Singapore is a prosperous High-Tech city state situated at the lower tip of the Malaysian Peninsular with a population of approximately 5 million people.
Under the idiosyncratic pro-development leadership of Lee Kwan Yew’s People’s Action Party (and thanks in no small part to a low tax operating environment) Singapore has risen from a subsistence based economy to an economic superpower in little over 50 years. It is known as one of the four ‘Asian Tigers’ and is the major center for business and trade within the region.
A British colony from 1826 to 1963 the official business language in Singapore is English but Mandarin and Malay are also widely spoken. The work force is well educated and hard working with a high level of expertise.
Singapore is one of the leading international financial centres in the region and most of the world’s top 50 banks have branches or representatives on the ground as do most multi- national companies. Financial Services is a major contributor to GDP and the service infrastructure is world class with numerous International Asset/Fund Managers, Trading Houses and International Accounting’/Legal firms having substantial operations on the ground in Singapore.
With the controlling hand of government effectively planning and managing the social and economic development of the country Singapore boasts extremely high political stability and very low corruption.
A 2006 study by KPMG rated Singapore as one of the most competitive business locations amongst industrialised countries in the world. The World Bank’s ‘Doing Business 2011′ study also concluded that Singapore is the best country in which to run a business.
Key benefits to incorporating a Limited Liability Singapore company are:
- Singapore Companies do not pay tax on profits made and held outside of Singapore
- English is the official business language (all company reports are produced in, and all information is available in, English)
- A British Common Law Legal System
- 5 Star service infrastructure
- There are no restrictions for foreigners to be shareholders or Directors of a Singapore company
- The incorporation process for a Singapore company is quick and efficient
- There is no minimum requirement for share capital (Singapore companies can be capitalized with just one dollar)
- Only one Director and Shareholder is required to form a limited liability company.
- There is no capital gains tax in Singapore
- Foreign dividends are not subject to Singapore income tax
- No Audit requirement (except for large Companies – see below)
- Extensive double taxation avoidance treaty (DTA) network with more than 60 DTAs signed and ratified with other countries.
Other features of Singapore Companies include:
- At least one Director must be a Singapore (natural person) resident (which OCI can provide)
- Can trade in Singapore and outside Singapore
- May be limited by shares or limited by guarantee
- Tax on Singapore sourced or remitted income is only 17% max
- Singapore is a world leader in foreign trade and investment and has one of the best business environments in the Asia Pacific region
- Singapore is the best country in which to run a business according to a recent world bank study and it has been named as having the most open economy for international trade and investment and least corrupt economy in the world
- Singapore has one of the most highly developed and well-regulated financial centres in the world which has been built on the highest regulatory and prudential standards
- Tax credits for foreign tax paid are available in Singapore. However, they are subject to some conditions
- Corporate tax rates are about 8.5% up to $300K profits and a flat 17% above that
- There are no dividend or capital gains taxes in Singapore
- There is no estate/death/inheritance tax in Singapore
- There is no requirement to disclose beneficial owners names to the Registry
Singapore as a Company Domicile – Overview
Reduced tax liability
Taxes are one of the key considerations for setting up an offshore company. One of Singapore’s unique advantages is its simple and low tax system. Singapore’s Tax System is characterized by low corporate and personal income tax rates; tax incentives and tax relief measures; absence of capital gains tax; absence of dividend tax; territorial one-tier tax system and an extensive tax treaty network.
As Singapore follows a territorial basis of taxation, taxes apply to income that is accrued to or derived by the company from Singapore or foreign-sourced income received in Singapore. Foreign-sourced income received in Singapore that meets certain qualifying conditions is exempt from Singapore tax, while foreign-sourced income that is not remitted into Singapore is exempt from Singapore taxation. Singapore follows a single-tier tax policy which means once the income has been taxed at the corporate level, dividends can be distributed to shareholders tax free. The corporate income tax rate is approximately 8.5% for profits up to S$300,000 and a flat 17% above S$300,000. Furthermore, a newly incorporated company enjoys 0% tax rate on the first S$100,000 taxable income for each of the first three tax filing years, provided the company has a maximum of 20 shareholders of which at least one is an individual shareholder holding at least 10% of the shares.
Since Singapore is not a tax haven, an offshore company that is incorporated in Singapore communicates credibility and stature as a legal entity. By incorporating a Singapore offshore company, your business will be taken seriously by stakeholders such as employees, bankers or other professionals you will be dealing with.
Ease of offshore company incorporation
Singapore has been consistently ranked as the world’s easiest place to do business. The company registration process is quick and efficient, free of bureaucratic red-tape. The registration procedure is fully computerized and involves only two distinct steps – company name approval and submitting incorporation documents. Both these procedures can be executed online and under normal circumstances a Singapore offshore company can be incorporated in 1-2 days.
Liberal foreign ownership policy
Singapore’s foreign ownership policy is open and liberal. There are no restrictions on permitted fields of business activity if you want to set up an offshore company in Singapore. 100% foreign shareholding is allowed in all sectors. Shareholders can be individuals or corporate bodies. Additionally, foreigners wanting to register an offshore company in Singapore do not require prior approval from Singapore authorities.
The Political and Economic Risk Consultancy has rated Singapore as the most politically stable country in Asia and Asia’s least bureaucratic country. The Singapore government is noted for its high integrity and pro-business approach. It is often described as rational, pragmatic, transparent and corrupt-free. Singapore is also characterized by a transparent, sound and efficient legal system. There are clear-cut rules and regulations pertaining to commerce, intellectual property protection, manpower and other business related areas. As a result, the level of risk involved in setting up and operating a Singapore offshore company is minimal and almost non-existent.
Sophisticated banking facilities
Singapore has emerged as the leading financial center in the Asia Pacific region. Singapore offshore companies have a broad choice of world-class local and foreign banks for opening an account. Banks in Singapore offer a wide-array of attractive features such as multi-currency accounts, internet banking, credit cards, trade financing, freedom to move funds across countries and more. Although most of the banks require physical presence at the time of opening the account some of them are willing to make an exception on a case-by-case basis.
The Companies Act was amended in 2014 to update the audit exemption criteria for companies and introduced the concept of a “small company”. A company that qualifies as a small company is not required to appoint an auditor and have its accounts audited. The Amended Act was made effective starting from July 1, 2015. A company is considered to be a small company if it fulfils at least two out of the following three conditions:
- The total annual revenue of the company must not exceed S$10 million;
- The total assets of the company for the financial year end must not exceed S$10 million;
- The number of full-time employees at the end of the financial year must not exceed 50.
Besides private companies, group companies (holding and subsidiary companies) can also avail the audit exemption if they qualify as a small group per the criteria described below.
Group Company Audit Requirement
A group company is defined as a holding company and its subsidiaries that together form a group due to a common source of control.
A group company will be exempt from annual audit of its accounts if the holding and all subsidiary companies individually:
- Fulfil at least 2 of the small company qualifying conditions and
- Belong to a “small group”
To qualify as a “small group”, the group (comprising of all the companies) must fulfil two out of the following three conditions in the immediate two preceding financial years:
- The consolidated revenue must not exceed S$ 10 million;
- The consolidated total assets must not exceed S$ 10 million;
- The total number of employees of the group must not exceed 50.
In other words, this means that to qualify for the audit exemption, the individual subsidiary companies as well as the holding company, as a group, must fulfil the eligibility criteria of a small company.
Procedure to Incorporate
- The proposed name must be submitted for approval
- Corporate documents and etc must be filed including:
(a) Memorandum and Articles of Association
(b) Details of shareholders & shareholdings must be filed
(c) Details of registered office address
(d) Appointments of directors, company secretary and statutory auditors.
- No more than 50 shareholders are permitted
- Bearer shares are not permitted
- Time to establish 3-5 days
- Authorised Share capital can be in any currency
- Public register of Directors and Shareholders (though Nominee Director/Shareholder can be deployed)
- (subject to certain exceptions) Accounts must be audited
- Shareholders meeting can be held anywhere
- Local Company secretary is required
- Singapore companies can be redomiciled and foreign companies can migrate to Singapore
- Generally there are no restrictions on what kind of business a Singapore Company can do save for financial services education, financial services, education, media related or other politically sensitive businesses all of which require special licenses.
- Ordinary shares, preference shares and redeemable preference shares are all permitted
- Shares in Singapore Companies can be held 100% by non-Singaporeans
- There are some partial income tax exemptions available in Singapore
- There is no net worth tax in Singapore
- Singapore is rated #1 in the world by World Bank for ease of doing business
- Singapore is ranked the third wealthiest nation in the world by Forbes magazine
- Singapore was ranked as the third most globalized economy among 60 of the world’s largest economies in the Ernst and Young 2011 Globalization Index
- Singapore is rated #1 as the most politically stable country in Asia
- Singapore is rated #1 as the best labour force in the world
- Singapore is rated #1 in Asia for quality of life
OCI Singapore Company Packages
At OCI we believe in giving you more for your money than would the average offshore company formation service. Hence included in the incorporation package for your Singapore Company is the following:
- Unlimited name availability inquiries
- Advice from an experienced International Corporate Lawyer on how to structure your company
- Preparation (overseen by a lawyer) of application to incorporate the company
- Preparation (overseen by a lawyer) of the company’s memorandum of association
- Preparation (overseen by a lawyer) of the company’s articles of association
- Attending to filing incorporation request with the company registry
- Attending to payment of government filing fees
- One year’s Registered Agent service in the country of incorporation
- One year’s Registered Office service in the country of incorporation
- Mailing address in the country of incorporation
- Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)
- Unlimited free legal consultations for 12 months
Documents included in your Incorp pack:
- Certificate of incorporation
- 2 sealed/stamped copies of the company’s Memorandum of Association
- 2 sealed/stamped copies of the company’s Articles of Association
- Resolution appointing first director/s
- Resolution appointing first shareholder/s
- Up to 5 share certificates
- Resolution to open a bank account
- Resolution to rent an office
- Resolution/s to engage a Phone, Internet & Website service provider
- Resolution to hire a staff member/s
- Resolution to appoint a company lawyer
- Resolution to appoint a company accountant
- Resolution appointing you as the company’s authorised representative in commercial negotiations
- Resolution issuing a Power of Attorney in your favour
- Agreement authorising you to represent the company in commercial negotiations
- Power of attorney authorising you to sign documents on behalf of the company
- Register of directors
- Register of shareholders
- Expression of wishes (ie an “Offshore” Will)
- Lawyer authored User Guide (“How to Use Your Offshore Company”)
- XBRL Filing
- Preparation of unaudited financial statements
- Filing estimated Chargeable income (ECI) and Form C-S
- Provision of corporate secretary
Price (all inclusive): $US2,550
Plus provision of 2 Nominee (natural person) Directors (including 1 Singapore based Director): $2,500 p/a
Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.
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DISCLAIMER: OCO Ltd are not Tax advisers or Legal Advisers. You should seek local tax, legal and financial advice before committing to set up an Offshore Corporate or Fiduciary Entity.