Singapore Incorporation
Why choose Singapore for incorporation
Ever increasing numbers of foreign investors choose to incorporate in Singapore every year. The primary driving factors for incorporating in Singapore by foreign investors often include:
- Low Tax Rates. Singapore has one of the lowest tax rates in the world.
- Excellent Base for Expansion in Asia. Foreign investors often leverage Singapore’s advantages as a leading global city, pro-business climate, efficient legal system, and corruption free government to set up regional headquarters to drive business expansion and innovation in Asia
- High Quality of Living. Quality of life in Singapore is comparable to Western nations. The country is safe, environment friendly and cosmopolitan. Healthcare, education and housing are excellent. English is widely spoken and most expats find it easy to relocate to Singapore and settle down quite easily.
For more information, refer to detailed Why Singapore guide.
Singapore incorporation choices for individual entrepreneurs
For any serious entrepreneur, the default choice of legal entity in Singapore is a Limited Liability Company often also known as Private Limited Company or simply LLC. A Singapore LLC is a legal entity on its own and separate from its owners. As a separate legal entity, its liabilities do not extend to that of its owners.
There are two other types of business entities in Singapore known as Sole Proprietorship and Limited Liability Partnership. Although they are simpler forms of business structures than LLC, they suffer from certain drawbacks which makes them unattractive for conducting any serious business. For example, a sole proprietorship is not a separate legal entity and thus the owner is fully and personally responsible for all the liabilities of the business.
For more details, refer to Singapore Business Structures.
Key facts about incorporating a limited liability company in Singapore
- Any local or foreign person is free to incorporate a company in Singapore.
- A foreign person can own 100% of a company in Singapore.
- A minimum of 1 director and 1 shareholder is required and it can be the same person.
- There must be at least 1 local resident director. Foreigners who will be relocating to Singapore to operate their company can act as the local resident director once their relocation visa is approved. Foreigners who will be operating their Singapore company from overseas can engage the services of a local nominee director to satisfy this requirement. A nominee director is on paper only and does not get involved with any company management or financial matters. Most professional firms that provide Singapore incorporation services offer nominee local director service.
- A qualified local company secretary is required for each company in Singapore. All professional firms that provide Singapore incorporation services offer company secretary service.
- A local registered address is required for each company in Singapore. Again, all professional firms that provide Singapore incorporation services offer company registered address service.
- It’s very easy to open a corporate bank account for a company in Singapore. Singapore is one of the world’s top financial centers and most major banks operate in Singapore.
- It takes less than 1 day to incorporate a company in Singapore. The whole incorporation procedure is fully computerized.
- Foreigners are not required to visit Singapore for incorporation of their company.
For more information, see detailed guide to Singapore Corporation.
Singapore incorporation choices for foreign companies
Foreign companies have the following incorporation options in Singapore:
The choice of entity will depends on the goals and objectives of the foreign firms. For more details and the comparison of the three incorporation choices, refer to Foreign Company Registration Options in Singapore.
Relocation matters for foreign entrepreneurs and foreign staff
As mentioned earlier, foreign individuals and firms are free to establish a company in Singapore with 100% ownership.
A foreign entrepreneur who wishes to incorporate and relocate to Singapore to operate his/her business may apply for relocation visa of type Entrepreneur Pass or Employment Pass. Of the two choices, Employment Pass is easier to apply and easier to renew on an ongoing basis. However, the choice of which type of the two relocation passes to apply will depend on your educational qualifications. If you have tertiary level education from a well known university and can back it up with 5+ years of professional and relevant experience, you have a good chance of Employment Pass approval. Alternatively, you can apply for Entrepreneur Pass.
Foreign companies that after incorporating a branch/subsidiary/representative office in Singapore plan to relocate one or more of their professional staff from the head office to Singapore can do so by applying for Employment Pass for each such staff member.
There s no quota system for Entrepreneur Pass and Employment Pass relocation visa types. However, each application for Entrepreneur Pass or Employment Pass is subject to review and approval by Singapore government and the approval is not a simple matter of fact. Refer to the above links for more detailed information on these passes.
What taxes you will need to pay and when?
Each incorporated entity in Singapore is subject to corporate taxes on their annual taxable income. Singapore has a flat corporate tax rate of 17%, however the effective tax rate for Singapore resident companies for the first S$300,000 annual profits is <9% due to available tax exemptions. Non-resident Singapore entities such as a branch office are not eligible for tax exemptions and therefore the standard tax rate of 17% will apply.
Capital gains and dividend distributions of a Singapore incorporated company are tax free. Double tax treaties and unilateral tax credits are available to Singapore companies conducting intentional trade to avoid double taxation.
The due date for filing corporate tax return is November 30. Tax returns are filed on a preceding year basis. For instance, for the financial year of your company that ended on March 31, 2010, the tax return filing deadline will be November 30, 2011. However note that Estimated Chargeable Income statement needs to be filed with authorities within 3 months of the financial year end date.
For more information, refer to the detailed Singapore Corporate Tax guide.
Ongoing compliance for Singapore companies
Some of the key compliance requirements include:
- File an annual tax return with IRAS.
- File an annual return with ACRA.
- Register for Goods and Services Tax if the company’s annual revenue exceeds S$1 million.
- Notify ACRA of any changes to its structure such as change of officers, change of registered address, change in share capital, etc.
- Have its financial accounts audited annually it has a corporate shareholder or if the annual revenue exceeds S$5 million.
For more information, refer to Compliance Requirements for Singapore Companies.