Starting a Business in Singapore – Complete Guide
Every year, Singapore witnesses a large influx of foreign capital and global talent from across the globe. This strong liking towards Singapore can be attributed to its pro-business approach, lower tax rates, business friendly laws, stable political environment, free from corruption and red-tapism, transparency, startup, nurturing and among others.
Why so much FDI in Singapore or Why to start Business there
Lower Tax Rates
The corporate tax rate in Singapore is between 8.5%17%, which is quite lower than the rates prevalent in other countries in the world. It is a great reward to the business owner that is setting up a company in Singapore. In addition,Singapore based holding companies can repatriate dividends from their foreign subsidiaries to free of Singapore tax.
Ranking in Ease of Doing Business
Singapore consistently tops World Banks Ease of Doing Business report due to its hassle-free business set-up processes and was also rated as offering the best IP protection, infrastructure, and incentives in Asia by World Economic Forums Global Competitiveness Report 2015-16. The Economist Intelligence Unit, Country Forecasts Report in 2014, ranked Singapore as the most attractive investment location, both regionally and globally. The Global Innovation Index (GII) 2015 ranked Singapore as the best-performing Asian country in terms of innovation performance.
Locational and Infrastructural advantages
Singapore is location in the heart of South-east Asia and close proximity to emerging markets of India and China. Its Changi International Airport serves over 80 international airlines with connections to more than 330 cities. Singapores seaport infrastructure has been ranked the best in Asia for the past two decades. The container ports here are the busiest in the world, offering 200 shipping lines with links to some 600 ports in 123 countries.
Stable Political Environment, Arbitration, Transparent, free from red tapism, Corrupation etc. etc.
Singapore has the most stable political environment in South-east Asia, offering entrepreneurs and investors a strong sense of security and comfort. In the event of cross-border disputes, businesses can rely on Singapores reputation as a world-class arbitration facility. The World Economic Forum ranked Singapore as having the best IP protection in Asia. The same report recognised Singapore as a country with sound political infrastructure and policy-making procedures; leading to its ranking as the most transparent country in Asia that enjoys a stable business environment. It is also the least corrupt country in the Asia region, where transparency is valued highly. This is according to the IMD World Competitiveness Report 2015.
Pre-incorporation considerations
Before starting business in Singapore following things must be kept in mind by foreigners:
Taxation
Singaporean tax rate are very much lower as compared to other jurisdictions. The biggest advantage isno tax on dividend distribution & capital gainandCorporate Taxis8.5 % on your first S$300,000 of annual profit and 17 % thereafter.
Local Nominee Directors
Singapore company must have at least 1 Local Resident Director. Such nominee director does not interfere with the affairs of the company and are easily available. This person can be a citizen, permanent resident, or someone with a valid employment pass. Indian can be treated as local if he/she is having valid employment pass. You can appoint as many directors, local and foreign, as you want. You must ensure they are no younger than 18, have a clean criminal record and cant suffer from bankruptcy. Directors need not be shareholders.
Shareholders
For Private Limited Company, you can have between 1 to 50 shareholders. A minimum of one shareholder is required. 100% foreign ownership is allowed. Shareholders can be individuals or entities, local or foreign. The director and shareholder records are public accessible like any one can see after paying nominal fees.
Company Secretary
You have to appoint a qualified company secretary within six months of incorporation. A sole director or shareholder cant also be the company secretary, who must be a natural person living in Singapore.
Minimum Paid-up Capital
Your company must have at least S$1 in paid up capital for register Pte Ltd company in Singapore, though you can increase the amount at any time after incorporation. Singapore companies do not use authorized capital. It can be Ordinary shares, preference shares or other shares.
Registered Address
You need to register a local business address to register Pte Ltd company in Singapore. It can be residential or commercial, but cant be a post office box.
Process of Company Registration in Singapore
Step 1: Company Name Reservation
To register a new company, its name should be approved by ACRA Singapore Company Registration Authority. It will take 2-3 hours for approval of name. The name must be, Unique, meaningful, easy to read and devoid of the vulgar or obscene word, Free of copyright issue. It should not infringe any trademark.
Your application may require an approval of external authority if the company name includes certain words such as the Bank, Finance, Educational, Media, etc.
Once the company name is approved & reserved, it will be automatically reserved for you for 60 days from the date of application. You are advised to incorporate the company within a specified period. However, we as your registered filing agent can ask for an extension of another 60 days by filing a request on your behalf.
Step 2: Company Registration
After the approval of company name, you can apply for company registration. It should not take much time to accomplish the process assuming documents are in order.
Documents required:
– A brief description of business activities;
– Details of Singapore registered address of the company;
– Particulars of all shareholders name, address, contact details and email id;
– Particulars of all directors name, address, contact details and email id;
– Particulars of company secretary name, address, contact details and email id;
– Foreign Entrepreneurs need to submit a copy of their passport and residential address proof;
– Foreign Companies need to submit Memorandum & Articles of Associations;
– Singapore Residents must submit a copy of their Singapore identity card;
– Company Constitution, known asthe Memorandum and Articles of Association (MAA).You may decide to adopt the standard Singapore company constitution as available from ACRA, which is acceptable for most.
– Signed Consent to Act as a Director for each director;
– Signed Consent to Act as Company Secretary by the company secretary;
Step 3: Certificate of Incorporation
Upon successful registration of the company, ACRA will issue e-Certificate of Incorporationcontaining a Unique Entity Number (UEN).This e-Certificate is sufficient in Singapore and accepted for all corporate needs A company can also purchase a hard-copy Certificate of Incorporation from ACRA at any time after incorporation.
Compulsory Compliances
Register of Companies
Companies are required to maintain beneficial ownership information in the form of a Register of Registrable Controllers, and to make the information available to public agencies upon request.
Register of Nominee Directors
Companies are required to keep a register of its nominee directors containing the particulars of the nominators of the companys nominee directors
Financial Year
Every company in Singapore is free to determine its financial year. It does not necessarily need to be January to December or April to March accounting cycle. The financial year (accounting cycle) can start in any month of the year.
Financial Statements
Directors of the company are required to set before the shareholders companys annual financial statements compiled in accordance with the Financial Reporting Standards of Singapore, consisting of:
– Directors Statement
– Independent Auditors Report (if required)
– Balance Sheet
– Profit and Loss Statement
– Statement of Changes in Equity
– Cash Flow Statement
– Corresponding Notes to Financial Statements
Requirement of Audit
Audit is exempted in the following category of companies:
The Company having only upto 20 shareholders that too only individual and
The Company is Small Company.
A company qualifies as a small company if it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
1. Total annual revenue is not more than $10m;
2. Total assets is not more than $10m;
3. No. of employees is not more than 50.
Annual General Meeting
Every Singapore Company needs to hold its annual general meeting (AGM) once in every calendar year and its financial statements are to be tabled at the AGM for the shareholders approval. The Singapore Companies Act states that every company is required to hold an AGM:
– once in every calendar year; and
– within 15 months from the date of the last AGM; or
– within 6 months from its financial year end date, whichever earlier
Newly incorporated companies are allowed to hold the first AGM within 18 months from the date of incorporation.
An AGM must be physically held anywhere in the world, whereby the shareholders meet.
The following matters are to be discussed at an AGM:
– To approve the Directors Report and Audit Report;
– To approve directors fees, remuneration and emolument;
– To re-elect the director(s) (if applicable)
– To reappoint auditors;
– To declare dividends, if any;
– To transact any other business.
Exemption for private companies from holding AGMs
Private companies are exempted from holding AGMs if they send their financial statements to members within 5 months after the FYE.
Filing of Annual Returns
For companies having a share capital and keeping a branch register outside Singapore: Annual returns to be filled within 6 months (if listed) or 8 months (if not listed) after the closure of financial year.
For other companies: Annual returns to be filled within 5 months (if listed) or 7 months (if not listed) after the closure of financial year.
Corporate Tax Filing
Every company has to file Corporate tax return by 30 November (paper-filing) and 15 December (e-filing).
Company Registration quick FAQs
Is a one-person company allowed 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. The following caveats apply: At least one director must be a Singapore-resident director. Therefore if you are a foreign person and not a resident of Singapore, you can still be the shareholder and operating director of your company, but in addition, you will be required to appoint a Singapore-resident person as an additional director.
Can a foreigner incorporate a Singapore company
Yes. As stated earlier, foreigners are free to form companies in Singapore and they can be 100% shareholders of their company. A foreigner is not required to relocate to Singapore for this purpose; they are free to operate their company from overseas.
Do I need to appoint a corporate 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 passed the requisite exam.
How long will it take to register my Singapore company
Singapore company registration consists of a number of steps.
1. Providing information about company structure and supporting documents 7 days
2. Know You Client (KYC) checks by Corporate Service Provider as required by law: 1 day
3. Reservation of Company Name with ACRA: 1 day
4. Preparation of incorporation document set: 2-3 days
5. Client Review and Signatures on document set: Anywhere from 3 days to 15 days (depends on the client and number of signatories involved)
6. Incorporation with ACRA: 2 days
So, overall time required to incorporate company in Singapore by foreign person can vary from 7 days to 30 days.
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