Singapore offers the option for foreign investors and entrepreneurs to form an offshore company. An offshore company is a type of company, which is incorporated in a jurisdiction that is different from where it operates from. In other words, the company is incorporated in a different country from where the principal investors of the company reside.
The major benefit of incorporating a business this way is to enjoy tax benefits, ease of setting up the company, Simple requirements for reporting, an ease of running administrative duties. One of the most important decisions the investor has to make is the choice of jurisdiction to incorporate an offshore company. In Singapore, offshore companies enjoy a tax efficient regime and ease of operation in an environment that is both economically and politically stable. Let’s explore the major point to consider when incorporating an offshore company in Singapore.
Some interesting facts about business in Singapore
- Singapore is one of the top countries that provides the lowest tax rates making it very attractive destination for foreign businesses.
- Singapore has been ranked the third country in Asia and 5th in the top 20 host countries in FDI inflows
- Tax on dividend income and capital gains is 0%.
- Highest tax rate in Singapore is 17%.
- Singapore has entered into double tax agreement (DTA) with more than 80 countries around the world.
Benefits for Incorporating a Singapore Company
Singapore offers a low and simple tax system, which is characterized by low personal income and corporate tax rates. Companies incorporated in Singapore enjoy tax relief measures, tax incentives, territorial one-tire tax system, lack of dividend tax, and a huge network of tax treaties.
In Singapore, taxes are territorial-based implying that taxes apply only to income derived or accrued from Singapore by the company or income that the Singapore company sources from abroad. While income sourced from abroad that is not remitted into the country is exempted to taxation, foreign-sourced income meeting the qualifying conditions is exempted from taxation.
The Singapore tax policy is single-tier, meaning that incomes that is taxed at corporate level is not taxed at individual level. Therefore, no tax is levied to the dividends are distributed to shareholders. The corporate tax rate is friendly with an approximate of 8.5% for profits below S$300,000, and profits above this amount are taxed at a flat rate of 17%. In addition, a new company in Singapore enjoys a tax ate of 0% for the first 3 years on the first S$100,000 f taxable income. The only requirement is for the money to have no more than 20 shareholders, and at least one of the shareholders holding more than 10% of the share.
In 2018, the World Bank ranked Singapore the 2nd as the easiest place in the world to do business. The procedure for registering a company is quick and quick straight forward with no bureaucratic red-tape. The entire process is done electronically, comprising of only two steps: the approval of the company name and the registration of the company. Under normal circumstances, the process can be completed and the company incorporated within 1-2 days.
Singapore does not operate as a tax haven, and offshore companies incorporated in the country show their stature and credibility as legal entity. Various stakeholders take the business seriously if it is incorporated. By incorporating an offshore company, you will be able to deal better with bankers, employees of high caliber and other professionals.
Singapore has been ranked the most politically stable country in Asia by the Political and Economic risk Consultancy. The country has also been ranked as the least bureaucratic country in Asia with the government demonstrating a pro-business approach and high integrity. Often, Singapore government is described as pragmatic, rational, corrupt-free, and transparent. Furthermore, Singapore legal system is known to be sound, transparent and efficient. The rules and regulations governing commerce, manpower, intellectual property, and other business areas are clear. This makes the risk of starting and maintaining a Singapore offshore company so small to almost not exist.
The foreign ownership policy in Singapore is open and liberal. The country does not restrict permitted field of business activity for those interested in forming offshore companies in Singapore. Businesses in all sectors are allowed to have 100% foreign ownership, with shareholding being by corporate bodies or individuals. In addition, prior approval by Singapore authorities is not required to foreigners wishing to register Singapore offshore company.
Singapore is one of the leading financial centers in Asia, and offshore companies enjoy a wide range of reputable banks to choose from when opening an account. Both local and foreign banks operating in Singapore offer a plethora of features including internet banking, multi-currency accounts, trade financing, credit cards, and freedom of moving funds from one country to the other. However, many banks in Singapore require your physical presence during account opening, with the process taking between 2-15 days. This will depend on the type of account you wish to open and the due-diligence process that the specific bank follows.
Checklist for Incorporating a Singapore Offshore Company
| NO | ITEM | DESCRIPTION |
| 1 | Approval of the company name |
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| 2 | Directors |
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| 3 | Company secretary |
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| 4 | Shareholders |
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| 5 | Registered address |
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| 6 | Paid-up capital |
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| 7 | Documents needed for an offshore company |
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| 8 | Incorporation agent appointment |
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| 9 | Process of incorporating the company |
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| 10 | Opening of bank account |
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| 11 | Obtaining business permits & licenses |
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| 12 | GST registration |
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| 13 | Relocation to Singapore |
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| 14 | Adhere to ongoing compliance requirements |
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How MAM Corporate Solutions can help?
Its critical to consult market-entry specialists like MAM Corporate Solutions to ensure the smooth establishment of an offshore company and no costly mistakes are made from start to finish. We have years of experience and we are always up-to-date with latest regulations in Singapore. At MAM Corporate Solutions, we help businesses with registration of the legal entities in Singapore, application for import licenses, accounting, tax and all other legal compliance in Singapore.
Contact MAM Corporate Solutions
If you need help to establish a legal entity in Singapore or want to develop your Singapore-entry strategy, Contact us here or provide below as much detail about your inquiry as possible to receive the most relevant response.
