Singapore Company Formation- A Comprehensive Guide To Setting Up Your Own Company
As an Entrepot between East and West, Singapore is an important part of the global supply chain. Entrepreneurs beeline to get the benefits of company formation in Singapore. The process is simple and short, and anyone over the age of 18 can initiate it. The benefits include ease of establishing a new company set up in Singapore, low tax rate, political stability, availability of funding and tax exemption schemes.
What are the benefits of setting up a company in Singapore?
Low-Income Tax Rates
Corporate Income Tax: Singapore corporate income tax rates are low, and they range between 0%-17%. These are low when you compare them with the corporate tax rates charged by other countries. It enables companies to use the saved money for product development, marketing campaigns, market research, or to pay dividends to their shareholders.
Personal Income Tax: Singapore personal income tax rates range from 0-22%. It is a progressive tax. The rates applicable depends on your tax residency. Singaporeans and permanent residents use these rates for residents to pay their income tax.
The non-resident foreigners working in Singapore have to pay 15% or resident rates, whichever yields a high tax amount. The non-resident consultants and company directors are charged at 22%.
Tax-free Capital Gains: Singapore applies no tax on capital gains. And a Singapore company, after paying its corporate income tax, can disburse dividends to its shareholders. This is a tax-free income for them.
Singapore Tax Benefits: Singapore offers various tax benefits to new and existing companies. It has a Startup Tax Exemption Scheme for new local startups. They know these companies require time to take roots and control their costs.
Even existing companies need tax benefits like Partial Tax Exemption scheme, Capital Allowances, Renovation and Refurbishment Expenses, etc., to reduce their overheads.
Tax Credit Pooling: Pooling of tax credit enables companies to claim a foreign tax credit for tax they have paid abroad against the Singapore tax payable on the same income.
Unilateral Tax Credit: Singapore tax residents receiving foreign-sourced income in Singapore can claim Unilateral tax credit if the country where income is earned has no DTAs with Singapore.
Tax Agreements
Singapore has simplified cross-border trade for its companies by signing several trade agreements with other countries. It has signed 70+ Double Tax Agreements, 40+ Investment Guarantee Agreements and 26 Free Trade Agreements or Economic Partnership Agreements.
World-class Infrastructure
Singapore has invested in installing world-class infrastructure. It has top-ranking harbours serving 600+ destinations. Its airports like Changi provides air connectivity to essential markets. It has a mass rapid-transport system, subways, and an efficient public transport system.
Premier Financial Hub
Singapore is one of the favoured business hubs in South Asia. It has installed a robust financial ecosystem and attracts vast amounts of money in foreign direct investment.
Singapore is a liquid capital market and provides businesses with affordable finances. It is home to well-known multinational and local banks, venture capital firms, angel investors, and high net-worth individuals.
IP Protection
Singapore is known for its Intellectual Property (IP) laws. They are enforced strictly to protect the rights of IP holders. A number of Research and Development companies have shifted their base to Singapore and are enjoying it.
Ease of Doing Business
Singapore ranks 2nd for the ease of doing business in the World Bank’s report. It is an efficient business and startup environment that simplifies business compliance by providing streamlined processes. Singapore is also high in facilitating tax filing.
Singapore’s Qualified and English-Speaking Workforce
Singapore is home to many global companies. These multinationals can easily employ qualified and highly experienced English-speaking professionals.
What are the different types of companies that can be set up in Singapore?
If you want to register a business in Singapore, you must apply to the Accounting and Corporate Regulatory Authority (ACRA). This agency acts as its Company Registrar.
Depending on your business needs, you can also use different business structures. They are as follows:
- Private Limited Company
- Limited Liability Partnership
- Limited Partnership
- General Partnership
- Sole Proprietorship
A sole proprietorship is the simplest type of business that you can register in Singapore. Registering a partnership allows a group of 2-20 individuals and companies to come together and use their complementing skills to earn profits.
However, the entrepreneurs prefer a registered private limited company. Opting for company formation in Singapore limits their liability to the amount they have invested in its shares. These companies have their separate identity and have perpetual existence. It is relatively easy for these companies to raise capital for their growth.
The shares of a private limited company (ownership) are easily transferable. In the case of sole proprietorships or partnerships, the transfer of ownership is not easy. These business firms depend on their owners for credibility, hampers their ability to raise funds.
How to form your own company in Singapore: Step-by-step guide!
Pre-Incorporation Requirements
The process to set up a company in Singapore is straightforward. To set up a company in Singapore, you have to fulfil a few pre-incorporation requirements. They are listed below:
- At least one shareholder
- Minimum initial paid-up capital of S$1
- At least one company secretary
- At least one local director
- Registered physical office address
The company formation process has only 2 steps in it. If you are a foreigner, you need to hire an agent or a provider of services for company formation in Singapore.
These providers generally appoint a manager to take care of your new company set up in Singapore. They advise you on the procedure to set up a company in Singapore and incorporation and KYC documents that you need to submit to ACRA. Let’s go through a step-by-step guide to set up a company in Singapore.
Step 1: Take ACRA’s Approval for Your Company Name
The Company registrar wants companies to have unique names. It helps investors incorrectly identify a company they are interested in.
To accomplish this step, you need to supply your agent a list of company names. They visit ACRA’s website and check if any of your list’s names are available (i.e. not taken by others).
The agent pays the official fee of S$15 and registers the available name for your use for 60 days. The company name approval takes about a few hours to 1 day. If you cannot form your new company set up in Singapore within 60 days, then you can ask your agent to pay additional fees and extend the period by another 60 days.
Step 2: Register Company with ACRA
You need to submit your incorporation and KYC documents to your agent. ACRA accepts documents that are written in English. The agent then pays fees of S$300 and submits your application for company formation in Singapore to ACRA.
ACRA takes about 1-3 days to process your application. On success, it sends you an incorporation email. It has all the details of your company, including its Unique Entity Number, business activity, Etc. You can use the email as an incorporation certificate in Singapore.
Post-incorporation Activities
After forming a new company setup in Singapore, you need to open a corporate bank account to streamline its cash flow. You also need to open a CPF account and top it up, take out insurance cover, and acquire business licenses and permits before starting your business activities.
Each year numerous entrepreneurs choose to do their company formation in Singapore. Many of them prefer to set up company in Singapore over other types of businesses. If the company suffers losses, they lose only what they have invested in its shares.
Each year numerous entrepreneurs choose to do their company formation in Singapore. Many of them prefer to set up company in Singapore over other types of businesses. If the company suffers losses, they lose only what they have invested in its shares.
SBS Consulting is a reliable provider of services for company formation in Singapore. We are a registered filing agent and can legally interact with ACRA and pay official fees for a new company set up in Singapore. If you have any queries regarding how to set up company in Singapore, contact us at +65-6536 0036 or email us at info@sbsgroup.com.sg for answers.
