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Singapore Business Incorporation: Enjoy Lower Corporate Tax Rates in Singapore

Last modified: June 19, 2018
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When incorporating a business in Singapore, the most common business structure for the foreign entities is the private limited company. A private limited company in Singapore must have at least one shareholder and the number cannot exceed 50.

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Doing Business in Singapore

Singapore is the most sought after destinations in the present business world. Singapore’s stable political system, anti-corruption attitude, and the highly developed infrastructure are a few key reasons why foreigners prefer to incorporate company in Singapore.

Most of the foreign Singapore company incorporations are for establishing the new startups or regional headquarters. Accounting and Corporate Regulatory Authority (ACRA) of Singapore govern all the businesses operating in Singapore.

Note: The World Bank rates this Asian nation at the top position for ‘ease of doing business.’

Pre-registration Requirements for the Incorporation of a Company in Singapore

Before registering a private limited company, one must consider following requirements:

  • Selection of a unique name for company and its approval from ACRA
  • Appointment of a resident director, who should be a Singapore local resident or a holder of Dependent, Employment, or EntrePass
  • Determination of company’s shareholders (1 – 50)
  • Minimum paid-up capital to incorporate a company in Singapore is S$1.
  • Local registered address, the address should physical but not PO Box address.
  • Appointment of one professional Company secretary

Benefits of Singapore Business Incorporation

  • Company registration process in Singapore is fuss-free, easy, and quick.
  • If all the required documents are readily available on hand, the process of business registration in Singapore takes only a day or two.
  • Existing companies also receive tax exemptions, rebates, and incentives.
  • Singapore has signed more than 70 double taxation avoidance treaties with other countries. It is a great help in the cross-border trade.
  • Singapore workforce is multilingual and well versed in English.

Singapore Corporate Income Tax

The main reason behind the rapid immigration to this island nation is its open and honest policies. The businesspersons find this Asian nation as a convenient place to set up their new business or to expand the existing one.

In Singapore, IRAS (Inland Revenue Authority of Singapore) is the concerned authority that looks after all the tax related issues. It is accountable to assess, manage, and collect taxes from the Singapore taxpayers.

The Government actively woos foreign business investors, entrepreneurs, and entities by offering competitive tax rates, tax exemptions schemes, generous rebates, and financial incentives. The effective tax rate paid by a business after the experts from an experienced accounting service has gone through its books is around 8.5%-11%

Note: The company tax in Singapore ranges from 0%-17%.

Features of Corporate Income Tax in Singapore

Full Tax Exemption

Full tax exemption is one of the most alluring aspects of Singapore company tax. It provides Start-up Tax Exemption Scheme under which new start-up companies are free from paying tax for the initial three consecutive years on their taxable income of up to S$100,000.

Criterion for Start-up Tax Exemption Scheme

  • To avail this scheme a start-up must fulfill certain conditions such as,
  • The company must not have more than 20 shareholders.
  • No corporate shareholder is allowed.
  • One of the shareholders must own at least 10% of the issued shares.
  • Companies active in the investment holding and in the development of property for sales or for investment or for both are not eligible for full tax exemption benefits.

Partial Tax Exemption Scheme

The partial tax exemption scheme has been designed for those companies that do not meet the prerequisite conditions set by the government to avail full tax exemption. Partial tax exemption is available to all companies throughout their life and there are no specific conditions attached to it.

Note: Under partial tax exemption scheme, 75% of the initial taxable profit of up to S$10,000 and 50% of the next, S$290,000 taxable profit is tax exempt.

Single-Tier Tax System

Singapore applies Single-tier based corporate income tax. The tax paid by a company on its taxable income is final. After filing its corporate tax, if a company distributes the dividend to its shareholders, it is tax-free. Hence, the owners or the shareholders of the company get to share the company’s profit without paying any personal tax.

Competitive and well-regulated tax structure plays an important role in fetching the attentions of the creative, energetic, and experienced business people from around the globe. Consequently, Singapore is consistently growing as a superior business nation.

Singapore Immigration

Singapore’s immigration system is well organized. The foreign entrepreneurs who wish to set up their own businesses in Singapore need to apply for and acquire Employment pass or the EntrePass.

Singapore government also accepts qualified and certified professionals in order to bolster its workforce. It also provides for the relocation of skilled and manual labors. It offers different types of work visas to cater to the needs of these individuals.

work visas passes employment pass

Note: Singapore’s open immigration policy assists individuals in immigrating and settling permanently in Singapore. After a considerable work stay in Singapore, the pass holders find it easier to lay their claim to the permanent residence status.

The island country thrives on a highly advanced infrastructure, world’s best human resource, rich culture, higher quality of life, and business friendly environment. For many entrepreneurs, indulging in Singapore business incorporation, Singapore’s pro-business attitude and competitive tax rates are the main attraction.

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