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.
For the first three years of a new company, the first SGD 100,000 in chargeable income will have a 75% exemption from tax, i.e. the tax rate is reduced by 75% on the first $100,000 of chargeable income. The tax rate on the second $100,000 in chargeable income is reduced by 50%. All further chargeable income is taxed at the full rate of 17%. This implies a graduated corporate income tax rate as follows:
The Government of Singapore is encouraging all local small and medium-sized business (SMEs) to digitize their businesses to the maximum feasible extent. Accordingly, they have developed the SMEs Go Digital program. The program includes a variety of subsidised components, including Industry Plans that will give you a head start in determining what you should do, A Start Digital Pack of approved solutions that you know will work together is available as well as consultancy and project management. More information on this program can be found here.
For personnel or enterprise development, the Government of Singapore has instituted the Skills Future Enterrise Credit (SFEC). The SFEC offers up to SGD 10,000 to defray up to 90% of the costs of upgrading the enterprise or staff skills. More information on this program can be found here.
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.