HOW TO INCORPORATE A COMPANY IN SINGAPORE
Singapore is the best place to incorporate a business because of the tax benefits that the place offers.
Before you register your Singapore Company, the following requirements are to be fulfilled;
- Your company name needs to be approved before incorporation.
- You need to appoint a minimum of one resident* director
- You can have anywhere between 1-50 shareholders, which may or may not be directors
- You need to appoint a qualified resident* company secretarywithin 6 months of your Singapore company’s incorporation.
- You need to possess a minimum of S$1 worth of paid-up capital(also known as share capital) to register your Singapore company
- You need to provide a local, physical Singapore address as the registered address of the company.
- Singapore-registered companies enjoy attractive tax exemptions and incentives.
The following documents need to be maintained during the incorporation of the Company;
- Company name
- Brief description of business activities
- Shareholders’ particulars
- Directors’ particulars
- Registered address
- Company secretary particulars
The company registration procedure in Singapore is fully computerized by Singapore’s Accounting and Corporate Regulatory Authority (ACRA) and can be done within the same day under regular circumstances.
To register your Singapore company, you’ll need to go through two distinct steps:
In general, new company names are approved or rejected within an hour. The exception to this is if the proposed name has certain words (such as bank, finance, law, media, etc.) that might require the review and approval of a corresponding external government authority – in this case, the name approval may get delayed by a few days or weeks.
To get your proposed company name approved quickly, make sure that the name:
- is not identical or too similar to any existing local company names
- does not infringe with any trademarks
- is not obscene or vulgar
- is not already reserved
An approved name will be reserved for 4 months from the date of application.
Once the name has been approved and any duly signed incorporation paperwork is in place, company incorporation can be completed in a couple of hours within the filing of the incorporation request. In some rare cases, authorities might request for additional information from shareholders or directors of certain nationalities.
ACRA sends an official email notification to confirm the registration. Hard copy of the certificate can be obtained if required by paying additional charges.
After successfully registering your Singapore company, you can open a corporate bank account in any of the major banks in Singapore such as HSBC, Standard Chartered, Citibank, DBS, OCBC, UOB, etc.
Types of Business Entities in Singapore
The following are the main business entities in Singapore
- Limited Liability Company
- Private Limited Company
- Public Limited Company
- Sole Proprietorship
- Limited Liability Partnership (LLP)
COMPLIANCES FOR REGISTRATION
1.A qualified company secretary needs to be appointed within six months of the incorporation.
2.A local physical address needs to be provided as the registered address of the company. This address must be open and accessible to the public during normal office hours.
- You need to appoint a minimum of one resident** director for your Singapore company, who needs to be at least at least 18 years old, not bankrupt, and free of any malpractice charges.
- You need to appoint an auditor within 3 months from the date of incorporation. However, effective 1 July 2015, your Singapore company can qualify for audit exemption if you meet at least two of the conditions below in the last 2 FYEs:
- Total annual revenue of no more than S$10 million
- Total assets worth no more than S$10 million
- No more than 50 employees
- If the projected or actual annual revenue of your Singapore company exceeds S$1 million, you’ll need to register for theGoods and Services Tax (GST), which is known as Value Added Tax (VAT) or Sales Tax in other countries. GST-registered companies need to charge this tax (currently 7%) to their clients on the goods and services provided, and remit this amount to the tax authorities.
- You may also need to obtain one or more business licensesbefore you can commence your Singapore business operations
- From 31 March 2017 onwards, you will be required to maintain a hardcopy or digital register of controllers** of your Singapore company, which must be physically accessible in Singapore.
- If you run a foreign company, you’ll also need to maintain a public register of members.
- You need to keep necessary accounting recordsthat can sufficiently explain the transactions and financial position of the Company.
- The director(s) of your company need to disclose any material personal interest that is related to company affairs, as well as any information that is necessary to avoid a perceived or actual conflict of interest.
- You need to lodge any changes in company particularsto ACRA within the timeframes allocated for that item. If you fail to update the particulars in time, you will incur penalties
- You need to publish your Unique Entity Number (or company registration number) on all official company correspondence.
- You need to file your annual returns with ACRA and your annual tax returns with the Inland Revenue Authority of Singapore (IRAS)
ADVANTAGES OF INCORPORATING A COMPANY
Incorporation of a company in Singapore means you have a corporate opportunity of dealing with a number of business and government entities to further your goals. At present, this tiny city-state is playing host to a vast number of self-motivated individuals like entrepreneurs, investors, managers, contractors, shareholders, and bankers. The professionals in charge of the government agencies are also part of this scenario.
BENEFITS OF INCORPORATION
The business persons from all over the world come to Singapore for the benefits, rebates and incentives that it offers through its tax system. It has one of the hassle-free statutory compliance requirements and is located close to the Asian markets
A ROBUST ECONOMY
Singapore has a well-developed free market economy that is based primarily on trade, finance and manufacturing. Services account for 75% of the country’s GDP and employ 80% of its workforce. The country has managed to achieve very low unemployment rate while maintaining low inflation.
ATTRACTIVE TAX SYSTEM
Singapore has one of the world’s simplest and most rational tax system. It levies no tax on capital gains or on dividends received from a business. This makes the country particularly attractive to entrepreneurs who want to incorporate and build a new business.
Singapore uses a tiered tax system for both personal and corporate taxes. New firms receive significant tax breaks during their first 3 years reducing their tax rate to 0% for first S$100k of income. The corporate tax rate is capped at 17%.
Similarly, the personal tax rate starts at 0%, rises very gradually to a maximum of 20% for incomes above S$320,000. Corporate profits are not double taxed when they are passed to shareholders as dividends. In other words, dividends are distributed to shareholders tax-free. Finally, Singapore charges one of the lowest value added tax rates in the world
AVOIDANCE OF DOUBLE TAXATION
Singapore has an extensive network of Avoidance of Double Taxation Agreements (DTAs) with over 50 countries. These agreements are designed to ensure that economic transactions between Singapore and the treaty country do not suffer from double taxation. Furthermore, Singapore provides Unilateral Tax Credits (UTCs) for the case of countries with which it does not have a DTA. Thus, a Singapore tax resident company is very unlikely to suffer from double taxation.
100% FOREIGN OWNERSHIP AND NO CURRENCY CONTROLS
Singapore allows a foreigner to own 100% of the stock of a Singapore incorporated company. You do not need any local partners or shareholders. This enables you to start a company with the type of capital structure that you desire and distribute its ownership to suit your investment needs.
EASE OF INCORPORATION AND OPERATION
The requirements for incorporating a company are straightforward and the procedure for doing so is simple. It takes less than a day to incorporate a new company in most cases.
Similarly, the annual compliance requirements are simple and devoid of unnecessary or complicated paperwork.
SUPPORT FOR STARTUPS
The Singapore government adopts very pro-growth and innovation friendly policies. It provides many grants, tax incentives and in-kind assistance schemes to startups. Within certain preferred sectors, the government can also subsidize the labor costs of a new business. These benefits are available to local as well as foreign-owned businesses.
In addition, Singapore’s liberal immigration policy brings global talent to the country. Singapore makes it easy for a foreign professional to obtain and maintain work visas or permanent residence (PR) status. Nearly a third of the country’s workforce is from abroad.
Singapore’s central location in Southeast Asia makes it a physical and metaphorical gateway to the continent’s 3 billion people. Some of the most important economies of the world (China, India, Malaysia, Australia) are a short plane ride away. The port of Singapore is one of the busiest in the entire world and is classified as a major International Maritime Center. Singapore’s Changi Airport is a world class airport that caters to approximately 20 million passengers every year and provides convenient flights to nearly every major city in world.
Most first-time visitors to Singapore are astonished by the world-class infrastructure of the country. This includes the country’s airport, highway system, subways, internet infrastructure, commercial buildings, museums, hotels and public parks. Much of the infrastructure has been developed in the last decade so it is very modern and new
Singapore is the best place to start a business because of its tax benefits and also for the grants and benefits that it provides to the new startups.