Experts regard Singapore as the country to start a business because it only takes 2.5 days to start a company here. Not only that, you will find that starting a business here comes with lower costs compared to other business startup capitals like London, Sydney, and Toronto. As opposed to other countries, starting a business with five stakeholders requires only days. You can be on your way to a profitable business venture in no less than 2.5 days. This is only one of the reasons why you should consider Singapore as your company expansion hub. Not only does the country provide top-notch services like expert financial services and benefits like affordable marketplaces, but it also enjoys top-notch partnerships, making market integrations less complicated and costly.
Business-friendly policies, world-class infrastructure, and an efficient workforce are just some of the reasons why a lot of entrepreneurs choose Singapore as their new business destination. From a back office to a market region focus, the country has the right environment and resources to ensure any company’s success. To make sure your company’s venture into the country would be a smooth-sailing experience, it is very important that you know the legal requirements, insurance options, and tax regulations for doing business in Singapore. Business laws and regulations are not really complicated, but they still vary per type of business and industry for company registration Singapore.
Benefits of Setting Up a Company in Singapore
The Singapore government has been supportive of investments by creating some very tax-efficient policies. The government provides various tax incentives to attract businesses while at the same time ensuring that the tax exemptions and benefits provided are not abused. Most notably, the government provides a nominal corporate tax rate of less than 9% for profits up to S$300,000. The progressive personal income tax rates in Singapore range from 0 to 22% for residents (and a final withholding tax rate of 15% for non-residents) and for companies, the highest marginal tax rate is 17%. Furthermore, there is no capital gains tax and the country operates on a deemed basis for taxation, which encourages repatriation of earnings. There are double taxation agreements available with several countries which have provisions for reduced tax withholding rates and other exemptions. Additionally, in the event where dividends are distributed from countries where there isn’t a tax treaty, the Singapore shareholder is eligible for unilateral tax credit of foreign tax.
A global trade and logistics powerhouse, Singapore is one of the most vibrant economies and stylized jurisdictions in the world. Given its strategic location, it is well linked to other Asia-Pacific economies and it serves as the gateway for global trade. Being the only city-state in the world, Singapore has its advantages of drawing the best of regulatory and governance environment around and promoting a sustainable business ecosystem in a swift and innovative manner. The radical administrative and legal reforms made by the government helped to open its economy, and through human resource development and other structured corporate policies, it succeeded in becoming one of the leading and competitive economies across the world.
Overview of Singapore’s Business Environment
To set up a business (commonly referred to as “incorporate”) in Singapore can be straightforward, especially when one has a comprehensive guide to walk them through the process. This comprehensive guide is created to assist business owners who are thinking about setting up a business in Singapore by providing key considerations and important information they need to be aware of. The company that you set up in Singapore will be a Singapore incorporated company (equivalent to the definition of a private limited company in Singapore). You will only have complied with the Singapore Company Act and Singapore’s regulatory requirements; therefore, both local and foreign businesses are governed by the same set of regulations.
Singapore is a well-recognized business hub in the region given its advantageous geographical location, world-class infrastructure, clear and stable legal and political regime, as well as numerous trade agreements which make it a perfect gateway for companies to tap into the burgeoning Southeast Asia market. Beyond that, Singapore has also consistently been ranked by reputable global publications, as the world’s leading country for “Ease of doing business”. A favorable tax regime, as well as tax incentives, also means great cost savings for companies that are set up in Singapore. The thriving financial sector, strong Intellectual Property (IP) protection, and governmental support for Research and Development (R&D) further complement the attractiveness of Singapore as a prime location for businesses.
Company Registration Process in Singapore
They may also open a representative regional office as per the guidelines of the Economic Development Board of Singapore (EDB), which was established to support the registration and growth of businesses on the island. Registering and establishing a new business entity is easy, fast, and straightforward, and the following types or forms of business entities can be established, which are subject to various regulations in Singapore. These entities are as follows: Limited companies; Private limited companies; Limited liability partnerships; Sole proprietorships; or Partnerships. In Singapore, the shared obligations of the company shareholders are limited to their initial capital holdings in the company, and the shareholders’ personal assets are not exposed to corporate risks. Moreover, the company structure is a legal business entity and does not cease automatically with shareholder changes, making it a more sustainable medium for business transactions.
The company registration process is typically a simple and fast process in Singapore. It involves two key procedures: 1) company name reservation and 2) company registration. It can be completed within a day if the proposed company’s name is approved on the first round; otherwise, it may take a few days. To incorporate a company in Singapore, it is required to have a minimum of one local director and one shareholder. Shareholders can be individuals or corporate entities, and they can be local or foreign entities. However, only corporate directors cannot be appointed to manage the company. Although the practice is very rare, legally, it is possible to appoint a single individual as a shareholder, director, and Company Secretary. However, to avoid conflicts of interest and ensure sound corporate governance, at least two individuals are needed for those roles. They can be Singapore citizens, permanent residents, or any foreigners holding EntrePass or employment passes. In that respect, foreign entrepreneurs can register a Singapore company if they have an EntrePass, Employment Pass, or Dependent Pass.
Choosing the Right Business Structure
The cost of setting up and maintaining the entities also varies. Generally, the amount of rhetoric and compliance required to run, properly maintain, and finally liquidate the said company (including annual filings, annual email accounts or annual statements as well as the subsequent service of these documents and the related tax files) will also vary across these company structures. With the introduction of the Companies Act 2014, the cost of incorporating a company in Singapore has significantly decreased. While tax filing is now done online via a one-stop filing system with zero-based registration fees and streamlined annual return processes, companies are now able to submit their upcoming Annual Returns and have the accounts of the associated companies filed simultaneously, which will no doubt also reflect a cost savings on the corporate secretarial services front. Overall, costs are still to be a significant factor for businesses when considering their corporate structure.
One of the key differences between the various business structures is the level of liability, as the liability of the owner varies from one entity to another. In a sole proprietorship, for example, the owner is personally responsible for his business debts and liabilities, and his personal assets can be used to pay off any business liabilities. On the other hand, in both a company and a partnership, the debt liability is restricted to the amount of money that the respective investors have invested in the business. The concurrent drawback in both entities is that the liability of all the assets is also tied in with the business and may be used to pay off any business debts or liability.
You have a choice when setting up a business in Singapore, where you can either do business as a locally incorporated company, or you can register your foreign company in accordance with the Companies Act, a local branch office or a representative office. However, there are several different types of corporate entities you can choose from – the most common of which are private limited companies, sole proprietorships, or partnerships. While the most preferred choice is usually a private limited company, the decision should be made based primarily on the company’s ultimate goal and reasons for coming to Singapore.
Registering Your Company with the Authorities
To register the business as a company, go to the respective member’s chambers of commerce to secure a document that confirms you are a chamber of commerce member and be directed to one of their associates to act as the secretaries of the company. After this, use the reserved company name to register the company. To do this, download the eForm 1 from either the sole shareholder or company website, fill it in and submit it to acquire the registrar of companies full name using this electronic registration system. Open a bank account in the company name, perform a directors’ resolution security check – visit to download and install the public services electronic key and browse to the Security Agents page to apply the e-Services ids and p/k pairs before uploading the key. Standby, thus, to bring the application on the approved e-Services id in person and return to the registrar of companies by yourself to do this in the next 14 days.
After you have developed a reputation as a reliable supplier of goods or services, consider setting up a company. Whether despite the low start-up cost or operating under the business’s owner name can be beneficial. First, find out if there are companies from another industry that would like to pay the business to use its skills to help train them. Save yourself some money should you hire a consultant to incorporate the company and serve as secretary. Choose who you want to be the directors and company secretary. A person can be the director and the company secretary if they have a secretary’s academic qualifications. However, be careful not to allow the secretary of the company to become the director.
Understanding the Required Documents and Fees
The total cost for registering a company without the services of a professional company secretary is estimated to be $1,408. The cost includes: a) Business Profile $50; Company Constitution $60; Corporate Information Consent Form $15; and, b) incorporation fee flat rate $300. In addition to these charges, the payment for the license (known as company registration filing) will amount to $1,228. This is the sum payable to the professional company secretary. Such a high cost for registration is paid once, while the company secretary’s service will have to be paid every time AGM is held or whenever a particular service is provided. After deciding on the registration, you will not be able to subtract the cost. All patients can do is to select the cheapest and most convenient way/forms of company registration.
When you register a limited liability company in most situations (if people are engaged with your company), you must have a Company Constitution written. The goal of the Company Constitution is to provide your company details like the director’s role and duties, the authorised and allotted capital, and the members’ liabilities. You must also write a Corporate Information (Consent) form that includes the details of your directors, Company Secretary and shareholders. If you have a complex company structure or a ten-page business plan written, you should pay more fees to the professionals. Although registering a company in Singapore with the government is affordable, hiring a professional company secretary’s service can be expensive.
This is a typical sequence on how to register a business. Suppose you choose to set up a limited liability company. First, you must register with the Accounting and Corporate Regulatory Authority (ACRA). After you pay the registration fee and receive approval from ACRA to register your business, most of the documents required are already prepared by the government and you can just sign and submit them. However, there are certain documents that you must prepare on your own before you can have your business registered. These documents are important to the aspect of business operation.
Compliance and Legal Considerations
Third, determine the Singapore Standard Industrial Classification (SSIC) code for your business activity, and declare it in your registration process. The code specifies the business activities the company is initially engaged in or intends to do moving forward, and determines the rate of corporate tax (or tax exemption benefits) the company receives. The code is specific, from “01210: growing of commodities such as coffee” to “77319: rent/leasing of environmental and waste management machinery and equipment” (all provided codes have a reference/preamble towards agricultural activities and machinery, respectively); there are over 6,000 variations to select from.
Second, trademark search and registration of the local trademark in Singapore, through the Intellectual Property Office of Singapore (IPOS). We actually recommend this be done last, as once you have a company number from ACRA, IPOS will charge a renewal fee on its corresponding application to keep it active.
First, you must register your company with the Accounting and Corporate Regulatory Authority (ACRA) for it to become a legal entity recognized as a business. You need a business address in Singapore, and the owner must be a locally-resident director; in the case of a foreign individual, the work visa conditions state such a requirement. The law states that a foreign individual can register a Singapore Company without this requirement provided another resident director is in place, who meets the criteria of being a Singapore Citizen, Permanent Resident, or any person with an Employment Pass/Dependant Pass/Student Pass (an old requirement added).
Period. Not really, but it’s a starting place for setting up your company in Singapore. Costs, laws, rules, regulations, procedures, requirements, and taxes—it takes thought, especially for remote setting up and from non-Singapore based countries. We must cover the basics of what to think about, including compliance matters, regulations, taxes, etc. Here are ten, in no particular order.
Taxation and Accounting Requirements
All companies must maintain proper accounting records to explain their transactions and financial position, as from the records that enable the financial position of the company to be readily and accurately ascertained. In order to maintain its accounting records at its registered office in Sophia Rd, the company must engage the services of a public accountant, who is a member of the Institute of Singapore Chartered Accountants and who maintains a practicing certificate. The accounting records must be kept for the current and immediately past financial year of account, where the accounting records must be kept in such a manner as to enable them to be conveniently and properly audited. Each entry in the ledgers must be made as soon as possible after the transaction or the receipt of information in all circumstances. The directors and management officials are required to take all reasonable steps to secure the financial records and prevent those persons from falsifying the payment of goods and its services.
The corporate tax rate and tax exemption schemes for Singapore resident companies have been attracting businesses setting up in Singapore. The tax rate is 17% since January 2009, and is the lowest in the region amongst the Asia-5. Singapore resident companies are those companies incorporated in Singapore or companies that are managed and controlled in Singapore, and whose shareholders are individuals or corporate entities who are ordinarily resident in Singapore. Where the company is eligible for the new startup tax incentives, the first S$100,000, S$200,000 and the first 10% (new exemption) of chargeable income on normal chargeable income is chargeable at 4.25%, 8.5% and 8.5% respectively.
Employment Laws and Regulations
The government-endorsed re-employment act is a way of Singapore indirectly requesting that companies make every effort possible to retain older workers rather than retrenching them. For employees up to the age of 65, companies are required to offer re-employment to workers by offering them a similar position and salary. However, this can be challenged if a company can prove that re-employing the worker would excessively strain the company. If age is not eligible for re-employment standards, view it as a requirement for these workers to be made redundant in line with the Tripartite Guidelines on Age and it is expected that they will be paid a fair severance pay accommodating to their age and salary.
The Employment Act is Singapore’s contribution to protect the rights of employees, and it sets out in detail the ways in which businesses have to manage and administer their employees. It is legislated such that all companies with more than 25 people are governed by the Act, which includes full-time, part-time, and contract workers. Once a business hires 25 employees or more, it must adhere to stringent guidelines that affect how day-to-day business is managed and run. This includes management of overtime hours, and the need to pay for working on off days. It also mandates that companies must present a 2-week notice to all employees who they are preparing to dismiss on the basis of poor performance, and the length is set at 1 month for those employees who have been there for more than 2 years.
Intellectual Property Protection
Foreign businesses can consider the following common types of IP protection in Singapore: trademarks, copyrights, patents (particularly relevant for tech and innovation companies – Singapore has introduced an accelerated patent application-to-grant process), industrial designs, circuit layouts, and plant varieties. Having set a date for company registration and obtained approval from ACRA, businesses need to consider how to protect their IP in Singapore and overseas. Many small and medium-sized businesses may not qualify for legal aid. However, under the enhanced IP Management (IPM) Scheme, IPOS will cover up to 70% of the company’s costs, to a maximum of $100,000 for all IP rights applications. In addition, IPOS’ enterprise development flagship for legal aid provides a full refund on patent search and advice rights protection for tech companies. In addition to IPOS, law firms, patent agents, and other professional service providers offer comprehensive IP services that can meet your specific business objectives. Sector-specific research and interest groups may also offer useful licensing or business opportunities.
Singapore, a regional intellectual property (IP) and innovation hub, has the world’s second-largest trademark registration system and the fifth-largest patent registration system. Under the auspices of the Intellectual Property Office of Singapore (IPOS), known brands such as Apple and Procter & Gamble, as well as cutting-edge technology companies like IBM and Mastercard, are exploiting the full value of intangible assets and discovering new opportunities through co-innovating in Singapore. When bringing their business to Singapore, foreign businesses need to be mindful of IP laws, rights, and protection. As businesses grow, protecting your intellectual property becomes increasingly important.
Business Support and Resources in Singapore
Venture capital and private equity firms in Singapore continue to be interested in providing funding for new businesses and established businesses that have high growth potential. With the right business model, they may invest in companies that are still at a very early stage of development. If not, they prefer to invest in companies that have already demonstrated traction. This is where companies in Singapore have an advantage, as investors sometimes place greater value in the region where companies are based. Depending on the investment strategy of the firm and its focus sector, high net worth individuals (and not just those living in Singapore) and Corporate Venture Capital funds are seen to be increasingly involved in the financing of these businesses in Singapore. As Singapore has achieved its reputation as a prime startup hub in the region (and aiming to be a global hub for innovation) and an IPO from this region is of strategic importance to many companies in Asia, investment exits can be achieved in a relatively short span of time – typically within a 5-year period or less – compared to developed economies. Multi-million dollar start-up exits are not uncommon, companies do raise more capital through later funding rounds in Singapore.
It is important to be aware of the business support that is available in Singapore that may be of use or beneficial to companies that are setting up and operating here. There are various business support programmes in Singapore, such as those from government grants like SPRING Singapore Development and International Enterprise Singapore. These schemes help businesses in Singapore achieve their business goals, both domestically and abroad. Despite the numerous support programmes, time and time again, SMEs do not take full advantage of the grants available to fund the business expansion or for development. Additionally, there are plenty of incubators and accelerators that can provide financial and business operational support such as co-working spaces and mentorship in hand. Other sources of funding for start-up businesses in Singapore include grants, equity, debt, and mezzanine.
Government Grants and Incentives
- StartupSG Start-up SG is a whole-of-government initiative that provides support for startups in Singapore. It is administered by Enterprise Singapore. The initiative consists of Startup SG Founder, Startup SG Tech, Startup SG Equity, Startup SG Accelerator, and Startup SG Talent. The brand is an overview of the resources available to them, such as mentorship, resources to learn about entrepreneurship, grants for startups for technology solutions, equity investment, accelerators, and talent. With these various initiatives, local entrepreneurs or global entrepreneurs looking to start a business venture in Singapore are well supported.
- Grants Available to R&D and Innovation-driven MNCs There are various grants incentivizing and supporting the R&D efforts of MNCs in Singapore. These include the Corporate Research & Development Scheme, LSP Scheme targeting R&D and commercialization, Partnerships for Capability Transformations, Careers@R&D Scheme, etc. Companies are informed of these through the Singapore Economic Development Board’s suite of services.
- Investment Allowance The investment allowance is an incentive that provides tax allowances on specified capital expenditure incurred within a five-year period, enabling companies to improve overall productivity. Non-qualifying activities listed under the Economic Development Board’s Investment Development Incentive scheme include R&D, training, services including logistics and utilities purely serving the manufacturing activities.
The Singapore government administers various business grants and incentives to encourage and support business activities in Singapore. Some of the key grants, incentive schemes, and support measures are mentioned below. Various economic, trade, and manpower data on Singapore is included in Annex A.
Accessing Financing and Funding Opportunities
Venture debt, grants, and various tax incentives, such as the Development and Expansion Incentive or Productivity Solutions Grant, are also available to support startups. For example, in the Budget speech in February 2021, the Singapore government announced the co-investment of up to $500 million through the risk capital investment (“RCI”) sub-fund under the Monetary Authority of Singapore’s (MAS) Financial Sector Technology and Innovation (FSTI) Scheme and an additional $650 million under the Enterprise Development Grant that co-funds technology projects. In view of the pandemic, 97% of companies have benefited from at least one of the multiple government grants available to help businesses, thus driving overall productivity improvements. The latest leap in Singapore’s technology, e-commerce, and other sectors are one element of an extensive network of companies and private equity investors in the wider region, which is becoming an attractive investment target and is able to establish a platform to enter higher-value and faster-growing markets, given the lower investment per startup.
As startups look to scale and expand their businesses, many will require different forms of financing. Funds from family and friends are a common source of finance for many entrepreneurs, especially initially. Investors, such as angel investors and venture capitalists, are a popular source of funds for startups, thanks to their willingness to invest in early stage, high-potential and high-risk businesses. With Singapore being a hub for venture capitalists, the presence of investors has been a pull factor for startups, subsequently adding on to the ecosystem growth. Singapore’s investment activity in deep tech startups is a significant driver of an otherwise “flat” year for venture capital activity in 2020. Of the S$1.4 billion invested in deep tech startups, about half of this comes from Singapore-based companies.
Networking and Business Development Resources
- Business Associations – Some of these associations work as closed groups of buddies, but most offer open information that includes events, business matching, e-government advocacy, and networking. Examples include the British Chamber of Commerce Singapore (BCCS) with membership that can be availed by anyone with business interest irrespective of whether they are of British origin or not. Other business associations also organize various events to keep both potential and existing business owners very well informed about goings-on in the business world, providing the perfect platform for networking and lead generation. For example, the Singapore International Chamber of Commerce (SICC), a multisectoral industry body, promotes the interest of domestic business and open trade, making it a must-join organization for entrepreneurs in SE Asia.
- Government Events and Programs – Singapore has a reputation for being a strong advocate for economic growth and for fostering business opportunities, and the government heavily supports these networks. Various platforms encourage the development of inner networks and affiliated communities that mutually benefit the companies and statecraft, offering opportunities to discover new contacts and resources. In fact, companies looking to make contacts can participate in government initiatives such as investor pitching events, business matching sessions, and business forums. Examples of initiatives include Global Entrepolis, YES Startup Conferences, Asia Pacific Elderly Care Expo, and the iAdvisory Seminar on “Redefining Healthcare Business Models for Asean”, organized by IE Singapore, to name a few. These events set up by the government act as great opportunities for aspiring entrepreneurs to make new contacts.