criteria that can be taken into account include whether the company has an office and / or employees in Singapore.

It is also beneficial to be tax resident in Singapore to be able to benefit from the Double Tax Treaties that Singapore has with other countries for example relating to claiming credits for overseas withholding tax paid on remittances into Singapore

Companies’ income is taxed in Singapore when it is arises in or is remitted to Singapore.

Depending on the size of the business as defined by its turnover / gross revenue, companies might be required to register and account for GST.

Establishing a Private Limited Company in Singapore

To do business in Singapore and benefit from the business-friendly environment, a Private Limited Company can be established with at least one Company Director required to be resident in Singapore.

The first stage of registering a company is applying for approval for the company’s name with the Singapore Accounting and Corporate Regulatory Authority (ACRA). The company will need a minimum of one shareholder that can be an individual or a company (corporate). The company structure is not restricted in the number or nationality of its shareholders as long as one Director is a resident in Singapore. To qualify as residing in Singapore the Director can be a Singapore Permanent Resident (PR); a Singapore Citizen with a residential address in Singapore or a Singapore Employment Pass (EP) holder.

A foreigner can become a resident Director of the new Singapore company by obtaining an Employment Pass (EP) to work in Singapore. The company needs to be incorporated first, then it can apply for the EP for the overseas person who wants to manage and operate the company in SG.   In such cases the company will need to be incorporated with a Singapore resident as a director first.

Alternatively, the foreigner could apply for an EntrePass if he or she is an entrepreneur with recognised venture backing or who has innovative technology.

The minimum salary companies need to pay EP holders is currently SGD4,500 per month but the salary must consider the qualifications and experience needed for the job and depending on the seniority of the position could be S$10,000 a month or more.

Every Singapore company must have a Company Secretary and the Secretary cannot double hat as the Company’s Director if it only has one director. Such a service is typically outsourced to a firm like H.A. Christie & Co. and its affiliates who offer cradle to grave corporate secretarial services.   The Company Secretary must be a resident of Singapore and be qualified.

Example Company Secretary Services

• Company incorporation
• Provision of company secretary
• Provision of a registered office address
• Provision of resident nominee director
• Maintenance of company’s corporate secretarial records and registers
• Preparation and recording of directors’ and shareholder’s minutes of meetings and resolutions

Allow a Month for the Incorporation Process

The incorporation process can be fast – in theory within one day –  but in practice can take at least a few days and sometimes a week or 2 depending on how long the following take:

• Obtaining ACRA approval of the company name is usually within a day or two but can take longer for example in cases where the name is protected or similar to another company’s name
• Preparing, signing and filing the Constitution and other incorporation documentation can take time depending on the location of the various signatories. Original signed documents are needed.
• Choosing a bank and opening a corporate bank account in Singapore, completing background checks for anti-money-laundering purposes
• Fundraising is not mandatory for incorporation but often required before the doors can be opened. Singapore is very happy to encourage local and overseas investment in local companies that will have business operations in Singapore.