Singapore

Doing Business in Singapore

Introduction

The Republic of Singapore is a Commonwealth country located at the tip of the Malaysian peninsula and occupying an area of 622 square kilometres. Singapore was formerly part of Malaysia. Malaysia gained independence from Britain in 1957. Eight years later in 1965, Singapore broke away from Malaysia and became a sovereign state in its own right.

Because of its close past connections with Britain, the business language remains English and the English common law system applies. Local currency is the Singapore Dollar.

There is an excellent professional infrastructure with good legal services. Most of the large accountancy firms have offices in Singapore, as do most of the major international banks.

Communications are excellent with state of the art telecommunications equipment and an airport that serves as a regional hub for over 100 destinations. Singapore did have strict bank and trust secrecy laws but recent developments indicate that Singapore will commit to greater transparency and will make it easier for foreign tax authorities to request information under tax information exchange agreements.

Population

Approximately 7 million.

Compliance

Taxation

Singapore’s tax system is based on the principles of source and remittance, which means that only profits that are derived from or arise in Singapore and any foreign-sourced profits remitted back to Singapore are subject to tax. The current rate of Singapore Income Tax (SIT) is 17%. Every Singapore incorporated company enjoys partial tax exemptions. The first S$10,000 of chargeable profits is 75% exempt from SIT and the next S$290,000 of chargeable profits is 50% exempt from SIT. This means that the first S$300,000 of net assessable profit is only effectively taxed at approximately 8.5%. Profits exceeding S$300,000 are taxed at the normal 17% SIT rate. An EPC is exempt from tax for the first three years after incorporation for the first S$100,000 of chargeable profits. The next S$200,000 profit is 50% exempt from SIT and any profit exceeding S$300,000 taxed as usual at 17%. Dividend income from other Singapore companies is not subject to tax. Foreign sourced dividends remitted back to Singapore are normally taxable but they can be totally exempted from tax if the following conditions have been satisfied: 1) the country from which the dividend was paid has a headline tax rate of 15% or higher, and 2) the dividend must have suffered taxation either because it is paid out of taxed profits or has suffered withholding tax. Capital gains are not subject to SIT. Singapore has currently entered into 82 comprehensive agreements for the avoidance of double taxation (DTAs).

Shareholders

Singapore companies can be incorporated with a single shareholder. Details of shareholders are available at the Public Registry. Anonymity can be achieved by the use of nominee shareholders.

Directors

A minimum of one director is required. Details of directors must be filed with the public registry. Corporate directors are not permitted. One director must be a resident of Singapore and this director remains personally responsible for the compliance by the company with the Singapore Companies Act and may continue to be liable for those obligations even after resigning. Because of this in cases where we act as a director, an amount of S$3,000 will have to be deposited in order to guarantee such compliance. This amount may be returned when business operations cease and the company has been wound up in the manner required by law.

Annual Reporting

With the exception of EPCs, all Singapore companies must prepare full audited accounts and must keep a copy of such accounts at the registered office address. EPCs only need to file management accounts accompanied by a Directors’ Declaration in a prescribed format on the public register.

Timescale

Once the preferred name is approved incorporation is usually within the same day with a computer generated confirmation from the Registry. An original Certificate of Incorporation will be issued upon request. We do have ready-made companies available for immediate purchase.

Restriction on Name and Activity

Names that suggest any connection to any head of state, government undertaking or enterprise are generally prohibited and certain words that suggest specialist activity can only be used when the appropriate licences have been obtained. If such names are used, the name approval may be delayed for 2–4 weeks.

Local Requirements

As a matter of local company law, the company MUST maintain a registered office address within Singapore, and must appoint a Singapore resident individual as company secretary. We would generally provide these services as part of the domiciliary service. Additionally, the company must appoint at least one Singapore resident director.

Disclaimer
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. IQTESADI does not accept any responsibility, legal or otherwise, for any errors or omission.