Incorporating in Singapore

 

According to the World Bank in its Doing Business 2015 Survey, Singapore is the world’s easiest place to conduct business and is a highly reputable, highly regulated business jurisdiction. Where businesses are concerned, the aspect of legitimacy is of great importance and there are times where potential clients may require greater legitimacy than an offshore company is capable of offering. A Singapore company is not perceived as an offshore company in a tax haven.

 

Singapore’s tax rate is the third lowest in the world, at 17% and is well known as a low tax jurisdiction.

 

Singaporean companies make excellent corporate vehicles for a large variety of purposes. These include: trading, consultancy, holding companies for businesses engaged in equity and share ownership and investment projects, shipping companies, for treasury management, owning real estate, private yacht and Intellectual property (e.g. software development, design and entertainment).

 

The most common legal form utilized by foreign investors are exempt private company limited by shares (“EPC” - with no more than 20 individual shareholders) and private company limited by shares (with no more than 50 individual or corporate shareholders). The liability of shareholders are reflected in the amount of paid-up capital contributions.

 

Singapore’s tax structure is both pro-business and pro-enterprise, a myriad of tax schemes and incentives have been put in place to aid companies in their growth. New companies will enjoy tax incentives for the first three years of operation though it should be noted that this benefit does not apply to investment holding companies. Any profits earned from the first SGD 100,000 will be rendered tax-free with the subsequent profit of $200,000 being taxed at 8.5%. All further profits would then be taxed at the corporate tax rate of 17%.

 

To encourage business, the Singapore government introduced Productivity and Innovation Credit Scheme (“PIC”) in 2010 that let Singapore companies, SMEs included to enjoy up to 400% tax deduction or allowances, or get a 60% cash payouts when the company invests in these six qualifying activities:

  1. Acquisition and leasing of IT and Automation Equipment (eg: computers, office system software, data communication & networking equipment, website development etc.);
  2. Training of employees (eg: in-house training accredited by WDA, external training etc.);
  3. Acquisition and in-licensing of Intellectual Property Rights (eg: costs incurred to acquire IPRs for use in trade or business);
  4. Registration of patents, trademarks, designs and plant varieties (eg: costs incurred to register patents, trademarks, designs and plant varieties);
  5. Research & development activities (eg: costs incurred on staff costs and consumables for qualifying R&D carried out in Singapore or overseas);
  6. Design projects approved by Design Singapore Council (eg: costs incurred to create new products or industrial designs)

 

Singaporean companies enjoy access to comprehensive double taxation treaties with 62 different jurisdictions including: China, Indonesia, Thailand, Taiwan, Malaysia, Philippines, Vietnam, India, Japan, Korea, Australia, New Zealand, South Africa, United Kingdom, Netherlands, Germany, Switzerland, Sweden, France, Belgium, Finland and the United Arab Emirates.

 

Singapore Company formation requires a minimum of one shareholder, one resident director, one resident company secretary, a local registered address and a minimum share capital of $1.

 

There are no restrictions as to foreigners becoming shareholders for the company. Statutory compliance such as annual general meetings, accounts, audits (audits are not necessary if it is an EPC) and tax filings are all mandatory on an annual basis.


If you are a lawyer, accountant , tax advisor or financial consultant and require services for your clients, please contact us for further options.

 

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