Singapore

The Republic of Singapore provides all the necessary conditions for small and medium-sized enterprises. For years, the country has been included in the top three states among 190 listed in the World Bank ease of doing business ranking. Thus, setting up and running a business here do not take much effort. Moreover, in Singapore, one may easily gain access to the prospective markets of the ASEAN economies: Indonesia, Malaysia, Thailand, Vietnam, and Philippines. The integrated ASEAN market is the third largest in the world in terms of population, with more than 600 million people living in the member countries. Couple that with China and India, and the size of potential market will exceed 3 billion people.

The registration procedure in Singapore is simpler and faster than in any Asian country. No licences are required for most types of businesses, and if the one is needed, it can be obtained through straightforward and transparent process. The tax rate is one of the lowest in the region. In accordance with the Companies Act, a natural person of any residency who has attained the age of 18 years may establish an entity in Singapore.
The country’s residents can set up a business remotely in half an hour. In the case of a foreign founder, the procedure will take more time since, under the local legislation, the certified registrars’ assistance is necessary. Even so, all the arrangements can be made in 2-3 days.
It is important to note that newly established entities are entered into the special registry. The information on the company’s name, address, and property thus become publicly available.

Essential information

  • Shareholders

    A company must have a minimum of one and a maximum of 50 shareholders, which can be both natural and legal persons. 100% foreign ownership is allowed.

  • Share capital

    The minimum paid-up share capital required to incorporate a company is SGD 1. The capital may be raised at any time by attracting additional funds.

  • Directors

    Both residents and non-residents of Singapore may be the company’s directors. Director shall be a natural person. Each entity must have at least one director who is ordinarily resident in Singapore. Being “ordinarily resident” means that the director is a citizen of the country, its permanent resident, or an Employment Pass holder. In this connection, nominee director services are of great demand.

  • Registered office address

    Each company is obliged to have a registered office address in Singapore. The address refers to the place where all constituent instruments of the entity are kept. A P.O. Box address cannot be used for this purpose.

  • Company Secretary

    Each company must appoint a professionally qualified secretary within the 6 months of the incorporation date. The secretary shall be a natural person and a Singapore resident.

  • Transfer of shares

    The company’s articles of association restrict the rights of its participants to transfer the shares they hold.

  • Audit

    Under certain conditions, company may be exempt from filing audited financial statements.

6 simple steps to purchase a company

  1. choosing a country

  2. choosing a bank

  3. payment (by any method)

  4. sending documents

  5. company registration

  6. bank account opening

Main advantages

  1. Zero taxation. Dividends and capital gains are not subject to taxation in Singapore. Zero tax rate also covers all types of foreign-sourced income received by non-residents. This rate is as well applied if the company’s income has not yet exceeded USD 100,000, or less than three years have elapsed from the date of incorporation. When at least one of these criteria is no longer met, the tax rate increases to 8.5% (to 17% if the amount of income is greater than USD 300,000).
  2. Prestige. Numerous companies seek to establish a representative office in Singapore, one of the world’s largest financial centres. For Russian entrepreneurs, it is an important step towards building a profitable international business. Here you will get more opportunities to foster relationships with partners and banking institutions.
  3. Approval to purchase property. In Singapore, there is no prohibition on foreign ownership.
  4. Exemption from foreign-exchange controls and audit (provided that the company’s annual turnover does not exceed SGD 5 million).
  5. Safeguarding of corporate assets. Stable economy and secure banking system ensure long-term efficiency of investments and protection for capital.
  6. Management flexibility. You can carry out entrepreneurial activities remotely. If the company’s owner is abroad, government officials contact him or her via the Internet.

What types of businesses can be registered in Singapore?

The local legislation provides for the following organisational and legal forms:

  1. Sole Proprietorship;
  2. Partnership;
  3. Limited Liability Partnership;
  4. Company;
  5. Business Trust.

The most common form is a company

Companies are further divided into:

1. Public Companies:
  1. Public Companies Limited by Shares;
  2. Public Companies Limited by Guarantee;
  3. Public Companies Unlimited with Share Capital;
2. Private Companies:
  1. Private Companies Limited by Shares;
  2. Private Companies Unlimited with Share Capital;
3. . A type of Private Companies — Exempt Private Companies:
  1. Exempt Private Companies Limited by Shares;
  2. Exempt Private companies Unlimited with Share Capital.

Among the legal forms listed above the following are of particular interest:

  1. Private Companies Limited by Shares (for simplicity, also referred to as Private Limited Companies);
  2. Exempt Private Companies Limited by Shares, or Exempt Private Limited Companies.

Opting for one type of business or another, you primarily endeavour to protect your personal assets from various risks, including legal action. If establishing Private Limited Company or Exempt Private Limited Company, your savings and property will be secure. Otherwise, for instance, when setting up a Sole Proprietorship or a Partnership, private individuals are personally liable for the company’s debts.

Private Limited Company can raise capital by issuing shares of stock, debt, and other securities. In such companies, shareholder’s interest may be transferred to the third parties and inherited.

Exempt Private Limited Company is a company with a maximum of 20 shareholders, none of them being an entity. In Singapore, this type of business is exempt from filing audited financial statements if an annual turnover is under SGD 5 million.

Key points on taxation

The territorial basis of taxation is adopted in the country. In other words, entities and individuals are taxed mainly on Singapore sourced income. With regard to foreign sourced income (branch profits, dividends, service income, etc.), it is subject to taxation when remitted or deemed remitted into Singapore unless the aforementioned income was already taxed in a jurisdiction where a tax rate of at least 15% is applied. Whether income arises in or is derived from the country is dependent on the nature of this income and of the transactions which generate it. The standard corporate tax rate in Singapore is 17%. The local tax rates have been consistently reduced in order to make the jurisdiction more attractive for investment. As in many other countries, in Singapore the standard corporate tax rate and the effective one are not necessarily equal. The latter is usually lower due to various tax deductions (for example, if chargeable income amount ranges between SGD 400,000 and SGD 500,000, the rate of 7.2% is applied). The effective rate can change from year to year. Moreover, during the first three years of operating a company with a chargeable income of SGD 100,000 may be exempt from taxation if the following conditions are fulfilled:

  1. It has no more than 20 shareholders throughout the basis period for the current tax year.
  2. All shareholders are individuals or
  3. There is one individual holding at least 10% of the common shares

Reporting requirements

  1. Annual returns shall be prepared and filed with the ACRA (the registrar of companies in Singapore) within 30 days after the annual general meeting of shareholders. Annual return includes information on the company’s structure, director(s), auditor (if applicable), and registered office address.
  2. Returns are filed through the Internet, via online account, which can only be accessed by the company’s secretary.
  3. All entities in Singapore shall prepare and submit the following accounting and tax records:
  4. ECI form – Estimated Chargeable Income. The present form must be filed within three months from the end of the financial year (as a rule, we seek to arrange the registration procedure in such a way so that the financial year corresponds to the calendar year, what makes it much easier to comply with the requirements; thus, in this case, the ECI form is to be prepared and presented by 31 March). In order to fill in the form, the company’s income for the financial year shall be estimated.
  5. Accounting report and audited (if audit is required) financial statement must be filed with the ACRA together with the annual return after the general meeting of shareholders.
  6. Annual financial statement shall include the following: Statement of Comprehensive Income (that is, the company’s profit and loss, earlier referred to as P&L), Statement of Financial Position (Balance Sheet), Cash Flow Statement, Statement of Changes in Equity.
  7. Form C is a form used to file the company’s corporate income tax return with the Inland Revenue Authority of Singapore (IRAS). Each enterprise shall submit an annual tax return to the IRAS by 15 December of the year following the reporting year. The previous calendar year is considered as a basis period. It should be noted that the company’s directors are held responsible for filing all the necessary reports. Non-compliance with regulatory requirements constitutes an offence and may entail fines or even prosecution.
  8. In Singapore, there are also some requirements for preparing and submitting of audited reports. Until 1 July 2015, audit was obligatory for all companies. However, since that date, new amendments came into force, and the entities that fall within the definition of a “small company” may be exempt from audit. For the enterprise to be considered as a “small company”, at least two of the three following criteria must be met for each of the two preceding consecutive financial years: 1) the total annual income does not exceed SGD 10 million; 2) the value of total assets is less than SGD 10 million; 3) the number of employees does not exceed 50.

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