For over a decade, Healy Consultants has efficiently and effectively assisted our local and international Clients start a business in Singapore and launch their Asian business. In our opinion, a Singapore business entity is the most tax efficient corporate structure in the world. The following information will assist your Firm determine whether Singapore company formation is the optimum corporate solution to fulfill your international business objectives:
a)
AdvantagesAdvantages of Singapore company registration
Due to the positive image of Singapore, Singapore business registration is an excellent corporate vehicle to promote to customers, suppliers, investors, venture capitalists, governments and banks. Official global comparisons of jurisdictions by respected organisations like Mercer and WTO confirm Singapore structures are secure long-term solutions compared to traditional tax havens like BVI or Cayman Islands.
If properly structured, Singapore company offshore profits are legally tax exempt, as outlined by the Inland Revenue Authority of Singapore website. For onshore profits, the first S$200,000 (approximately US$158,000) of corporate profits earned in Singapore is legally tax-exempt for the first three years of business trading.
A Singapore company is not perceived as an offshore company in a tax haven. Singapore is a reputable, highly regulated, international trading jurisdiction. Singapore is positively ranked the 5th least corrupt country in the 2012 Corruption Perceptions Index by Transparency International.
Singapore is the most proficient English speaking country in Asia, thus a strategic advantage for western companies setting up regional or global headquarters.
Following Singapore corporate formation, an annual statutory financial audit is not required if corporate turnover/sales is less than S$5 million (US$3.99 million) and there is no corporate shareholder.
Singapore has tax treaties with approximately 86 countries, including 69 comprehensive double tax treaties, minimizing withholding tax on funds transfers between countries. Singapore is also a member of ASEAN meaning free trade access (such as no import duty) with Indonesia, Malaysia, the Philippines, Thailand, Brunei, Burma, Cambodia, Laos and Vietnam.
To counter the effects of the global economic downturn, the Singapore government offers a range of incentives and initiatives to assist investors choosing to register a company in Singapore.
Singapore is an excellent location to register intellectual property (IP), including global trademarks and patents. Singapore is a signatory to international conventions including the World Trade Organisation's (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which helps protect against IP rights infringements. Healy Consultants assists clients to complete Singapore, and international, trademark registration.
DisadvantagesDisadvantages of Singapore company registration
In accordance with Section 145 (1) of the Singapore Companies Act 1963, Singapore company incorporation requires appointment of at least one director who is ordinarily resident in Singapore. Mr Aidan Healy will act as your Firm's resident director in Singapore, which will help with business registration, corporate bank account and visa approval.
Because so many international companies wish to designate Singapore as their Asian headquarters, Singapore is increasingly becoming an expensive city to base a business. The relentless rise in property prices is just one factor contributing to Singapore's alarming 6th position in the latest Mercer Human Resources' global Cost of Living Survey. As a services and export-based economy, Singapore is vulnerable to i) high global oil and food prices and ii) the health of the global economy.
Annual unaudited financial statements must be submitted to the Inland Revenue Authority of Singapore (IRAS) following Singapore company incorporation. Healy Consultants assists our clients efficiently and effectively complete this annual statutory obligation.
c)
10 steps to incorporation10 steps to incorporation in Singapore
d)
Employment visasSingapore employment visas
While the Singapore visa application process is a straightforward one, the Singapore government has tightened the controls on obtaining employment passes and permanent residence visas. This is to manage the number of foreigners working in Singapore and maintain adequate opportunities for Singaporeans.
Singapore visa and employment pass options include: regular employment pass (EP), personalized employment pass (PEP), EntrePass, EP eligibility certificate (EPEC), foreign worker work permit (FWWP), foreign domestic worker work permit (FDWWP), S Pass, dependent's pass (DP) and long term visit pass (LTVP).
Singapore Permanent Residence (PR) is also available to foreigners. The two avenues to becoming a Singapore PR are via a Global Investor Program or by meeting the criteria determined by the Immigration & Checkpoints Authority (ICA) which assesses time living in Singapore, education, employment, income etc.
e)
Business entity typesSingapore business entity types
Healy Consultants will assist our Client set up the optimum Singapore corporate structure.
Comparison of different types of corporate structures:
Type of Singapore Company
LLC
Branch
LLP
Rep Office
Can legally trade in Singapore and issue invoices
Yes
Yes
Yes
No
Can open a bank account in Singapore
Yes
Yes
Yes
Yes
Enjoys limited liability in Singapore
Yes
No
Yes
No
Minimum number of shareholders required
1
Parent Company
2
2
Minimum number of directors required
1
0
2
2
Singapore resident director required
Yes
2 local agents required
No
No
Singapore company secretary required
Yes
Yes
Yes
Yes
Annual Return required
Yes
Yes
Yes
Yes
Submit annual tax return
Yes
Yes
No
No
Corporate directors allowed
No
N/A
No
No
Singapore tax payable
17%
17%
0%
0%
Legal tax exemption if properly structured
Yes
Yes
Yes
Yes
Office premises mandatory
No
No
No
No
Allowed to hire staff
Yes
Yes
Yes
Yes
Limited liability company
This is the most common entity used for doing business in Singapore. It is also known as a private limited (Pte Ltd). As always, the company is a separate legal entity or 'person'. In particular, a company is separate from its owners, shareholders and the persons who run it, the directors.
Singapore Branch
The establishment of an Singapore branch may be preferable to incorporating a subsidiary if one of the objectives is to consolidate the financial results of the parent company.
An overseas company may register itself in Singapore to operate as a branch, instead of as a subsidiary. The branch must formally establish a registered office in Singapore and appoint a local resident agent.
Representative office
Where a foreign company does not intend doing business in Singapore it may seek to establish a representative office. Such an office must however only engage in activities which will not amount to carrying on business, for example market research.
Companies limited by guarantee
Instead of shareholders and paid up share capital, this company comprises members who place a guarantee on the company which is only enforced on the winding up of the company. Often non-profit companies and charities use this method.
Unlimited liability companies (partnerships)
An entity whose members have no limit placed on their individual liability to contribute to the debts of the company. The sole advantage is this company can distribute profits without restriction.
Public Companies
A public company usually comprises more than 50 shareholders and a minimum of 3 directors, 2 of whom must ordinarily reside in Singapore. This entity type is subject to more stringent regulatory provisions.
Private Superannuation Trustee Company
The sole purpose of this company is to act as a trustee of a regulated superannuation fund within the meaning of s19 of the Superannuation Industry (Supervision) Act 1993.
Not-for-profit Company
This company is for charitable purposes only and its constitution will i) require the company to apply its income in promoting those purposes and ii) prohibits the company making distributions to its members and paying fees to its directors.
Sole trader
The business is run by one person, all decisions are made by this person but staff can still be hired. Sole traders do not enjoy limited liability and personally liable for all debts of the business.
f )
FeesSingapore business registration fees
The average fees per Singapore engagement amounts to US$9,350, including company incorporation, resident director, corporate bank account, virtual office address and GST registration or exemption. Refer to draft invoice embedded here.
Accounting and taxAccounting and tax considerations
Healy Consultants Compliance Department assists our Clients to efficiently and completely discharge the annual accounting and auditing obligations of their Singapore company.
Healy Consultants assists our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budgets and sensitivity analysis to better manage financial obligations and ease the process of reporting to Singapore accounting authorities.
If properly structured, a Singapore non-resident company offshore profits are legally tax exempt, as outlined by the Inland Revenue Authority of Singapore website. A resident Singapore company suffers corporate tax of 17% on annual profits. However, the first S$200,000 (approximately US$160,000) of corporate profits earned in Singapore is legally tax-exempt for the first three years after business registration in Singapore. To highlight Singapore's tax advantages, private companies voted Singapore as the country with the least burdensome taxes in the world, according to a survey by Grant Thornton International.
Singapore companies must conduct an independent annual audit only if i) if corporate turnover/sales is more than S$5million (US$3.99 million) or ii) if the Singapore company has a corporate shareholder.
A Singapore resident company is only obliged to register for goods & services tax (GST) if annual sales exceed S$1 million (US$800,000).
There is no capital gains tax in Singapore.
Tax planning in Singapore is straightforward compared to most jurisdictions. Singapore tax laws are simple and pro-business. When tax planning in Singapore, taxes are levied only on income earned in Singapore and provided the income is not remitted back to Singapore. Refer to the Inland Revenue Authority of Singapore (IRAS) website for more information.
Unlike many corporate services providers, Healy Consultants takes a global approach to our Singapore tax planning services. Our Singapore tax consultants think 'outside the box' to provide a creative solution. Our international tax professionals provide legal, creative solutions.
A Singapore company accesses double taxation treaties signed with 69 countries including Japan, China, Germany, France, the UK and Canada. In some instances, a Singapore company may be liable to pay income tax despite a double tax treaty being in place. In this case, the tax rate depends on the terms of the treaty, and may be reduced through tax credits. Our Singapore tax consultants can provide further information.
i )
Compliance requirementsCompliance requirements for Singapore companies
Each Singapore company must appoint a local company secretary.
Singapore business registration requires having a registered office in Singapore.
A Singapore company must have at least one director who is "ordinarily resident in Singapore" i.e. Singapore Citizen, Singapore Permanent Resident, or a person who has been issued an Entrepreneur Pass or Employment Pass and must be above the age of 18 years.
Each Singapore company must fix its financial year end (FYE).
GST registration is required only if the company falls under the following:
The turnover is more than S$1 million for the past 12 months - known as the retrospective basis, or;
There is a reason to expect that the turnover will exceed S$1 million for the next 12 months - known as the prospective basis
Each Singapore company must keep such accounting and other records as are necessary to explain the transactions and financial position of the company and to allow a profit and loss account and a balance sheet to be prepared.
As a director of the company, one shall disclose to the company:
Any material personal interest they have in a matter which relates to the affairs of the company
Any other interest which the Director believes is appropriate to disclose in order to avoid an actual conflict of interest or the perception of a conflict of interest
Each time a change occurs in the particulars of the company or to its officers, the change must be lodged with Registrar of Companies.
The Singapore Companies Act now requires every company to have the registration number (in addition to its registered name) on all business letters, statements of account, invoices, official notices and publications.
Each Singapore company must file annual return with Company Registrar and annual tax return with the Inland Revenue Authority of Singapore (IRAS).
j )
Success tipsSuccess tips on doing business in Singapore
k)
Support servicesOther Singapore company registration support services
Trademark and copyright protectionTrademark and copyright protection
Company secretary servicesCompany secretary services
Market researchMarket research
Internal auditInternal audit
Legal supportLegal support
Joint VenturesJoint Ventures
l )
Did you knowDid you know about Singapore?
According to the 2012 Index of Economic Freedom by the US-based Heritage Foundation, Singapore is the second freest economy in the world, after Hong Kong.
Singapore's Port attracted 127,998 vessels and saw 29.9 million twenty-foot shipping containers in 2011, making it one of the largest shipping ports in the world.
The Mercer Human Resource Consulting's Quality of Living Survey 2011 has ranked Singapore as Asia's most livable city and the 25th most livable city in the world.
Singapore is perceived as the 5th least corrupt country in the world, according to the 2012 Corruption Perception Index by Transparency International.
According to the Singapore Statistics group, Singapore's real GDP (gross domestic product) grew 4.9% for 2011. Growth in 2010 was 14.8%, after recovering from the global economic downturn.
The Singapore government provides a range of incentives for investors, including tax holidays, loans, grants and equity financing. Visit the Enterprise One website for more details of Singapore government assistance.
In Singapore there is approximately one taxi for every 190 people.
The population density of singapore is 7,447 per square km (United Nations data, 2010).
Singlish is a local dialect spoken by Singaporean's. It is a mix of English, Hokkien Chinese and Malay.
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