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Advantages of foreigners to incorporate an offshore company in Singapore

Last modified: January 21, 2022
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Advantages of foreigners to incorporate an offshore company in Singapore

Singapore is ranked 2nd for the ‘Ease of Doing Business indicator. It hints that the Singaporean authorities have streamlined many processes related to statutory compliance to make life easy for the business owners. Let us start why foreign companies choose company incorporation Singapore.


Singapore Functions as an Entrepot

Geographically, Singapore is situated on the sea links between East and West. It is one of the reasons why foreigners set up an offshore company in Singapore.

These waterways carry as much as $5 trillion of goods. Singapore has world-class harbours that enable it to pay the role. These harbours serve more than 600 other destinations spread throughout the globe.

Singapore is host to a number of logistical companies that do their part in offering highly evolved solutions to streamline the global supply chain.


A Foothold to Emerging Asian Markets

The global entrepreneurs and companies look up to Singapore as a staging post to emerging Asian markets. The travel time is between 8-10 hours. These markets are home to more than 3 billion consumers. Singapore offers them excellent air connectivity to these markets. The foreign companies also benefit from the Singapore regional/global headquarters scheme.


Company Incorporation Singapore

ACRA, the company registrar of Singapore, takes only 1-3 days to process an application for a new company setup in Singapore. The process is straightforward for even foreigners to follow.

The process for a new company set up in Singapore has only 2 steps in it. The foreigners have to register their company name with ACRA and then apply to the same agency to register their offshore company in Singapore. Of course, they need to hire a registered filing agent to do the legal work.


Singapore Startup Ecosystem

Singapore treasures its startups and new local companies. The authorities understand their teething problems and provide many government grants and benefits to them. These help startups to keep their overhead costs down and maintain their competitiveness.

There are government agencies that give a helping hand to the startups in taking a foothold in the Singapore market. The startups can also benefit from the accelerator and incubator programs designed to help them. They can also lean on various venture capital companies, private equity funds, and banks for the funds.


Singapore Taxation System

Singapore is known for its low and affordable tax rates and compliance procedures. Yes, authorities here have taken steps and installed processes to enable taxpayers in paying their taxes in a short period.

Singapore companies have to pay corporate income tax on their taxable income. It is charged at a flat rate of 17%. However, with the tax benefits and exemptions, Singapore companies pay around 8.5%-9.5%.

Singapore applies no tax on capital gains. It means that after a company has paid its corporate income tax, it is free to disburse dividends to its shareholders. These dividends are tax-free. It is an excellent advantage to the shareholders.

Singapore has adopted a territorial taxation system. Individuals and businesses pay tax on the income they have generated in Singapore. The offshore income is taxed only if it is repatriated to Singapore.


Startup Tax Exemption Scheme

During their initial 3 three years of assessment, the local startup companies can use Startup Tax Exemption Scheme to their advantage. They get 75% of tax exemption on their initial S$100,000 chargeable income during this period. Next, S$200,000 is taxed at 50%.


Partial Tax Exemption Scheme

Singapore also provides a partial tax exemption scheme for the benefit of existing companies.

From the YA 2020 onward:

Singapore companies can claim 75% of tax exemption on the initial $10,000 of chargeable income. Next, $190,000 of their chargeable income get taxed at 50%.


Claiming Expenses Incurred Before Starting a Company

Normally, companies can claim tax deductions on their expenses incurred after starting their business activities. However, it is valid for the Singapore companies to claim a tax deduction on their expenses incurred a year before the start of their financial year after they have generated their first receipt and earned their first dollar.


R&D Companies Benefit from Tough IP Laws

The Intellectual Property (IP) Protection Laws are stringent in Singapore. These laws have proved effective in stopping copycats from stealing the intellectual property of creative and innovative individuals.

They are highly beneficial to the companies primarily involved in the Research and Development (R&D) of new products and technologies. And many foreign R&D companies have chosen to set up offshore company in Singapore to relocate their activities. Authorities here are also swift in updating their laws to maintain the advantage.


Singapore Immigration

Singapore welcomes qualified professionals like managers, professionals and specialists from all over the globe. As per June 2021 statistics, 5.45 million individuals live in Singapore. These emigrants form a significant part of this population.

Professionals with degree/diploma certificates, experience, English, and required skill-set can easily immigrate to Singapore. They can use Singapore passes like Entrepass, Personalised Employment Pass, Employment Pass, S pass, etc.

After immigrating, certain pass holders can also bring their family members to Singapore on various passes like Dependant’s Pass, Long Term Vacation Pass, etc.


Communication Networks

Singapore has invested in its communication networks based on the latest technologies. These networks allow business owners easy access to the outside world. These help entrepreneurs speed up and conclude their business deals and transactions without leaving for offshore travel.

Singapore is a politically stable place. It provides advanced infrastructure, communication facilities, funding, a supportive startup ecosystem, low tax rates, English-speaking professionals, Etc. These are why foreign companies opt for company incorporation Singapore and relocate their headquarters and business activities.

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