Introduction:
Singapore, often referred to as the “Lion City,” offers numerous advantages that make it an attractive destination for businesses. Renowned for its strong economy, political stability, and pro-business environment, Singapore provides a strategic gateway to the thriving markets of Asia and beyond. It is also the preferred seat of arbitration by global leaders. This is possible as there are clear definition of business rules and their consistent enforcement. Companies and professionals in Singapore benefitted greatly from its simple and globally competitive tax system. All these and more make Singapore an attractive investment hub for MNCs and entrepreneurs. The important aspects of incorporation of company in Singapore have been explained below.
Importance of proper company incorporation process:
It is essential that to ensure smooth business operations, a company is incorporated properly and is in compliance with all rules and regulations. Mentioned below are some of the key benefits:
- Legal Recognition and Protection: A business gains legal recognition as a separate legal entity distinct from its owners through the proper company incorporation process.
- Limited Liability: Another key benefit of company incorporation is limited liability. Shareholders are not liable for the company’s debts and obligations beyond their investment in the company except in case of piercing of the corporate veil.
- Enhances Credibility: A properly incorporated company demonstrates professionalism and credibility to customers, suppliers, investors, and other stakeholders.
- Perpetual Existence: A properly incorporated company enjoys perpetual existence, meaning it continues to exist even if the original owners or shareholders change or die. A company would continue to exist even if all of its members die.
Why incorporate a company in Singapore?
A key question while incorporating a company is determining the place of incorporation. While deciding on the location, many factors are taken into account. Singapore addresses many of them, thus being one of the top choices by investors to set up business there.
- Strategic Location: Singapore is located in Southeast Asia. It serves as a gateway to big and growing economies like India, China.
- Strong Economy: Singapore has a strong and healthy economy with a focus on innovation and technology. It offers attractive incentives and government support for industries like finance, technology, logistics, etc.
- Tax Benefits: The tax system of Singapore is competitive which offers and encourages business growth. The corporate tax rate is confined to a flat rate of 17%. Singapore has signed Double Taxation Avoidance Agreements (DTAAs) with many States to reduce the burden of tax on international businesses.
- Intellectual Property Protection: Singapore has strong intellectual property laws and a strong legal framework to protect trademarks, copyright, patent, trade secrets, etc.
- International Reputation: Singapore is a recognized global financial hub and a leading business destination. Having a company in Singapore boosts creditability and attracts international partners, investors, and customers.
Mandatory requirements for company registration:
- Resident Director: The person who is a permanent resident of Singapore or a Singapore citizen or a person who has received EntrePass can be appointed as director of the company. The director must be at least 18 years of age and not bankrupt or convicted for malpractice in past years.
- Shareholder: The company must have at least 1 shareholder, whether an individual or a corporate legal entity.
- Company Secretary: Company Secretary must be appointed within 6 months from the date of incorporation. Company Secretary is a natural person and ordinarily resident stays in Singapore.
- Paid-up capital: The minimum paid-up capital required for registration of a Singapore company is SGD1 and it can be increased after the incorporation of the company at any time.
- Registered Address: A local Singapore address must be given as a registered address of the company to register a Singapore company. It must be a physical address like a commercial or residential address and not a PO box.
- Corporate Tax: The corporate tax in Singapore is 17%. Companies registered in Singapore enjoy attractive exemptions and incentives. In Singapore, there is no capital gain or dividend tax.
Process of Registration:
- Select company name and address: The proposed name of the company must be approved to set up company in Singapore. An application must be filed for the same purpose with ACRA (Accounting and Corporate Regulatory Authority). Along with the application, the investor must also submit details with respect to the business activities the company will be engaged in by selecting the most relevant SSIC code (Singapore Standard Industrial Classification). On approval, the investor must incorporate the company within 120 days. The approved name is reserved for 60 days from the application date. An extension request has to file to extend the name for another 60 days just before the expiry date.
- Submit relevant documents: Submit Articles of Association (now called “the Company Constitution) to the ACRA. These contain information about internal structures, shareholders’ rights, and relations necessary for the company management. Furthermore, other documents such as ‘Consent to act’ forms, signed by the directors and company secretary, identification documents from shareholders, officers, and beneficial owners of the company. It is a must that shareholders provide their certificate of registration from their home jurisdiction so that they can be properly registered as beneficial owners of the company.
- Complete Registration: After choosing a company name and finalizing the address you can fill up other details which are required on BizFile+. After paying a registration fee of S$300 and S$15 for the name application, the company will be set up in 15 minutes and the application is sent for approval and review.
- Certificate of Registration: After completing registration an official email notification is sent by the ACRA to confirm the incorporation of the company. The email includes the registration number. The email can be treated as a certificate of incorporation. An online request has to be made to the ACRA for the hard copy of the certificate of registration by paying fees of S$50 and the hard copy can be collected on the next working day from the ACRA office.
- Business profile: A business profile contains basic information about the company such as Unique Entity Number (UEN), name of the entity, business activities, date of incorporation, etc. which can be obtained by making an online request and paying an application fee of S$5.50 on BizFile+ and received a copy from ACRA. The document can be downloaded within an hour’s request.
- Fees: The fees for maintaining a company in Singapore has to be paid after registration of the company.
Requisite documents for Incorporation of the Company in Singapore
- Approval of Company Name
- Necessary details and documents from directors and company secretary such as Consent to Act forms, identification documents, etc.
- Registered office location (lease documents)
- Particulars of the shareholders (details and identification documents of beneficial owners); in the case of corporate entity shareholders, their certificates of registration.
- Constitution of the Company (AOA)
Taxation Aspect in Singapore
A company registered in Singapore enjoys attractive tax exemptions and great incentives. There is no requirement for a Singaporean company to pay capital gains or dividend taxes. For the first $3,00,000 of the Company’s annual profits, the rate of tax is less than 9%, after that the rate of tax is flat 17%.
It has a zero-tax rate on capital gains and dividends. It is also considered a tax haven, because of its low tax rates.
The annual tax returns are required to be submitted to the Inland Revenue Authority of Singapore (IRAS). The time limit for submission of audited or unaudited accounts is on 30th November annually. It must be noted that Singapore follows the ‘preceding year’ basis of taxation.
Conclusion:
Company incorporation in Singapore offers numerous benefits, including a business-friendly environment, ease of doing business, strategic location, tax benefits, strong economy, intellectual property protection, access to a skilled workforce, and an international reputation as a global business hub. The process is streamlined, and the government provides efficient online services. Working with a professional service provider ensures compliance with regulations and a smooth incorporation process. Overall, incorporating a company in Singapore provides a solid foundation for business success and growth.
How can we help?
At Sorting Tax, we specialize in providing comprehensive services to support businesses in setting up and establishing their operations in Singapore. With a deep understanding of the local business landscape and a team of experienced professionals, we are committed to helping our clients navigate the complexities of the Singapore market and achieve their growth objectives.
Our Expertise:
With years of experience and in-depth knowledge of the Singapore business landscape, we offer a wide range of services tailored to meet the unique needs of our clients. Our team of dedicated professionals consists of legal experts, consultants, and industry specialists who possess extensive expertise in company formation, government regulations, licensing, and business advisory.
Incorporating a company in Singapore has never been this easy!
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