Doing Business in Singapore
14 February 2018
Most companies are registered as private limited liability companies (commonly known as private limited companies) in Singapore. A private limited company in Singapore is a separate legal entity and shareholders are not liable for the company’s debts beyond the amount of share capital they have contributed. All companies in Singapore must be registered with the Accounting & Corporate Regulatory Authority (ACRA) and abide by the Singapore Companies Act.
The company name must be approved by ACRA before incorporation of the Singapore company can occur. If the name does not conflict with an existing name and does not contain any sensitive words, the application is usually processed within 15 minutes after the fee of S$15 is paid. It may take 14 days to 2 months if the application needs to be referred to another agency for approval or review. An approved company name will be reserved for 120 days from the date of approval.
A minimum of one resident director is mandatory. There is no limit on the number of additional local or foreign directors a Singapore company can appoint. Directors must be at least 18 years of age and must not be bankrupt or have any previous convictions for malpractice. There is no requirement for the directors to also be shareholders, i.e. non-shareholders can be appointed directors.
A Singapore private limited company can have between one and fifty shareholders. A director and shareholder can be the same person or different people. A shareholder can be a person or a legal entity, such as another company. Subject to the Singapore Constitution, new shares can be issued or existing shares can be transferred to another person any time after the company has gone through the incorporation process. Singapore Companies Act allows for 100% ownership of Singapore companies by foreign persons or entities.
Every company must appoint a Company Secretary within six months of incorporation. It should be noted that in cases of a sole director/shareholder, the same person cannot act as the Company Secretary. The Company Secretary must be a person who is ordinarily resident in Singapore. The Companies Act states that it is the duty of the directors of a company to ensure that the Company Secretary has the requisite knowledge and experience.
Minimum paid-up capital for registration of a Singapore company is S$1. Paid-up capital (also known as share capital) can be increased any time after the incorporation of the Company. The concept of authorized capital has been abolished in Singapore. The paid-up capital can be listed in Singapore Dollars or any other major currency.
In order to register a Singapore company, you must provide a local Singapore address as the registered address of the Company. The registered address must be a physical address and cannot be a P.O. Box. Use of a residential address is allowed for certain types of businesses.
Singapore registered companies enjoy very attractive tax exemptions and incentives. The headline corporate tax rate in Singapore is 17% flat on the net income chargeable to tax. The effective tax payable is even lower if one takes advantage of government incentives, subsidies and schemes, especially for the first 3 consecutive ‘Years of Assessment’. Foreign sourced dividends received in Singapore can be tax exempt if the headline tax rate of the foreign jurisdiction from which the dividend is received is at least 15% and has been subjected to tax in the foreign jurisdiction from which it was received. There is no capital gains tax in Singapore.
Company registration procedure in Singapore is fully computerized by the ACRA and in most cases, the company can be incorporated within 1-2 days. A registration fee of S$300 is payable to the Singapore Registrar of Companies at the time of incorporating a private limited liability company.
Opening a Corporate Bank Account
After successful registration of your Singapore company, you can open a corporate bank account in any of the major banks in Singapore such as HSBC, Standard Chartered, Citibank, DBS, OCBC and UOB. Many will require physical presence of the key representatives as part of the account opening procedure. Seek professional advice from your existing banking partners and professional advisors before you incorporate, to determine the best way to handle local bank account setup.
Applying for Business Licenses
Depending on your company’s business activities, you may need to obtain one or more business licenses (after you have incorporated your company but before you can start to operate). Examples of business activities that require a business license include restaurants, educational institutions, travel agencies, financial services and those importing/exporting goods.
Goods & Service Tax (GST) Registration
If the projected annual revenue of your company exceeds S$1mn, your company must register for GST.
If your company is GST registered, you will need to charge this tax to your clients on the goods and services provided and in turn remit this amount to tax authorities. GST registration is not mandatory if your company’s annual turnover does not exceed the above threshold.
Advice should be sought in all cases to ensure you are making the best decision for your worldwide operations
Payroll, Employee Benefits & HR
Written employment contracts are common in Singapore and local hires will have expectations in terms of when and how they are paid, bonuses and employee benefits, annual leave and so on. Contact us for more information on employing people in Singapore.
Register of Registrable Controllers
With effect from 31 March 2017, all Singapore companies, unless exempted, have been required to maintain a register of beneficial owners (“Register of Registrable Controllers”). The Register, or any particulars contained therein, is not disclosed or made available for inspection except upon request by relevant public agencies/ regulatory bodies.
People from outside Singapore wishing to set up a Singapore company must take into consideration the following points:
- You must engage a professional firm to register the company. Singapore law does not allow foreign individuals or entities to self-register.
- There is no requirement for you to obtain any special Singapore visa if you merely want to incorporate a private limited company but have no plans to relocate to Singapore. You are free to operate your company from overseas.
- You can visit Singapore on a Business Visa to attend to company matters on a short-term basis. However, each company must have at least one local director.
- If you plan to relocate to Singapore to operate your company, you are required to obtain an Employment Pass or Entrepreneur Pass. Once you have obtained your work permit, you can act as the local resident director of your company.
- All company incorporation formalities (as well as work permit formalities, if applicable) can be handled without you having to visit Singapore. The only exception may be opening a bank account, depending on the bank you choose.
For more information on doing business in Singapore, please contact us.