Should you or should you not consider registering a business company in Singapore? The jurisdiction looks attractive on many parameters and below we discuss the main advantages of incorporating a company in Singapore. We will say from the outset that it is not going to be cheap but the combination of advantages that you can find in the country probably overweigh the only serious disadvantages that it has.
Low taxes in Singapore
Taxes are so low in Singapore that it is sometimes referred to as an offshore jurisdiction. Well it is not as the Сorporate tax rate is 17% in Singapore. In reality, however, resident companies pay much less in taxes for the first three years or more.
Start Up Tax Exemptions are available to Singaporean companies and the pay the taxes at the following rates:
- 4.25% on the first 100,000 Singaporean dollars of taxable income;
- 8.5% on the next 100,000 Singaporean dollars of taxable income.
When three years pass, the company becomes eligible for a Partial Tax Exemption and that taxes become only a bit higher.
Dividend tax is 0% in Singapore, which attracts foreign investors and makes Singapore a great jurisdiction for holding companies.
There is a VAT in Singapore and it is called Goods & Services Tax (GST). The rate is 7% but not all companies have to pay the tax. Companies in Singapore do not have to register for GTS until their annual turnover reaches 1 million Singaporean dollars. When the threshold is reached, the company has to register for GTS. If the company pays the GST, it is eligible for tax deductions when buying goods and services from other GST payers.
An international business company will benefit from the fact that Singapore has signed 86 bilateral treaties on avoiding double taxation. A beneficial taxation system is probably one of the most important benefits for business companies in Singapore.
Easy document management and reporting in Singapore
The Singaporean state apparatus is considered the most advanced state management system in the world. The requirements remain stable for years and years and all the reporting is done online. It will be interesting to note that the Singaporean authorities do their best to keep entrepreneurs away from Government officials. A personal meeting with a Government officer can be held only in an exceptional case. This is the Singaporean way of combating corruption and it works. Singapore is one of the least corrupt countries in the world.
Every company has its own reporting deadlines, which means that the fiscal agency never works in a rush mode as the reports are evenly spread over the year. Because they never have to hurry, the fiscal officers seldom make mistakes in Singapore.
Stability in Singapore
Singapore is a parliamentary republic and the same party has been in power there since 1959. Members of the People’s Action Party usually have more than 90% seats in the Parliament.
This sort of stability is highly beneficial for business because the Government’s economic policies are always consistent and investors don’t have to worry about any political risks. The probability that you might have to leave your property and flee is negligible in Singapore. A coup could hardly ever happen in the country.
The behavior of Singapore in the international arena is also very predictable. The country has no acute conflicts with any country on the planet. The Singaporean authorities are eager to strengthen the country’s international position through global economic integration. For example, Singapore has become the first ASEAN country to establish a free trade zone with the European Union.
Investments and assistance to startups
An entrepreneur who opens his/ her first company in Singapore can count on support from the Economic Development Board (EDB), Enterprise Singapore, and a dozen more organizations. For instance, Enterprise Singapore allows filing applications for grants. In some cases, 30% of the company has to belong to Singaporeans to make it eligible for a grant but in some other cases, this requirement does not apply. Therefore, a foreigner incorporating a company in Singapore can count on a grant too. High-tech companies stand the best chances of acquiring grants.
In addition to that, Singapore offers preferential credit programs, access to loans on special conditions, credit risk insurance, subsidies, and other types of financial assistance.
Private individuals and international funds willingly invest in Singaporean business too. There are many reasons for that. First, both investors and investment recipients feel well-protected in Singapore. According to the World Economic Forum assessment, the local legal system is the most efficient legal system in the world.
Second, Singapore is the third best country for protection of intellectual property rights. Investors can be sure that their ideas will not get stolen and thus they readily invest into the IT industry.
According to Enterprise Singapore, more than 100 business accelerators are registered in the country, as well as 30 corporate startup incubators, and around 150 venture investors. The latter group of companies invest billions of dollars every year.
Access to international markets
Singapore is strategically located in Southeast Asia and it can serve as a platform to expand your business to such countries as Thailand, Vietnam, Cambodia, Malaysia, Indonesia, Philippines, and Myanmar. Besides, European companies often open offices in Singapore to work with partners in China. The two countries are in the same time zone and people speak the same language in both of them but Europeans feel much more comfortable in Singapore than they do in China.
Notwithstanding its small size, Singapore is a busy transportation hub and it has an extensive transportation network. Changi Airport connects Singapore with 300 cities in 70 countries and the number of weekly flights exceeds 6,500. Local seaports are connected with 600 ports in 120 foreign countries and they are the busiest seaports in the whole world.
The advanced transportation network and a perfect infrastructure available in Singapore allow receiving goods from anywhere in the world and quickly sending goods to all possible destinations. Besides, there are three free trade zones in the country. Companies use the zones to store, pack and export their goods.
Opportunities for immigrating to Singapore
Many people want to immigrate to Singapore and this fact makes the local immigration policies rather stern. Only the best can get in. Fortunately, you can qualify for an Employment Pass (EP) if you have a sustainable business in Singapore. An EP is a long-term visa for managers and skilled professionals.
Obtaining an EP requires some investments. Your monthly salary has to be between 6,000 and 8,000 Singaporean dollars and you have to deposit an amount equivalent to your yearly salary in a bank before applying for an EP. In addition, when you apply, you will be asked to describe your business model, show the financial plan and other papers that can confirm that yours is a sustainable business with a growth potential.
If you do everything right, you can obtain a visa to Singapore with a validity term of 1 to 5 years. Your family members will qualify for Dependent Passes so you can take them with you too.
With time, EP and DP holders can qualify for permanent residence in Singapore and then for citizenship of the country by naturalization.
Conclusion
It is extremely easy to start a business company in Singapore but this is not the only advantage that the country boasts. The company management processes are straightforward in Singapore, fundraising opportunities are superb, and large new markets are readily available. Singapore is not simply a tax haven. Rather, it is an advanced business ecosystem with efficient Government services, a great legal system, and fantastic logistics.
At the same time, Singapore is not a cheap jurisdiction. Real property is expensive, salary expectations are high, company maintenance costs are substantial, and the price tags will probably take you by surprise when you visit a local grocery store. That’s how the world works: if you want the best, you have to pay for it. If you know how to make money, Singapore is a wonderful place to start a company.
