Doing Business in Singapore
Singapore with its pro business policies is the most attractive, tax-efficient corporate structure in the world to conduct international business. It has a comprehensive list of tax incentives and development schemes to attract investments and to assist investors in expanding their businesses.
General Information Singapore's strategic location on major sea lanes and its industrious
population have given the country an economic importance in Southeast
Asia disproportionate to its small size.
Singapore is situated in the Malay Archipelago. It is strategically
located along the major shipping and air routes of Asia making it the
major nerve center for trade and investments in the region.
Singapore, as city state is just over 712 sq km. Despite its small size,
it is undoubtedly an advanced and bustling economy, thriving on an
excellent infrastructure, highly educated labour force, political
stability and an efficient business environment.
Singapore is an ideal location to place your holding company and
headquarters location as it is a gateway for foreign investments in to
the emerging economies of Asia, such as China, India, Vietnam, Indonesia
and Thailand. Singapore being cosmopolitan attracts people from all over
the world.
Population Singapore has a population of approximately 5 million people, the
majority being the Chinese at 75%. The remaining 25%, are mainly the
Malays, Indians and others. The government encourages racial harmony and
the different races live together with mutual respect. The work force is
well educated and hardworking and there is a high level of managerial
and technical expertise available from both the local Singaporean and
well as local talents.
Political Structure
Singapore is a republic with a parliamentary system of government
governed by the Prime Minister and the cabinet. The Prime Minister is
the also leader of the political party having the majority of seats in
Parliament. The People's Action Party had been the ruling party since
its independence in 1965, rules Singapore.
Singapore with its corruption-free government, skilled labour force
together with an efficient infrastructure have attracted investments
from multinational corporations from the United States, Japan, China,
India and Europe. Foreign firms are found in almost all sectors of the
economy. Multinational corporations account for more than two-thirds of
manufacturing output and direct export sales.
Infrastructure and Economy
Situated at the crossroads of international shipping and air routes,
Singapore is a center for transportation and communication in Southeast
Asia. Singapore's Changi International Airport is one of the busiest
airport in the world, ranking 7 in 2010. The Port of Singapore is the
world's second-busiest for containerized transshipment traffic after
Shanghai. The country also is linked by road and rail to Malaysia and
Thailand. It is also linked to Indonesia by ferry services. Singapore
provides high quality telecommunications and Internet facilities
communications with the rest of the world. Singapore is rolling out a
nationwide broadband network that promises high-speed Internet
connections at lower prices.
Financial Center Singapore is also one of the leading international financial
centers.
Offshore investors are well served by representatives of most major
international banks, financial institutions, investment management
companies and accounting and legal firms.
Foreign investments with generous tax and financial incentives. This has
successfully attracted numerous regional holding companies, corporate
headquarters, business and service centers, group finance and treasury
centers as well as investments in high tech industries, media and
communications, shipping and financial services.
Singapore Corporate Tax System - How it helps to reduce tax liability
Taxable Income is any income that is "accrued" or received in Singapore by a company is liable to tax.No capital gains tax In Singapore corporate tax system, capital gains are not subject to tax. For instance, if a trading company sells its office, the profit on sale of the office is not subject to tax. A company is taxed at a flat rate on its chargeable income regardless of whether it is a local or foreign company. The current tax rate is 17%.
New companies enjoys additional tax exemption Tax Exemption Scheme for New Start-up Companies Exempt income example
- First $ 100,000 @ 100% 100,000
- Next $ 200,000 @ 50% 100,000
Total 200,000 Saving at 17% 34,000
Potential tax saving for newly form companies eligible for full tax exemption is $8,640 per year and a total tax saving of $25,380 for three years. The tax exemption is granted on up to $300,000 of the normal chargeable income (excluding Singapore franked dividends) of a qualifying company, for any of its first three consecutive YAs. The first YA refers to the YA relating to the basis period during which the company is incorporated. With effect from YA 2009, if at least 10% of the shares are held by individual it qualify for full tax exemption. Prior to YA 2009, all the shareholders must be individual. Any company that does not meet the qualifying conditions for any of its first three consecutive YAs would still be eligible for partial tax exemption.
The Partial Tax Exemption after the 3rd year is follows:
Exempt income
- First $ 10,000 @ 75% 7,500
- Next $290,000 @ 50% 145,000
Total 152,500 Saving at 17% 25,925
Tax rate for resident Personal Tax Rate
Chargeable income Rate % Tax payable
From 40,000 to 80,000 7 550 -3500
From 80,000 to 120,000 11.5 3500 - 7950
From 120,000 to 160,000 15 1950-13950
The highest personal tax rate is at 20% for income above $320,000
Double Taxation Agreements Singapore has an extensive investment protection agreement and double tax treaty network. This includes most countries in the Asia-Pacific Region and countries in Europe, Africa and the Middle East. These countries include China, Indonesia, Thailand, Malaysia, Philippines, Vietnam, India, Japan, Korea, Australia, New Zealand, South Africa, United Kingdom, Netherlands, Germany, Switzerland, Sweden, France, Belgium, Finland and the United Arab Emirates. Tax treaties tend to reduce taxes of one treaty country for residents of the other treaty country in order to reduce double taxation of the same income.
Introduction of on-tier tax system From 1 January 2003, the One-Tier Corporate Tax System took effect, replacing the old imputation system. Under the one-tier corporate income tax system, Singapore resident companies can issue one-tier exempt dividends. The shareholders will not be taxed on such dividend income under the one-tier corporate tax system.
Private Limited Information
The main advantage of incorporating a private limited company in Singapore compared to Limited Liabilities Partnership (LLP) is the tax exemption. A private exempt company can enjoy full-tax exemption on up to S$100k tax profit annually for first 3 years from incorporation. If the company cannot meet the requirements, it can still enjoy a partial tax exemption.Requirement to incorporate a company in Singapore
Singapore Registered Office At least one directors who must be a Singapore Resident (Local director). we provides nominee directors services for company who do not have a local director
A local director can be either:
• Singapore Citizen
• Permanent resident
• Singapore employment pass/EntrePass dependent pass holder
A company secretary who must be a natural person. We can provide you with a named company secretary
A minimum of one shareholder. Shareholder can be a local or foreign individual or corporation.
Share capital of minimum of S$1 Generally there are no restrictions for companies with the exception for financial services, education, media related or other politically sensitive businesses. A company incorporated in Singapore is a legal entity and has the same powers as a natural person.