SINGAPORE COMPANY INCORPORATION GUIDE 2017 … · SINGAPORE COMPANY INCORPORATION GUIDE 2017 ... strategic goods which are subjected to duties, ... FACTORS FAVOURING BUSINESS AND

SINGAPORE COMPANY INCORPORATION GUIDE 2017

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SECTION 1: DOING BUSINESS IN SINGAPORE

Singapore: The Ideal Destination for Your Business 03

Why Singapore is ASEAN’s Best Business Hub 05

Factors Favouring Business and Investment Climate 08

SECTION 1: THE BASICS OF COMPANY INCORPORATION

Choosing a Business Name 09

Choosing a Business Structure 10

Types of Business Structure 11

Types of Entities Comparison Chart 12

Business Entities and Tax Rates 13

SECTION 2: INCORPORATION FOR FOREIGN INDIVIDUALS

Popular Options for Foreign Individuals 14

Setup Options for Foreign Individuals 15

SECTION 3: INCORPORATION FOR FOREIGN ENTITIES

Popular Options for Foreign Companies 16

Setup Options for Foreign Companies 17

Comparison Table - Foreign Companies 19

Corporate Structures and Tax Rates for Foreign Companies 20

In the Spotlight: Singapore Employment Pass 21

SECTION 4: STAYING COMPLIANT IN SINGAPORE

Business Compliance Matters 22

Compliance Requirements: ACRA 23

Compliance Requirements: IRAS 25

SECTION 5: COUNTRY REPORT

Ease of Doing Business 2017: Indonesia vs Singapore 26

Singapore Facts & Figures 30

INSIDE THIS GUIDE


Singapore is the easiest place to do business in the world.

No Restrictions on Repatriation of Earnings & Capital

Tax Exemption on Specified Foreign Income

Wide Choice of World Class Banks

Attractive Corporate Tax Regime

Attractive Personal Tax Framework

20 FTA with 31 Trading Partners

DTAA Network with 82 Countries

Pro-Business Policies

Knowledge-based Economy

Ability to Attract Top Global Talent

Superb Air Connectivity

Strong Legal System & High Level of Personal Safety

Why Singapore?

SINGAPORE: THE IDEAL DESTINATION FOR YOUR BUSINESS

DOING BUSINESS IN SINGAPORE

Singapore has time and again been ranked as the world’s easiest place to do business by the World Bank, placing #1 in the Doing Business 2016 report and #2 in the 2017 report among 190 countries. The city-state held on to its top rank as the most competitive economy in Asia in the World Economic Forum’s Global Competitiveness Report 2016-2017. It has also been consistently top-ranked in Asia based on the Quality of Living survey by Mercer. Singapore is ideally the best place in this part of the world to live work and play. So what makes this relatively young island country devoid of any natural resources the best place for business and investments? Country Profile The 719km2 city-state has a population of 5.6 million people. For the year 2016, the nominal GDP was S$410 billion and the Gross National Income amounted to S$383 billion. The Per Capita National Income for the year was S$70,828. The unemployment rate has remained below 2.5% in the recent years.


SINGAPORE: THE IDEAL DESTINATION FOR YOUR BUSINESS


The country is ranked as one of the most open economy in the world. It is a heavily trade dependent economy. With the exception of a handful of strategic sectors such as financial services, professional services and media sector all other industries are open to foreign investments. Singapore allows 100% foreign ownership.

Singapore adopts an aggressive foreign investment strategy and attracts inbound investments through the Economic Development Board (EDB), its investment promotion agency. The total inbound FDI Stock in Singapore as of end 2015 amounted to S$1,255 billion. The US, Japan, British Virgin Islands, Cayman Islands and the Netherlands are the top five FDI Source countries. A predominant portion of the FDI remains with the Financial and Insurance Service Industry followed by Wholesale and Retail Trade and the manufacturing industry. The total outbound FDI stock of Singapore amounted to S$619 billion in 2014.

Services sector account for nearly 70% of the national GDP while manufacturing accounts for the remaining 30%. Singapore promotes high value manufacturing activities such as petrochemicals, semi-conductor, consumer electronics and transport equipments and machineries. Recently efforts are underway to nurture manufacturing activities in sectors with high growth potential such as life sciences, aeronautics and precision engineering. Services sector is the major employer of the country’s 3.67 million workforce. Wholesale & retail trade, financial and insurance services, transportation and storage and business services are the key industries within the sector.

Singapore relies heavily on external trade and pursues a free trade policy. It enjoys the world’s highest trade-to-GDP ratio. Except for a very few strategic goods which are subjected to duties, it is virtually a free port. China, Hong Kong, Malaysia, Indonesia and the USA are the top trading partners. Singapore’s principal exports are petroleum products, food & beverages, chemicals, textile & garments, electronic components and transport equipment. Singapore’s main imports are aircraft, crude oil and petroleum products, electronic components, motor vehicles, chemicals, food & beverages and textile yarns & fabrics.


Connected Marketplace1 Financial & IP Development Hub2

Efficient BusinessEnvironment3 Key Tax Benefits4

• Strong international network of Agreements

» 82 DTAs (Double Tax Agreements)

» 41 IGAs (Investment Guarantee Agreements)

» 20 implemented FTAs (Free Trade Agreements) with 31 trading partners

• World-class transport and logistics infrastructure

• World’s easiest place to do business• City with Best Investment Potential• 2nd most competitive city

in the world• Leading arbitration centre• Educated and proficient workforce• 1st in Labor Productivity and Attitude• Open immigration

policy• Least Corrupt

Country in Asia and 7th in the world

• Corporate income tax rate: 0-17%• Personal income tax rate: 0-22%• Dividends are tax-free• No tax on capital gains• Tax credit pooling• Unilateral tax credit• Reduced Withholding Tax on

foreign-sourced income

• Robust financial ecosystem• Access to low-cost finance• Various incentives to develop

Singapore as an IP hub (PIC)• Largest corporate banking centre

in Asia with over 160 banks• Deep and liquid capital markets• First in Global

Innovation• 4th Best in IP

Protection

WHY SINGAPORE IS ASEAN’S BEST BUSINESS HUB



FACTORS FAVOURING BUSINESS AND INVESTMENT CLIMATE


Political stability

The country has surprisingly sustained its political stability despite being surrounded by neighbors with tumultuous political environment. The ruling People Association Party (PAP) has remained in power since the very beginning of Singapore as an independent nation. The political stability has paved way for a legislative landscape that prioritizes transparency, meritocracy and an inclusive development.

The political stability provides predictability and a sense of security for investors and businesses entering Singapore. The government is responsive to the evolving business and economic environment and constantly reviews regulatory frameworks and policies. It also maintains a politically neutral stand fostering a cordial relation with its regional and international counterparts. Policy continuity is key to attract businesses. Investors feel assured by the political stability and the resultant policy continuity and resilience of Singapore dollar.

Strategic Location and Connectivity

Singapore is located along the corridors of east and west. Singapore remains connected not only to the regional growth markets but has also forged strong ties with economies beyond Asia. Singapore is essentially a bridge to the opportunities that are on both sides of the globe. Singapore’s container port is one of the busiest ports in the world in terms of tonnage. The Changi Airfreight Centre is a 24-hour, one-stop hub for the storing, moving and repackaging of goods without the need for documentation and custom duties. This has drawn 20 of the world’s top 25 third-party logistics providers.

Besides the physical connectivity in terms of extensive air network and sea routes, the cosmopolitan culture amidst a rich Asian heritage makes it easy for investors and businesses to use Singapore as a springboard to the regional markets and beyond. The country, besides the pro-business policies has concluded an extensive network of agreements with its regional and international counterparts – With 20 implemented Free Trade Agreements (FTAs), 82 Avoidance of Double Taxation Agreements (DTAs) and 41 Investment Guarantee Agreements (IGA) Singapore is an ideal choice for trade and investment holding companies. Singapore has a strong legacy as an entre port for traders, but now it is essentially so for any business targeting the burgeoning Asian markets.

Attractive Tax System

Singapore follows a territorial taxation policy, whereby profits made in foreign jurisdictions are not subjected to tax unless they are received in Singapore. Its Single tier taxation policy exempts the profits distributed as dividends


from further taxation; hence shareholders enjoy tax-free earnings from dividends. The headline corporate tax rate is 17% but for companies whose profits are less than S$300,000 the effective tax rate is only 8.5%. It is far competitive than the Asian average of 22.6% (2015). It must be noted that qualifying companies in finance, shipping, insurance, pioneer sectors enjoy further concessions on the tax rate. Attractive concessions are also available to Operating Head Quarters and Finance and Treasury Centers.

The personal tax rate in Singapore is also highly attractive. It is tiered and the first S$20,000 taxable income is tax-free. Chargeable income above S$20,000 is subjected to a progressive rate, which is capped at 22% for taxable income exceeding S$320,000. There are substantial reliefs available to qualifying individuals. The tax rate of 22% on the high-income earners is still considerably lower than the Asian average of 26.9%.

Singapore also levies a consumption tax called Goods and Services Tax (GST). Presently at 7% the GST it is one of the lowest in the region that has an average rate of 12.4%.

Trusted Legal System

Singapore legal system scores well in terms of transparency, fairness, efficiency and integrity. Singapore upholds the rule of law and therefore the sanctity of the judicial system remains uncompromised and well respected around the world. While Singapore’s legal system has heavily adopted from the English common law, it has evolved over the years and has undergone several amendments to remain relevant to the changing realms of commercial and business practices. Singapore is gaining ground as an international legal hub with much of commercial arbitration being shifted



to the Singapore International Arbitration Center. With the setting up of International Commercial Court and International Mediation Center, Singapore’s dispute resolution facility will get reinforced further.

Robust IP Protection

Singapore’s role as a Startup hub is attributed to the strong Intellectual Property (IP) regime. It is ranked top in the Asia and second in the world. Singapore in its drive to nurture an innovation driven economy has built a robust regime for the entire spectrum for IP that includes patents, trade marks, copyright, registered designs, plant varieties protection, geographical indications, trade secrets and layout-design of integrated circuits. The country has gained reputation as a tax efficient IP management hub because of the several allowances and concessions available for qualifying R&D expenses. For this reason Singapore remains the top choice for setting up an R&D base for not only large multi-nationals but small startups as well.




Pro-Business Regulatory Framework

Setting up a business in Singapore is really a breeze. Unlike other countries in the region and beyond where the incorporation process is long winded, in Singapore the company incorporation process can be completed in less than two days. The regulatory framework acts as an enabler for businesses in general to ensure compliance to standards and prevention of illegal activities. All relevant licenses can be obtained online and the process is very transparent and straightforward.

World-class Talent Pool

The workforce in Singapore is highly efficient at all levels and are highly productive. The English-speaking workforce is highly competent for meeting the demands of international and regional businesses. They are IT savvy and constantly update themselves. The government, in collaboration with industry and educational partners, has several programmes to upgrade the skills of the workforce to meet the evolving demands of businesses. In addition to the local workforce, the government has a merit based immigration policy that helps businesses to recruit international talent to fill the gaps.

Besides allowing international talent at professional, managerial, executive and technical (PMET) levels to be employed in Singapore under the Employment Pass schemes the doors are also open to skilled international workers under the S-Pass scheme.

Enterprise Ecosystem

Singapore through years of careful planning has fostered an ecosystem where enterprises can gain synergies. It offers a rich commercial ground where not only large multinationals but also small and medium size companies can thrive on a symbiotic relationship. It has gained reputation as a hub in Asia. Enterprises across the entire value chain for any given sector are present and prosper in Singapore. As a financial, logistics and services hub in the region it has a comprehensive infrastructure for any business.

Great quality of Life

Along with its clean and green environment it features diverse recreational facilities to suit myriad interest. Be it nightlife, nature, travel, food, sports or arts there are several options available. The educational and medical facilities are top class, the crime rate is low, public transport is exceptional therefore you can be assured of a good standards of living for your family.


CHOOSING A COMPANY NAME

THE BASICS OF COMPANY INCORPORATION

Choosing a business name is the first important step in setting up a business. Most businesses choose names that identify the products or services they offer.

An important matter to note when choosing an appropriate name for your business is that ACRA must first approve the name you have chosen. The approval process usually takes less than an hour, and the approved name can be reserved for 60 days from the date of application.

To ensure a quick and hassle-free name approval, make sure your company name meets the following conditions:

• Not identical or too similar to any existing local company names

• Does not infringe any trademark rights

• Is not obscene or vulgar

• Is not already reserved

Your business name must be approved by ACRA. This process usually takes less than an hour.

COMPANY NAME CHECK

GOCheck availability

Use our Company Name Check Tool to check the availability of your preferred company name.

https://www.rikvin.com/tools/singapore-company-name-check/





CHOOSING A BUSINESS STRUCTURE


Choosing the right business structure is essential in your development and the eventual success

of your company. In.Corp Group is the business incorporation expert and aims to help business

owners select the best option for their business. This serves as a general information guide. For

more information, please contact our incorporation experts or your attorney.


TYPES OF BUSINESS STRUCTURE


Sole Proprietorship

• A sole proprietorship is the simplest but riskiest type of business in Singapore.

• The sole proprietor must be a Singaporean/Permanent Resident (PR)/Employment Pass (EP) Holder/Dependant Pass (DP) Holder. If the owner is a foreigner residing overseas, he can appoint a local manager.

General Partnership

• A partnership is a form of business owned by a minimum of two partners and a maximum of 20.

• A partnership is not a legal entity separate from its owners/partners. Each partner is jointly and severally liable for all debts of the partnership.

• Like for a sole-proprietorship, a local manager must be appointed if none of the partners are Singapore residents.

Limited Liability Partnership

• The LLP combines the benefits of being a separate legal entity with the operational flexibility of a partnership.

• The LLP requires a minimum of two partners but there is no limit to the maximum number of partners. Partners can be individuals or companies.

• Unlike the partnership, an LLP is a legal entity, separate and distinct from its owners/partners.

• It is compulsory for all LLPs to appoint at least one local manager.

Private Limited Company

There are four types of companies in Singapore:

• Private Limited Company - Not more than 50 corporate or individual shareholders.

• Exempt Private Company - Not more than 20 individual shareholders.

• Public Company Limited by Shares - It is locally incorporated where the number of shareholders can be more than 50.

• Public Company Limited by Guarantee - It is one that carries out non-profit making activities that have some basis of national or public interest, such as for promoting art, charity etc.

A company is a legal entity, separate and distinct from its owners/shareholders. It can incur obligations and hold property in its own name. Consequently, it can sue and be sued in its own name, it has perpetual existence and it can contract with its controlling members.


TYPES OF ENTITIES COMPARISON CHART


Sole Proprietorship

General Partnership

Limited Liability

Partnership

Private Limited

Company

ACRA filing (& filing fee) required for creation

Liability extended to owners

Limited liability protection

Perpetual duration of the business

100% foreign ownership

Strict compliance requirements

Flexibility in who manages the business

Profits taxed at personal income level

Business taxed at entity level

Tax incentives and exemptions

Ease of raising capital Maybe

Ease of adding owners/ transferring ownership interest

Maybe


BUSINESS ENTITIES & TAX RATES


Owned by an Individual or group of individuals

PRIVATE LIMITED COMPANY

Owned by a Corporate Entity + an Individual or Individuals

Owned by an Individual

Owned by an Individual or group of individuals

LIMITED LIABILITY PARTNERSHIP

Owned by a Corporate Entity + an Individual or Individuals

SOLE PROPRIETORSHIP

Owned by a Foreign / Local Corporate Entity

The tax treatment for businesses in Singapore vary according to the type of entity. Sole proprietorships, gen-eral partnerships, and limited liability partnerships are taxed at personal tax rates. On the other hand, private limited companies are entitled to either full or partial tax exemptions for resident companies.

Do you know? Singapore’s maximum corporate tax rate is 17%. However, it has the lowest effective corporate tax rate in the world when partial tax exemption, incentives and rebates are included. If the company has at least one individual shareholder holding at least 10% of the subsidiary company shares, the firm is entitled to the Start-up Tax Exemption (SUTE) Scheme. Non-resident companies are eligible for partial tax benefits.

Singapore Effective Corporate Income Tax Rates (FY 2016)

Taxable Income (SGD)

Effective Tax Rate

100,000 0.00% **

200,000 2.13%

300,000 2.83%

400,000 4.25%

500,000 5.20%

1,000,000 11.10%

2,000,000 14.05%

3,000,000 15.03%

5,000,000 15.82%

10,000,000 16.41%

Individual Shareholding: Owned by an Individual or Group of Individuals

* Maximum headline corporate tax rate is 17% ** For the first three (3) Years of Assessment

Individual + Corporate Shareholding:At least 1 individual holding 10% of shares

100% Corporate Shareholding (Subsidiary Company)

Note: All Singapore company dividends are tax-free in the hands of shareholders.


Effective Tax Rate

100,000 0.00% **

200,000 2.13%

300,000 2.83%

400,000 4.25%

500,000 5.20%

1,000,000 11.10%

2,000,000 14.05%

3,000,000 15.03%

5,000,000 15.82%

10,000,000 16.41%


Effective Tax Rate

100,000 4.04%

200,000 4.14%

300,000 4.18%

400,000 5.26%

500,000 6.82%

1,000,000 11.91%

2,000,000 14.45%

3,000,000 15.30%

5,000,000 15.98%

10,000,000 16.49%

Band (SGD) Tax Rate

0 – 20,000 0.0%20,001 – 30,000 2.0%30,001 – 40,000 3.5%40,001 – 80,000 7.0%

80,001 – 120,000 11.5%120,001 – 160,000 15.0%160,001 – 200,000 18.0%200,001 – 240,000 19.0%240,001 – 280,000 19.5%280,001 – 320,000 20.0%

Above 320,000 22.0%

Income Tax Rates

* Excluding personal tax reliefs

Personal Income Tax Rates in Singapore range from 0% to 22%*

What is the effective tax rate of your company?Try our online corporate tax calculator to find out.

https://www.rikvin.com/tools/singapore-corporate-tax-calculator/



POPULAR OPTIONS FOR FOREIGN INDIVIDUALS

INCORPORATION FOR FOREIGN INDIVIDUALS

The most popular options for foreign individuals seeking company incorporation are as follows:

Engage Our Nominee Serviceand Run Your Business

from Overseas

1. Engage our Resident Nominee Director

2. Incorporate Your Company

3. Apply for an Employment Pass

4. Upon approval and collection of your Employment Pass, our Resident Nominee Director will resign and you will replace the Nominee as Resident Director

5. Run your Business 1. Engage our Resident Nominee Director


3. Run Your Business from Overseas

Company Incorporation + Nominee Director

Company Incorporation + Employment Pass

WITH RELOCATION WITHOUT RELOCATION

Dependant Pass

If your monthly salary is above $5,000, you are eligible to apply for Dependant’s Pass for your spouse and children under 21 years old.

You are eligible to apply for Permanent Residence after six (6) months under the Professional, Technical Personnel and Skilled Worker (PTS) Scheme.

Permanent Residence

Relocate toSingapore

via the Employment Pass


SETUP OPTIONS FOR FOREIGN INDIVIDUALS

INCORPORATION FOR FOREIGN INDIVIDUALS

If you are a foreign individual interested in establishing a corporate presence in Singapore, you can freely incorporate a private limited company in Singapore. 100% foreign ownership is allowed. In setting up your business, you have the following options:

Relocate to Singapore to Manage Your Company’s Operations

Option 1: Apply for an Employment Pass

This is our most popular option whereby a foreign entrepreneur, professional, executive, director or employee plans to relocate to Singapore to work in or run a business operation from Singapore. You will need to incorporate the Singapore Company and obtain work pass visa, commonly known as Singapore Employment Pass.

Option 2: Apply for an EntrePass

The Entrepreneur Pass (EntrePass) is designed for technopreneurs as well as R&D-intensive enterprises including those in the cleantech and biotech sectors so that they can add value as well as inject vibrancy and innovation in Singapore. Businesses that are involved in the development or application of innovative technology, or contribute to the flourishing of innovative ideas, stand a better chance of having their EntrePass application approved.

Incorporate Your Company and Manage it from Overseas

Option 3: Engage a Nominee Director

If relocation is not a possible option, In.Corp Group can provide its Nominee Director Service for your company. Our service will help you meet the statutory requirement to appoint at least one individual director ordinarily residing in Singapore.


SUBSIDIARY COMPANY / PRIVATE LIMITED COMPANY BRANCH OFFICE

Relocate to Singapore via the Employment Pass

Engage Our Nominee Director Service

1. Engage our Nominee Resident Director


3. Apply for an Employment Pass

4. Upon approval and collection of your Employment Pass, our Resident Nominee Director will resign and you will replace the Nominee as Resident Director

5. Run your Business

1. Engage our Nominee Resident Director


3. Run Your Business from Overseas

Company Incorporation + 1 Nominee Director

Branch Office Options

1. Engage our 2 Nominee Resident Agents

2. Register Your Branch Office

3. Run Your Branch Office from Overseas

Option 1

Option 2

1. Engage our two Temporary Nominee Resident Agents

2. Register Your Branch Office

3. Apply for an Employment Pass for each of your employees who will be relocating from your head office

4. Upon approval of the Employment Pass application, our Nominee Agents will resign and your employees will replace the Nominees as Resident Agents

5. Your Resident Agents will run your Singapore branch office operations

Company Incorporation + Employment Pass

Dependant Pass



Permanent Residence

most preferred

The most popular options for foreign entities seeking to establish a presence in Singapore are as follows:

Dependant Pass



Permanent Residence

POPULAR OPTIONS FOR FOREIGN COMPANIES

INCORPORATION FOR FOREIGN ENTITIES


SETUP OPTIONS FOR FOREIGN COMPANIES


Subsidiary Company

A subsidiary company is a private limited company incorporated in Singapore with another company being its shareholder.

Features of a Subsidiary• A Singapore subsidiary can be wholly owned by a foreign company and is yet considered a

separate legal entity from the foreign company.• For taxation purposes, the subsidiary may be treated as a Singapore resident company and as

such eligible for tax exemptions and incentives available to local companies.• A subsidiary company, with at least one individual shareholder holding at least 10 percent of the

shares, is entitled to the new start-up company tax incentive - zero tax on the first S$100,000 of chargeable income and a further 50% exemption on the next $200,000 for the first three consecutive years.

Setup Requirements for Singapore Subsidiary• Minimum 1 Shareholder + 1 Resident Director + 1 Company Secretary• Minimum initial paid-up capital is S$1• A Singapore registered office address

The Companies Act requires the appointment of at least one director who must be a Singaporean/PR/EP Holder/DP Holder. Alternatively, you can subscribe to our Nominee Director Service to comply with the statutory local director requirement.

Foreign companies intending to relocate any of the staff members from the head office to Singapore can apply for an Employment Pass for their staff after the subsidiary company registration.


Branch Office

A Branch Office in Singapore functions as an extension of a foreign company registered outside of Singapore.

Features of Singapore Branch Office• The Branch Office be identical to the parent company.• A Branch is required to submit its own audited financials accounts, as well as those of its head

office. • From a taxation point of view, a Branch Office is generally considered a non-resident entity and

although it is entitled to enjoy the partial tax exemption, a Branch is not eligible for the various tax incentives and rebates available to local companies in Singapore.

• A Branch Office does not establish a separate legal identity, and therefore the foreign parent company is responsible for all its debts, losses and liabilities.

Setup Requirements for Branch Office • 2 Resident Agents• A Singapore registered office address

Foreign companies that plan to relocate any of the staff members (agent) from head office to Singapore can apply for an Employment Pass for their staff after the Branch Office company registration. Alternatively, you can subscribe to our Nominee Agent Service to represent your Branch Office.

Representative Office

A Representative Office provides a foreign company interested in establishing operations in Singapore an avenue to assess business opportunities in Singapore prior to making any long term or large scale commitment. A Representative Office cannot engage in commercial, revenue-generating activities. The parent company must have been established for more than 3 years, and has a sales turnover of more than US$250,000.

Setup Requirements for Representative Office • 1 Chief Representative Officer• A Singapore registered office address

You can apply for an Employment Pass for the chief representative officer only after you have successfully registered the Representative Office.

SETUP OPTIONS FOR FOREIGN COMPANIES



Subsidiary Company Branch Office Representative Office

Entity Name Need not be the same as parent company

Must be the same as the parent company

Must be the same as parent company

Activities Allowed Can conduct all business activities Must be the same as the parent company

Can only conduct market research or coordination activities

Suitable For Local or foreign Companies who wish to expand their operations to Singapore

Foreign Companies who wish to expand their operations in Singapore

Foreign Companies who wish to set up a temporary vehicle in Singapore to conduct research and act as liaison office

Disadvantages Continuing Compliance Obligations, eg Financial Reports, Audit, AGMS, etc.

Continuing Compliance Obligations eg Financial Reports, Audit, etc.

It is a temporary vehicle and cannot generate revenue

Ownership Can be 100% foreign or locally owned Owned 100% by the head office No Ownership

Separate Legal Entity Yes No No

Cap on Number of Members

Yes, max 50 Not Applicable Not Applicable

Minimum Setup Requirements

Min One shareholder, which can be an individual or corporate, (100% local or foreign shareholding allowed). Must have at least one resident director

Must have two Singapore Resident Agents

Must appoint a Chief Representative who will relocate from headquarters. Sales Turnover of the foreign entity must be > US$250,000. No. of years of establishment of the foreign entity must be > 3 years. Proposed No. of staff for RO should be < 5 people.

Limited Liability Yes No No

Need for Audited Accounts

Required if any 2 of the following 3 criteria are met:• Total annual revenue > S$10 million• Total assets > S$10 million• Number of employees > 50

Yes No

Filing of Accounts with ACRA and IRAS

Yes Yes No

Annual Filing Must file audit report Must file branch office as well as parent company’s audit reports

Not Applicable

Tax Treatment Taxed as Singapore resident entity, local tax benefits available

Taxed as non-resident entity, local tax benefits not available

Not Applicable

Tax Benefits A subsidiary company, with at least one individual shareholder with minimum of 10 percent shareholding, is entitled to local tax incentives and rebates

Partial tax exemption No Corporate tax. Employees have to pay personal tax

Cessation of Business upon Death of a Member/Partner

No. Equity shares go on in perpetuity No Not Applicable

Validity Period Perpetually until deregistered Perpetually until deregistered This is a temporary setup. It is intended not to last more than 3 years

Normal Registration Time 3 hours 3 hours 3-5 days

Appointment of Officers Must appoint at least one local resident director and company secretary

Must appoint two resident agents

Must appoint a Chief Representative who will relocate from headquarters

Governing Body ACRA & IRAS ACRA & IRAS International Enterprise Singapore

COMPARISON TABLE - FOREIGN COMPANIES



Taxable Income (SGD) Effective Tax Rate

100,000 0.00% *

200,000 2.13%

300,000 2.83%

400,000 4.25%

500,000 5.20%

1,000,000 11.10%

2,000,000 14.05%

3,000,000 15.03%

5,000,000 15.82%

10,000,000 16.41%**

Taxable Income (SGD) Effective Tax Rate

100,000 4.04%

200,000 4.14%

300,000 4.18%

400,000 5.26%

500,000 6.82%

1,000,000 11.91%

2,000,000 14.45%

3,000,000 15.30%

5,000,000 15.98%

10,000,000 16.49%**

CORPORATE STRUCTURES & TAX RATES FOR FOREIGN COMPANIES


SINGAPORE SUBSIDIARYPRIVATE LIMITED COMPANY

Owned by a Foreign / Local Corporate Entity

Owned by a Corporate Entity plus an Individual or Individuals

BRANCH OFFICE

Extension of a Foreign Parent Company

100% Corporate Shareholding

Subsidiary Company or Branch Office

Corporate + Individual Shareholding

Subsidiary with at least 1 individual holding 10% of shares

REPRESENTATIVEOFFICE

Extension of a Foreign Parent Company

No TaxPayable

A Representative Officeis not allowed to engage

in commercial revenue-generating

activities

Singapore’s maximum corporate tax rate is 17%. However, it has the lowest effective corporate tax rate in the world when exemptions, incentives and rebates are included. If a subsidiary company has at least one individual shareholder holding at least 10% of the shares, the firm is entitled to the Start-up Tax Exemption (SUTE) Scheme. Holding and property investment companies are not eligible under the SUTE Scheme.

** Maximum headline corporate tax rate is 17%* For the first three (3) Years of Assessment

What is the effective tax rate of your company?Try our online corporate tax calculator to find out.




Foreigners who wish to relocate to Singapore to run their company’s operations, or corporate entities who wish to relocate their staff to Singapore, will need to obtain an Employment Pass.

The table below illustrates the relevant features of the Singapore Employment Pass:

Who is it for? CEOs, managing directors, managerial personnel, professionals, executives or specialists who wish to work in Singapore may apply for the Singapore Employment Pass.

Eligibility Criteria The Employment Pass is for foreign professionals who:• Have a job offer in Singapore.• Work in a managerial, executive or specialised job.• Earn a fixed monthly salary of at least $3,600 • Have acceptable qualifications, usually a good university degree, professional

qualifications or specialist skills.

Note on Salary • Young graduates from good institutions can qualify if they earn at least $3,600.• Older, more experienced candidates need higher salaries to qualify.

Company Paid-up Capital

S$1.00 (One of the assessed factors is the paid-up capital of the company.)

Visa Validity 1 – 2 years

Renewal Renewable for up to 3 years as long as you continue to be employed by the company.

Dependent PassApplicable to immediate family members (for those earning a minimum of $5,000/month)

Permanent Residence

Eligible to apply after 6 months for Singapore Permanent Residence

Personal Income Tax Rates

Income (SGD) Rate (%) Income (SGD) Rate (%)0 – 20,000 0.0 160,001 – 200,000 18.020,001 – 30,000 2.0 200,001 – 240,000 19.030,001 – 40,000 3.5 240,001 – 280,000 19.540,001 – 80,000 7.0 280,001 – 320,000 20.080,001 – 120,000 11.5 Above 320,000 22.0 (max)120,001 – 160,000 15.0 * Excluding personal tax reliefs

IN THE SPOTLIGHT: SINGAPORE EMPLOYMENT PASS



BUSINESS COMPLIANCE MATTERS

STAYING COMPLIANT IN SINGAPORE

Companies incorporated in Singapore are mandated to fulfill the responsibility of maintaining

compliance with various government agencies.

Company Registration Number

All registered companies in Singapore are required to have a registration number called the Unique

Entity Number (UEN) on all business letters, statements of account, invoices, official notices,

publications, etc.

Registered Business Address

A registered local business address is required, and the office must be opened to the public for

minimum of three hours per day during normal business hours on weekdays.

Central Provident Fund

Employers must contribute to the Central Provident Fund (CPF) for employees who are Singaporean

and Permanent Residents. CPF is a compulsory pension fund scheme in which the employer and

employee contribute a percentage of the monthly salary to the fund.

Goods and Service Tax

Goods and Service Tax (GST) is consumption tax on most domestic goods and services in

Singapore. The current rate is 7%.

Registration of GST: Currently only suppliers of goods and/or services, whose annual revenue

exceeds or is likely to exceed S$1 million, are required to register with the Comptroller of

GST. Suppliers, whose revenue does not exceed S$1 million, can voluntarily register with the

Comptroller if it is beneficial to the businesses. The approval of such registration is at the

discretion of the Comptroller. Once voluntarily registered, the suppliers must comply with the

regulatory requirements and remain registered for a minimum of 2 years.

Permits and Licenses

Depending on the type of business you would like to set up in Singapore, it is sometimes necessary

to obtain a license and/or permit when you register your business with ACRA. ACRA’s automated

system will indicate if another approving authority is required to grant a license or permit during

the application for name approval. Most businesses do not require licenses or permits to operate.

There are a small handful that are required to do so. Some of these are private schools, travel

agencies, liquor distributors, moneylenders, banks, childcare centres, and retailers.


COMPLIANCE REQUIREMENTS: ACCOUNTING AND CORPORATE REGULATORY AUTHORITY (ACRA)


Annual General Meeting (AGM)

Every Company must hold its AGM every calendar year and its financial statements are to be tabled at the AGM for the shareholders’ approval. The Singapore Companies Act (Cap.50) states that every company is required to hold an AGM with the below cycles:

• once in every calendar year • 15 months from the date of the last AGM, whichever is earliest *

* EXCEPTION: Newly incorporated companies are allowed to hold the first AGM within 18 months from the date of incorporation.

An AGM can be can be physically held anywhere in the world, whereby the shareholders meet, or by way of written resolutions, whereby a meeting is not required.

Annual Returns

Every company must file an Annual Return (AR), which consists of pertinent information of the company and its financial accounts reports within one month of its Annual General Meeting (AGM).

Requirement to maintain register of registrable controllers

All companies incorporated in Singapore and foreign companies registered in Singapore must maintain a register of registrable controllers. Registrable controllers refer to individuals or legal entities that have a significant interest in/ significant control over the company. Listed companies, Singapore financial institutions, and companies that are wholly owned by the government and the subsidiaries of such government companies are exempted from this requirement.

Companies that are incorporated on or after 31 March 2017 will have a transitional period of 30 days to set up the register. The register can be maintained in electronic or paper format and must be kept at the registered office of the company or at the registered office or its filing agent. The company must notify ACRA on the location of the register when filing the annual returns.


COMPLIANCE REQUIREMENTS: ACCOUNTING AND CORPORATE REGULATORY AUTHORITY (ACRA)


Requirement to maintain register of nominee directors

Companies are required to disclose the status of nominee directors explicitly. Particulars of nominators to their companies must also be maintained in such register. The register is not a public register but access must be given to officers of public agencies in the event of any enquiry.

Requirement of foreign companies to maintain public register of members

Similar to the existing requirement on public companies, foreign companies are required to maintain a public register of members or shareholders. Henceforth, the issuance or transfer of bearer shares or share warrants by Singapore-registered foreign companies will be void.

XBRL

XBRL (Extensible Business Reporting Language) is a language for the electronic communication of business and financial data worldwide. Singapore companies which are either unlimited or limited by shares are required to file a full set of financial statements in XBRL format, according to a minimum requirement list within the new ACRA Taxonomy 2013.


COMPLIANCE REQUIREMENTS: INLAND REVENUE AUTHORITY OF SINGAPORE (IRAS)


Accounting Records

All Singapore Companies must prepare accounts which must consist of a Profit and Loss Account, Balance Sheet, Cash Flow Statement, and Equity Statement in accordance with the Singapore Financial Reporting Standard (SFRS). The accounting records must be kept for 5 years.

Estimated Chargeable Income

Estimated Chargeable Income (ECI) is an estimate of a company’s chargeable income for a Year of Assessment (YA). IRAS requires each company to submit an ECI for the Year of Assessment within three months after the financial year ends. It is mandatory to file an ECI regardless of the amount of income. A company with a zero income will file a ‘NIL’ ECI.

Tax Return Filing

The filing deadline for corporate income tax return is 30 November each year. Documents to be submitted are the audited or unaudited Report and tax computation (Form C).

Preparation of Financial Report - Audited and Unaudited

Every company is required to submit a Financial Report – audited or unaudited, depending on the type of company. The report consists of the financial statements such as balance sheet and income statements; supporting notes and disclosure of significant accounting policies applied by the company; disclosure of company’s operations; and shareholders and directors’ interests.

Unaudited Report: A company is required to prepare proper director(s) statements and financial report in accordance with SFRS each year, as required by the Companies Act, for ACRA and later for filing with IRAS.

Audited Reports: Effective 1 July 2015, a company must audit its accounts unless they meet the criteria for exemption of audit. Please refer to our website for summarised information regarding audit exemptions. In short, if you meet any of the following 2 out of 3 criteria, then, you may be exempted from audit. You will have to consider the Group as a whole, including the Holding company and Singapore Company and Subsidiary(s) if any:

1) The Group Turnover is not more than SGD10 million;2) The Group Gross Assets are not more than SGD 10 million;3) The Group has less than 50 employees.

Filing of Financial Statements in XBRL: Companies are required to file their financial statements in XBRL format during the filing of the Annual Return, if your company is insolvent (Total Assets – Total Liabilities = Negative Value) and has a corporate shareholder for the financial year.

https://www.rikvin.com/compliance/small-company-concept-for-audit-exemption/


Population 5,607,300GDP per capita 73,167 SGD Annual inflation rate 1.4%Unemployment rate 2.3%Literacy rate 97%

Corporate Tax 17%Dividend tax NoneCapital Gains Tax NoneEstate Duty NoneForeign-sourced Income Tax-exempt

#2

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#1

#1 #1

out of 190 economies according to the World Bank’s Ease of Doing Business Report 2017

in the world in the Global Competitiveness Index 2016-2017 overall rankings

in Asia and 2nd in the world as top investment destination according to BERI Report 2016

in Asia and 6th in the world for innovation based on the Global Innovation Index Report 2016

least corrupt nation in Asia and 7th in the world according to Transparency International

SINGAPORE RANKINGS

*Although In.Corp Group has prepared the information contained within this guide with all due care and updates the information regularly, In.Corp Group does not warrant or represent that the information is free from errors or omission. Whilst the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact on the accuracy of the information. The information may change without notice and In.Corp Group is not in any way liable for the accuracy of any information printed and stored or in any way interpreted and used by a user.

Source: Department of Statistics Singapore & The World Bank Data

Currency SINGAPORE DOLLAR

#1

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in Asia and 4th in the world for having the best protection of intellectual property

in Asia and 2nd in the world for having the best labour market efficiency

in Asia and 25th city in the world with the best quality of living, based on Mercer’s survey 2017

ranking for labour force in terms of workers’ productivity and general overall attitude

in Asia with the most seamless connectivity with one of the world’s widest telco networks

#1 in Asia and 5th in the world for best logistics supply chain performance, World Bank 2016

#2 in Asia and 15th in the world for talent competitiveness based on IMD World talent Report 2016

Source: Singapore Economic Development Board

SINGAPORE FACTS & FIGURES

IN.CORP GLOBAL PTE. LTD. 1 Raffles Place, #41-01 One Raffles Place, Singapore 048616 Phone: +65 6812 1600 Fax : +65 6812 1601 Email : [email protected] Website : www.incorp.asia

UEN: 201504530W

RIKVIN PTE. LTD. 30 Cecil Street, #19-08 Prudential Tower, Singapore 049712 Phone: +65 6320 1888 Fax : +65 6438 2436 Email : [email protected] Website : www.rikvin.com

UEN: 200708442E EA License No. 11C3030

The information contained herein is intended for general information purposes only and shall not be regarded as professional advice. Readers are therefore advised that before acting on any matter arising from these notes, they should discuss their particular situation with the In.Corp Group. No liability can be accepted for any action taken as result of reading the notes without prior consultation with regard to all relevant factors.

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