Doing Business in Singapore:
Singapore business rankings made it clear that it is the worlds easiest place to do business, one of the world's busiest ports, leading oil refining and distribution centre and manufacturing electronic components. Singapore exchange is the world's fourth largest foreign exchange market, world’s largest maker of jack-up rigs used in off-shore oil exploration and drilling. Singapore is the world’s fourth ranked financial centre and is an hub to world’s leading names in insurance brokering, offshore insurance, captive and risk management.
Singapore offers investment opportunities to international investors and attracts trade. Among these are no control on foreign companies, no capital gain tax or estate tax, lowest corporate tax @ 17% on taxable income, access to low cost labour, excellent business connectivity, startup tax exemption scheme, foreign sourced income exemption scheme, startup enterprise development scheme (SEEDS) and local enterprise finance scheme (LEFS) and flexible labour laws.
The regulative authoty for company incorporation is Accounting & Corporate Regulatory Authority (ACRA), Singapore. The additional requirement for foreign enterprenuers or entities which want to set up business in Singapore needs to appoint two local agents who may be Singapore citizens, permanent residents, or foreigners with employment or dependent passes.
Types of Businesses one can open in Singapore:
Three are nine types of businesses you can open in Singapore subject to eligibiliy criteria.
(1) Sole Proprietorship,
(2) General Partnership,
(3) Limited Partnership,
(4) Limited Liability Partnership (LLP),
(5) Private Limited Company (Pty Ltd),
(6) Public Limited Company,
(7) Foreign Subsidiary Company,
(8) Foreign Company Branch Office,
(9) Foreign Company Representative Office..
Let us go through one by one.
An enterprise owned and run by one person (the sole proprietor) and has no legal distinction between the business owner and the business entity. This person is entitled to all the profits of the business and is personally liable, without limit, for all its debts and obligations.
Profits are taxable in the hands of the owner at the personal income tax rate. The owner must keep proper accounts and file Form B1 for taxes.
Singapore citizens or permanent residents above the age of 18 can set up such a business on their own by registering under the Business Names Registration Act with ACRA. They must first ensure that the proposed name is available and that personal medisave payments are up to date.
Foreigners residing overseas are required to appoint at least one locally resident Authorized Representative for the establishment. They must also engage the services of a registered filing agent for the setting up of this business.
Singapore resident foreigners on various passes are not permitted to register a sole proprietorship business. They are encouraged to setup a company or a limited liability partnership and applying for an Entrepass or employment pass.
A partnership is a business owned by 2 to 20 partners. Partners aged 18 and above can combine some or all their resources, skill or industry with the object of making a profit. In case, if none of the partners are Singapore residents, they must appoint a Singapore resident partner as their Authorized Representative.
The partnership must keep proper accounts and renew the registration annually. Partnerships themselves do not need to pay taxes, however they need to file an annual income tax return in Form P to IRAS.
Partners carry the burden for all debts and liabilities of the general partnership and can be sued personally and jointly. All partners are required to declare their share of income while filing their Personal Income Tax.
A limited partnership consists of general partner(s) and limited partner(s). There is no limit on the number of the partners. Passively run businesses may take up this model, with the main advantage for limited partners is that their personal liability for business debts is limited.
You can start it with at least one limited liability partner, this business must also have one general partner. If none of the partners are Singapore Ordinary residents, then the company is required to appoint a locally resident manager (Authorised Representative) to the entity.
The general partner is responsible for all actions, including reporting, liability of debts, and other obligations of the organization. Meanwhile, a limited partner will not be liable for the debts and other liabilities of the partnership beyond the amount of his/her agreed contribution.
All partners are required to declare their share of income while filing their Personal Income Tax as part of their Singapore tax returns.
The establishment itself has no legal standing. The general partners therefore can sue or be sued for culpability.
Any foreigner who wishes to set up a LP must engage, the services of a Registered Filing Agent to submit an application on behalf. If they wish to be the locally resident partner, they must seek prior approval from Ministry of Manpower (MOM).
Limited Liability Partnership (LLP)
LLPs give owners the flexibility of operating as a partnership whilst giving them limited liability. It combines the benefits of a partnership with those of private limited companies. Liability of the partners are limited to the amount they contributed to the LLP. The partners are not personally liable to the obligations of the LLP.
Partners can be resident individuals and corporate bodies, either local or foreign, to set up such an entity. If all the partners are foreigners, then a local Singapore resident must be appointed as their Authorised Representative.
Partners are legally liable for their own negligence, wrong doings; and are exempt from any liability arising out of oversight of other partners. The LLP is a corporate body and has legal personality separate from its partners. The LLP has perpetual succession. Any change in the partners of an LLP does not affect its existence, rights or liabilities.
Foreigners residing overseas must engage the services of a Registered Filing Agent to set up this entity. They must also seek approval of Ministry of Manpower (MOM), in case they wish to manage the entity while residing in Singapore.
Private Limited Company (Pty Ltd)
One or more individuals (at least one Director must be a Singaporean, Singapore Permanent Resident or Entre Pass Holder) may incorporate a company by registering under the Companies Act. A company may be limited by shares, limited by guarantee or unlimited. For companies limited by shares, shareholders may be individuals or corporate entities, and need not be of local residency. Private Limited Company may be formed as below:
Private Limited Companies: Companies limited by shares pursuant to and governed by the Singapore Companies Act. The shareholders cannot be held personally liable for the debts of Limited Companies, with their liability limited to the amount of shares that have been issued to them which they may not have fully paid for. The number of shareholders is limited to fifty or less.
Exempt/Deemed Exempt Private Limited Companies: A sub type of a private company, an exempt Private Limited Company has less than 20 members, none of them being corporate entities. Statutory Audit is not required if the turnover of the Company does not exceed S$5 million.
Gazetted Exempt Private Companies: Government-owned companies which have been declared Exempt Private Company by the Minister’s Gazette.
Public Limited Company
Public Limited Company include Company Limited by Share: The number of shareholders can be more than fifty members and the company may raise capital by offering shares and debentures to the public. A public company must register a prospectus with ACRA and MAS before making any public offer of shares and debentures and Company Limited by Guarantee: Companies limited by guarantee are usually formed for non-profit making purpose. This type of company is more commonly used for trade associations, charitable bodies, clubs, professional and learned societies, some religious bodies and the like, rather than commercial undertakings.
Foreign Company Subsidiary
Foreign Company Branch Office
A foreign company can set up a branch office in Singapore. A foreign company is required to engage the services of a Registered Filing Agent to submit an online application for setting up a branch office.
For Registering a Branch of a Foreign Company, it must have at least one Authorised Representative who is ordinarily resident in Singapore. Being “ordinarily resident in Singapore” means the authorized representative’s usual place of residence is in Singapore. A Singapore Citizen, Singapore Permanent Resident or an Entre Pass holder can be accepted as a person who is ordinarily resident here.
Foreign Company Representative Office
Documents Required for Company Registration in Singapore:
For Individual Shareholders
- Passport Copy
- National Registration Identity Card (NRIC) or Residency card (for Singapore residents only).
- Residential address proof (for example, a driver's license, a recent utility bill, rental agreement, etc.).
- Brief professional background. This can be in the form of a curriculum vitae (CV), resume or link to the person's LinkedIn profile.
For Corporate Shareholders
- Certificate of Registration issued by the Registrar of the jurisdiction where the company is registered.
- Company Extract from the Company Registrar of the jurisdiction where the company is registered that contains the following information: Company's name, Registration number, Registered address, Paid-up Capital and particulars of all Shareholders and Directors, Business activities that the Company is engaged in.
- Resolution for authorization to hold shares in the proposed Singapore Company.
- Resolution for Appointment of an authorised Person to sign the Singapore Company formation documents on behalf of the shareholding company.
- An ownership structure chart that identifies the Ultimate Beneficial Owners (UBO) of the shareholding company.
Let's Clear Your Doubts
Can a foreigner incorporate a company in Singapore?
Yes. Shareholders of a Singapore company may be a local individual, a foreign individual, a local corporate entity or a foreign corporate entity.
Can a foreigner own 100% of the equity?
Can we register Oner Person Company in Singapore?
Yes. A company can be owned and operated by a single person; i.e., a person can be the sole shareholder and director of a company.
What is the minimum share capital requirement for registering a Singapore Company?
What are the requirements to a foreigner to register a Company in Singapore?
The company must appoint a qualified local company secretary,
The company must use a local address as the registered address for the company,,
The company must appoint a local resident director, and
The company must have a minimum share capital of S$1.
I am a foreigner and do I need to physically present in Singapore to register my Company?
How long will it take to incorporate my Singapore Company?
Do I need to appoint a Company Secretary for my Singapore Company?
Yes, each Singapore company must appoint a corporate secretary. A company secretary is an individual who is a resident of Singapore and understands the Singapore company law.
Is statutoy audit mandatory for my company?
If your turnover exceeds S$5 Million, it is mandatory.
Do I need to apply for GST Registration mandatorily?
No necessarily. If your turnover in the past 12 months (or in the next 12 months) will exceed S$1 million then you are required to register for GST. You can apply voluntarily if you desire.
Do I need to take another licenses apart from Company Registration in Singapore?
For most industries in Singapore, you do not have to obtain a license before commencing operations. However, certain industries do require a license before commencing activities. Examples include employment agencies, financial services firms, travel agencies, restaurant business, etc..
What assistance does Singapore Government provide to Startups?
Full tax exemption on the first S$100,000 of profits and 50% tax exemption on the next S$200,000 of profits for the first 3 years. Note that from Year of Assessment 2020 this incentive will be changed to 75% tax exemption for first S$100,000 of profits and 50% exemption on the next S$100,000 in profit for the first 3 years.
A tax credit of up to 100% of the capital expenditure incurred for qualifying projects during the first five years (up to eight years in some cases).
400% tax deduction or allowance on expenditures that enhance productivity or innovation.
Several cash grants available to startup in targeted industries.
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