The Ultimate Guide to Meeting the Requirements for Setting Up a Company in Singapore
Singapore facilitates the easy formation of a new business. You only have to fulfil simple requirements for setting up a company in Singapore. And there are only two easy steps to the Singapore company registration process.
Annual compliance requirements for Singaporean companies are easy. You do not work at generating unnecessary or submitting complicated paperwork.
Pre-Incorporation Requirements for Setting Up a Company in Singapore
The World Bank ranks Singapore at the 2nd position for the “Ease of Doing Business” indicator among the 189 nations.
- 1 – 50 shareholders
- At least $1 in initial paid-up capital
- At least one resident or local director
- At least one corporate secretary
- A registered local office address
Let us expand on these requirements:
Shareholders: To register a Singapore company, you need a minimum of one corporate or individual shareholder. Singapore allows 100% shareholding to foreigners. A private limited company can have 50 shareholders.
Initial Paid-Up Capital: You need S$1 in initial paid-up capital to start a company. Later on, you can invest as much capital as you want in your company. There are no limitations on the amount or the currency.
Resident or Local Director: You need at least one local or resident director at the time of Singapore company registration. The appointee must be an ordinary resident of Singapore. Select a local, Permanent Resident, or EntrePass holder.
Corporate Secretary: You have to appoint a secretary within six months of your company’s incorporation date. Make sure that the appointee is familiar with the legislation and statutory regulations and can ensure your company’s compliance.
Registered Address: You have to provide a local registered address for your company office. Government agencies use it for official communication with you.
ACRA does not accept Post Office Box address as valid address. For Home Office, take permission from the proper URA/HDB authorities.
Why Incorporate in Singapore
Singapore implements pro-business-owner policies. Several international organisations, after independent verification, have lauded its willingness to make things simple for businesses, right from the steps and requirements for setting up a company in Singapore to its tax compliance.
Singapore was also ranked high by the Economist Intelligence Unit (EIU) for the indicator “Efficient & Open Economy.” These organisations have evaluated and validated Singapore for other factors like:
- Worker’s productivity
- Per capita GDP
- Intellectual property protection
- Least bureaucratic country
- Asia’s best city to Live in
What Attracts Business Owners to Singapore
There are several key factors that attract business owners from all over the world to set up company in Singapore. They are listed as follows:
- Political stability
- Stable economic climate
- Robust marketplace
- Affordable taxes
- Simple process & easy to fulfil requirements for setting up a company in Singapore
- Pro-business bureaucracy
- No red tape making running a company easy
- No to negligible corruption
- Strategic geographical location
- World-class infrastructure
- A qualified and productive workforce
- Mature capital markets and financial system
- Easy repatriation of profits
- Ease in import of capital
- Strong law enforcement
- Top quality of life
Advantages of Singapore Company Registration
Singapore has a well-established trading economy. This country serves as the entrepot that facilitates trade between the East and West.
Robust Economy & FDI
Singapore has considerable foreign currency reserves. It has no external public debt. And its current account is in plus and growing. It is also actively investing abroad.
In 2021, Singapore attracted S$2,479 billion in Foreign Direct Investment (FDI). And it has invested S$1,251.3 billion abroad.
- Singaporean GDP grew by 3.6%.
- Per capita GDP at current market prices is $114,165.
- The services sector added over 70% of nominal value, and goods-producing industries added around 25% of nominal value.
Contribution of Industries to the GDP in 2022
The SME sector is very strong in Singapore. The government also provides them with adequate support. Singapore has a very low unemployment rate. It is due to the fact that numerous Small and Medium Enterprises sector plays the role of a great employer.
- Manufacturing 21.6%
- Wholesale trade 18.6%
- Finance and insurance 13.5%
- Transportation and storage 10.4%
- Other services industries 9.3%
- Information and communication 5.4%
- Professional services 5.4%
- Ownership of dwelling 3.3%
- Administrative and support services 3.0%
- Real estate 2.9%
- Construction 2.7%
- Retail trade 1.3%
Affordable Taxes and Capital Gains
Singapore has one of the most affordable territorial tax systems. It taxes your income generated in Singapore.
Singapore uses a single-tiered tax system for corporate tax. It means once your company pays its taxes, it can disburse dividends to your shareholders. And they do not have to pay tax on it. Why?
In Singapore, there are no taxes on capital gains (dividends) and inheritance. And you can take your profits out of Singapore without any restrictions. It is what makes Singapore an attractive company registration and investment destination for business owners.
Singapore Corporate Income Tax
Singapore corporate tax is charged at a flat rate of 17%. However, a local company gets tax benefits, exemptions, and rebates which effectively brings its tax rate down to around 8.5% – 9.5%.
New qualified startup gets tax exemptions during their first three consecutive years. These private limited companies can claim:
- 75% exemption in tax on their first $100,000 of normal chargeable income; and
- 50% exemption in tax on their next $100,000 of normal chargeable income
Singapore Personal Income Tax
Singapore’s personal income tax rates are progressive.
For tax residents, they begin at:
- 0% for annual income less than S$20,000; and
- Tops at 22% for earnings over S$320,000
- Employment income is taxed at a flat rate of 15%
- Other personal income: rental, pension, and director’s fees are taxed at 22%
In 2023, at 8%, Singapore GST/VAT is one of the low taxes in the world.
Avoidance of Double Taxation
Singapore has signed several Avoidance of Double Taxation Agreements (DTAs) with its trading partner countries. DTAs ensure that Singapore companies do not have to pay taxes twice while trading in or with a treaty country. It drastically reduces the complexity of cross-border trade.
Moreover, if a Singapore company has to pay taxes in a foreign country, it can claim foreign tax credits. If their foreign-sourced income received in Singapore is taxed in a foreign country, they can claim Unilateral Tax Credits (UTCs).
100% Foreign Ownership & No Currency Controls
Singapore allows 100% foreign ownership of a company. You can own it without a local partner or shareholder. In addition, there are no restrictions on the capital amount you want to invest in a Singapore company.
Singapore is home to world-class educational institutes. Each year these organisations add talented students to Singapore’s workforce. They are hardworking, rule-following, and highly productive.
In addition, Singapore attracts highly qualified and skilled immigrants. These professionals, managers, CEOs, and CTOs bring excellence to work. Foreign MNCs and SMEs, shifting their base to Singapore, find this English-speaking workforce highly useful for their purpose.
Singapore facilitates trade between the East and West. It is a gateway to Asia and is home to 3 billion consumers. Singapore has reliable air connectivity to the immerging markets in Asia, which are only a short flight away. Singaporean port connects to more than 600 ports throughout the world.
Singapore has world-class infrastructure. Its airport, ports, highways, subways, communication networks, Mass transportation system, commercial centres, hotels, and banking system are highly efficient. All these things help a business succeed.
Rule of Law
Singapore is a law-abiding and corruption-less society. It has strict laws to protect your intellectual property, and commercial courts efficiently enforce contracts.
After you form your business by fulfilling the requirements for setting up a company in Singapore, you get to rub shoulders with the best in the industry. You get to improve the professionalism, and quality to the customers and reach new hights. It is a place to do honest business without worrying about turmoils.
SBS Consulting Pte Ltd helps you fulfil requirements for setting up a company in Singapore. Submit your incorporation and KYC documents to us. We will help you complete the Singapore company registration process successfully.