A business can be created within a week

Offshore company formation in Singapore

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ There are prison terms for disclosing customer bank details to third parties (and possibly fines).

β€’ Banks are fully subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are fully obligated to maintain sufficient records of customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information upon request, but without qualifications.

β€’ There are undue notification and recourse rights against the exchange of banking information upon request, but with some problems

2. Legal forms

Limited Liability Company Ltd.)

Setting up a limited liability company in Singapore is the most common strategy adopted by entrepreneurs, abbreviated as "Pte." This type of company is functionally equivalent to LLC in other jurisdictions, and the liability of shareholders is limited to the unpaid amount of their shares.

Thanks to the relaxed rules on opening a limited liability company, which requires only one shareholder, resident director, company secretary, registered address, and no minimum share capital, foreign investors overwhelmingly favor Pte. Ltd. when entering the Singapore market. This entity can carry out any type of commercial or industrial activity, and there are no restrictions on foreign investment.

Singapore private limited companies can have up to 50 shareholders. If there are likely to be i) more than 50 shareholders or ii) regular transfers of shares, then an unlisted corporation is a better option.

This entity can be incorporated within a week without the need for our Clients to visit Singapore or contribute equity capital. However, at least one of the directors of the company must reside in Singapore.

The local government is welcoming new entrepreneurs to start a business in Singapore. New start-ups will enjoy significant tax relief in the first 3 years of tax assessment and may subsequently qualify for partial tax relief. For more information, see the IRAS website.

Best Uses: General Purpose - A Limited Liability Company Meets Needs of almost all applications to do business inside or outside of Singapore. These entities have low administrative requirements and can be used for almost any use as long as they are not requires liquidity in the shares. These attributes of a Singapore LLC make it ideal for your use as a subsidiary or as a business vehicle.

The flexibility of the private limited company also means that it can be used in the following ways:

SPVs can be used to i) hold designated assets on behalf of their investors while
they insulate shareholders from liability and ii) raise funds from the market.

Holding company

This vehicle is used to hold and manage long-term investments, including debt, real estate, and stocks in other companies in a fiscally efficient manner.

Holding companies earn their income primarily from dividends, interest payments, and rental fees, depending on the types of assets they own.

Singapore companies can be used as private estate vehicles to manage family assets.

The Seychelles limited liability company (owner company)

Foreign companies can do business in Singapore without establishing a separate legal entity, although they must register with the Accounting and Corporation Regulatory Authority (ACRA) to do so. Doing business in this way is known as setting up a branch in Singapore.

A Brach office may conduct business only within the scope established by the parent company. A Singapore-based branch can bill local customers, sign sales contracts, and receive income from customers.

As an extension of the foreign company without its own legal personality, a branch does not have limited liability. Therefore, the liabilities incurred by the branch are attributed to the parent company. Consequently, using a branch presents greater risks to your business.

Branches can only be registered by foreign corporations, as stipulated by the Singapore Companies Act.

Branches are treated as non-residents for tax purposes. This means that they do not benefit from the Singapore treaties to avoid double taxation or the tax incentives for new companies.

Best Uses: Not Recommended - Although there are some limited benefits to using branches in others jurisdictions, including: i) being a profitable way to incorporate business in Singapore, and ii) the branch profits obtained can be repatriated without paying any tax. However, we recommend incorporating a local company rather than establishing a branch in Singapore. Since the company does not have a minimum capital requirement, limited liability and allows 100% foreign ownership in all fields, the traditional benefits of a branch do not apply. Nor is time saved in registering a branch, since incorporation of a Singapore business can be done in less than a week.

Representative office

A representative office can be used if a foreign company does not intend to conduct income-generating business activities in Singapore. Annual filings are simplified as a lack of income means there is no need to file or assess taxes.

These entities cannot make direct sales. Instead, they can only perform β€œancillary activities” such as i) promoting the parent company's business ii) market research iii) after-sales support or iv) research and development.

The scale of the limited scope of representative offices brings with it a limited lifespan, as they can only operate for a maximum of three years before they are required to become a branch.

New foreign companies cannot establish representative offices in Singapore as the law requires that the foreign entity i) have annual sales of more than US $ 250.000 and ii) have existed for at least three years.

Best Uses: Market Research - If your company wants to send a small delegation of staff to research the Singapore market, a representative office is a good solution to short term with simpler financial reports than for a business. For other activities or long-term establishments in Singapore, a company is often preferred due to increased flexibility in the activities you can perform and greater freedom to generate value for the deal.

Free zone company

Our Clients also have the option of establishing a free zone company in one of the nine free zones available. For this purpose, we can help our Clients to incorporate a simple LLC and then help them to obtain an operating permit from the free zone authority.

Free zones offer enormous advantages that include: i) warehousing facilities for local and foreign companies; ii) no permit requirement for transshipment of uncontrolled goods; and iii) absence of customs duties and GST on products imported into a free zone.

Best Uses: International Trade - Trade companies often use a zone company frank that need to import products to Singapore for further processing and then export finished products to other countries.

Singapore Quick Fix

This solution is recommended for our Clients who need an immediate installation of the company in Singapore.

Best Uses: Singapore Quick Fix is ​​recommended for our Clients who immediately need a local company to close deals or sign contracts in Singapore.

Limited liability company

An alternative to the limited liability company is the limited liability company (LLP). Like the LLC, this entity offers a limited liability benefit to its partners. In addition, this entity can issue contracts, lease real estate and sign legal documents on its own behalf.

An LLP can be established by 2 partners with a minimum capital of US $ 1. However, the LLP must designate at least one manager who ordinarily resides in Singapore.

Best Uses: Professional Services - An LLP is generally recommended for businesses that provide professional services, including accounting and tax services, consulting services, and legal services.

Potential

Some of our clients may wish to form a general partnership (GP) in Singapore. Unlike an LLP, the partners of a GP are personally liable for all losses and debts of the association.

An alternative option to GP and LLP will be the limited partnership (LP). An LP is made up of at least 1 general partner (who is personally liable for all losses and debts) and 1 limited partner (whose liability is limited to the extent of their equity contribution).

Best Uses: Not Recommended - GPs and LPs are not recommended to our clients as they expose partners to personal liability for all damages and losses. Instead, our clients must choose an LLC or LLP

Investment firm

An investment company will allow our clients to pool the capital of their investors and invest this money on their behalf. However, this business activity will require business owners to apply to the Monetary Authority of Singapore (MAS). For fund management, the application will take one of two forms: either as i) an application for a registered fund management company or ii) an application for a Capital Market Services license.

Registered fund management companies are limited to 30 institutional or accredited investors, of which up to 15 may be other funds in which accredited persons invest. Investors qualify as accredited under the Singapore Securities and Futures Act if they have i) net assets of more than S $ 2.000.000 or ii) annual income of more than S $ 300.000. There is a limit of S $ 250,000,000 in assets under management for this type of fund manager.

Capital market services (CMS) licenses, on the other hand, are much more flexible. Although further MAS accreditation is required to serve retail investors, CMS licensed fund managers have no limits on assets under management or number of investors.

CMS licensed fund managers must maintain core capital levels of at least $ 250, of which at least S $ 000 must be deposited with MAS. Annual audits are required to ensure this and other compliance requirements are met.

All registered and licensed fund management companies must have two Singaporean resident directors with at least 5 years of financial services experience to establish a track record. They also require two local employees, of whom must be the CEO and the other an Executive Director, and each of these employees must have at least 5 years of experience. If the CMS licensed manager is authorized to work with retail investors, a third staff member is required and the CEO requires 10 years of experience.

Remember

Se requires a Singapore resident director for all business entities. Fees / Director: US $ 9.300. Holding companies are available in Singapore.

OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

TAXES

Tax rates

UA company, whether incorporated in Singapore or otherwise, is considered a Singapore resident for tax purposes if it is managed and controlled in Singapore. The corporate tax rate for Singapore-resident companies is 17%. This corporate tax rate also applies to Singapore-registered subsidiaries and branches of foreign companies.

Companies are entitled to a refund of 40% of corporate income tax (CIT) with a limit of S $ 15,000 for the evaluation year (YA) 2018 and a refund of 20% of income tax with a limit of S $ 10,000 for YA 2019 There is a partial tax exemption of: i) 75% on the first S $ 10,000 and 50% on the next $ 290,000 of the ordinary income of the company for the years 2010 to 2019; ii) 75% on the first $ 10,000 and 50% on the next S $ 190,000 of the company's regular income from YEAR 2020 onwards.

A payer must withhold taxes when certain types of payments such as interest, royalties, and others are made to non-resident businesses. The withholding tax rate would range from 10% to 15%.

There is no withholding tax on dividends paid by a Singapore resident company.

There is no capital gains tax or inheritance or gift tax in Singapore.

GST is the Goods and Services Tax and applies to the supply of goods and services by a taxable person in Singapore and the importation of goods by anyone in Singapore. The standard GST rate is 7%. Few items are exempt from the GST, such as goods for export and international services and the sale / lease of residential land.

Personal income tax in the country follows a progressive system and ranges between 2% and 22%.

From YA 2019 onwards, businesses will receive a 20% corporate income tax refund capped at $ 10,000.

Currently, only group relief is available in Singapore and not tax consolidation.

A Singapore tax resident company can enjoy a tax exemption on its specified foreign income that is remitted to Singapore.

Tax on goods and services

UA company must be registered to collect GST if its annual turnover exceeds or is likely to exceed S $ XNUMX million from the sale of taxable goods and services. This requirement may not apply if the majority of the goods or services are exported or supplied internationally (zero-rate supplies).

It is advantageous for companies to register for GST when they have a considerable amount of inbound GST paid on their purchases and expenses, as they will be able to claim these inbound GST while submitting GST returns.

Submit due dates (corporate income tax)

β€’ Electronic filing: December 15th.

β€’ Presentation on paper: November 30th.

Tax exemptions and refunds

Non-resident companies

UA non-resident Singaporean company is legally exempt from tax if all its income and profits are derived from abroad. Consequently, it can be an excellent entity to legally account for global income.

If a company is managed and controlled by directors and members who reside outside of Singapore, then it is considered a non-resident company.

For foreign income to be exempt from tax, non-resident companies must not have a bank account in Singapore to which income and profits are remitted. Companies are required to have international bank accounts.

A company incorporated in Singapore but considered non-resident by the authorities is legally exempt from tax if all income and profits come from abroad. Consequently, a properly structured Singapore company can be an excellent entity to legally account for global income. If certain criteria are met, the overseas income of a Singapore resident company may be legally exempt from tax.

Resident companies

BGood news for newly registered Singapore companies. Entrepreneurs can now enjoy income tax rebate in the first three financial years.

To minimize overall tax withholding, Singapore has signed 84 double tax treaties.

In accordance with the Income Tax and Economic Expansion Incentives Act (EEIA), Singapore offers a wide range of investment incentives including tax breaks and concessions, accelerated depreciation schemes and favorable loan terms.

Business creation

PTo stimulate entrepreneurship, the Singapore government offers an extremely attractive tax exemption scheme for start-ups. For the first three years, Singapore startups are exempt from corporate tax on the first S $ 100.000 and the next S $ 200.000 are 50% tax exempt.

This scheme is applicable to tax resident companies that i) have less than 20 shareholders and ii) are not investment portfolio companies or real estate development companies.

As of the fourth year, the partial tax exemption will be applied to all tax resident companies as follows: 75% on the first S $ 10,000 and 50% on the next S $ 290,000

Shipping companies

LShipping companies using Singapore-registered ships enjoy a wide range of income tax exemptions, while foreign ships have limited tax exemptions.

Approved international shipping companies using ships in international waters also enjoy tax exemptions on certain types of international shipping income.

LEGAL AND COMPLIANCE

Singapore company laws

ESingapore's online public registry records the details of the directors and shareholders of a Singapore company, including names, addresses, and passport numbers. Some Clients ask us to act as professional passive nominee shareholders or directors.

Every year after company formation in Singapore, a company must submit an annual statement confirming relevant details for public record, including the names and addresses of all directors, the address of the principal place of business, and the details of shareholders and their stakes.

Singapore has an efficient and transparent legal system. All parties, regardless of nationality, are afforded the right to due process in accordance with the law. Singapore is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Arbitration in other countries that follow the convention is enforceable in Singapore.

The Constitution prohibits all resident businesses from discriminating against employees on the basis of religion, race, ancestry, and place of birth. All resident companies are prohibited from disclosing private information about an individual without consent.

The Competition Law obliges all resident companies to obtain government approval with respect to mergers and acquisitions.

Decommissioning a Singapore company takes a minimum of six months.

The Memorandum of Association is a contract between shareholders and includes i) activities of the company ii) registered office iii) details of the shareholder and director iv) capital stock v) method of profit distribution The same is filed with the ACRA after the formation of the company in Singapore.

After company formation in Singapore, the company must maintain a local registered address and appoint a local resident company secretary within six months of incorporation.

Under the Singapore Companies Act, international companies can re-domicile in Singapore, including offshore companies. Contact us to help with re-domiciliation

Singapore Labor Regulations Considerations

De according to the Singapore Employment Act of 1955, employment contracts must always indicate: i) the full name of the employee and the employer ii) the position and main duties of the employee iii) the date of employment commencement and the duration iv) working hours and rest days) v) base salary and overtime pay rate vi) number of holidays, annual leave, sick leave, maternity leave and childcare leave vii) parole viii) contributions to the CPF (if any) and ix) notice period for termination of the contract.

There is no minimum wage in Singapore. However, the salaries of qualified employees tend to be high.

Median gross salary income (including contributions to the CPF) reached S $ 4.056 in 2016, according to the Singapore Bureau of Statistics.

According to Singapore regulations, employers must also register all Singapore citizens and permanent resident employees with the Central Provident Fund (CPF) no later than one week after the start of their contracts.

For each citizen or permanent resident employee, the employer's monthly CPF contribution is 17% of the employee's gross salary. The employer must also deduct the employee's gross salary contributions of 20% each month and remit the corresponding amount to the CPF. These rates vary slightly for new permanent residents and employees 55 and older.

The standard working day is i) 9 hours and ii) 44 hours per week. Overtime must be compensated with an additional payment of at least 50% of the standard rate of pay. All beginning employees are entitled to at least i) 14 days of paid sick leave, ii) 11 days of paid national holidays, and iii) 7 days of paid annual leave per year. Please refer to this page for more details on paid employee leave practices in Singapore. Most local employers offer 14 days of paid annual leave per year.

When terminating a contract for reasons other than disciplinary, both the employer and the employee must provide a notice period (or equivalent pay) of at least one week for employees who have been with the company less than one year, two weeks for employees with less than five years of mandate and one month thereafter.

Singapore wages progressively worsen from 0% to 20%. For non-residents, salary income is subject to a flat tax of 15%, while directors' fees are subject to a flat rate of 22%

COUNTRY PROBLEMS

SIngapur is a prosperous country and its consumers have relatively high purchasing power. Coupled with the fact that information is more accessible thanks to technology, Singaporean consumers have become more meticulous and specific about what they want.

The Singapore government responds to foreign companies, which creates high competition within the country. As such, it will take a lot of advertising effort to gain market share.

All resident companies must have at least one resident director, who can be a citizen, permanent resident or holder of a work pass in the country. Corporate Directors are not allowed.

As an export and service-based economy, Singapore's growth depends on i) the health of the Chinese economy and ii) the health of the US and EU economies.

All companies must submit annual financial statements to the Internal Revenue Authority (IRAS). Singapore is an expensive city for a new business, with an average monthly labor cost of $ 2600 and average monthly office rent of $ 30 per square foot. Both rates are more than double the rates in the neighboring state of Malaysia.

Hiring foreign workers is difficult; the company must demonstrate that local workers were not denied the job opportunity.

Singapore is increasingly faced with the problem of having a limited talent pool. Since Singapore citizens and public relations mainly want to work in specific sectors such as finance, biotechnology, data science, pharmaceuticals, etc., it is very difficult to find local talent in other sectors such as printing, manufacturing, construction, etc.

Singapore is not a party to the Hague Convention of October 5, 1961, so Apostille is not possible in Singapore. Clients must plan additional time and budget to legalize documents.

Singapore banks continue to strengthen the incorporation process. To facilitate the opening of bank accounts, it is suggested that your company provide proof of minimal business activity in Singapore.

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

The national business registry includes the identity information of the legal owner.

Information on legal owners is not always available online (up to 10 EUR / GBP / USD).

4. Transparency of society

All businesses require the registration of all legal owners.

Updating proprietary information is not mandatory for all partners.

All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications, or incorporation numbers are always registered.

5. Shareholders publications

Companies available without registered information on beneficial owners.

Real property is not always available online (up to 10 EUR / GBP / USD)

6. Publication of the company account

It is mandatory to carry accounting data.

It is not always necessary to present the annual accounts to a public authority.

7. Country-by-country financial reports

No country-by-country public reporting at all.

8. Corporate tax return

The secondary mechanism is not subject to the restrictions imposed by the OECD model legislation: any national affiliate of a group would have to submit the CbCR in all cases where the jurisdiction cannot obtain the CbCR through AEoI.

Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice.

9. Identifier of legal entities

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of a Legal Entity Identifier (LEI) updated annually, developed under the guidance of the Financial Stability Board, FSB, is mandatory both for trading derivatives (OTC) and for some operators of financial markets and / or classes. of assets. beyond trading OTC derivatives.

β€’ The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory.

10. Measures to avoid tax evasion

Dividend payments: No unilateral relief for double taxation through a tax credit system.

Interest payments: No unilateral relief for double taxation through a tax credit system.

11. Tax matters judicial secrecy

None or restricted access to criminal / civil tax procedures.

None or restricted access to both criminal and civil tax judgments / verdicts.

12. Opaque structures

β€’ The jurisdiction accepts the circulation of large notes / cash notes of its own currency (with a value greater than 200 EUR / GBP / USD).

β€’ Bearer shares are always immobilized / registered by a public authority.

β€’ Serial LLC / Shielded Cell Companies are available.

β€’ Trusts with escape clauses are not prohibited.

13. Anti-money laundering legislation

Singapore is not on the FATF list of countries that have been identified with strategic AML deficiencies.

The last Mutual Evaluation Report related to the implementation of anti-money laundering and terrorist financing standards in Singapore was conducted in 2019. According to that Evaluation, Singapore was rated Compliant in 20 and Largely Compliant in 17 out of 40 Recommendations of the FATF.

Overall Non-Compliance Score of FATF Standards in Percentage: 27,5%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).

14. Automatic exchange of information

You signed the MCAA and committed to sharing information on or before 2019.

Number of significant activated AEOI relationships (under the MCAA) published by the OECD as of October 2019: 88

What type of private banking exists in Singapore?

International Banking
Local banking

Central bank security ⭐⭐⭐

The international and digital banks They're available.

CRS: YES

Real bank operations: 90%.

Visa type: SGD $, US $, €

Joint accounts.

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: It depends on the type of account.

Credit / debit cards in local currency

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.

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