Opening a corporate bank account in Singapore is essential for handling financial transactions. Recent high-profile fraud cases have made the process more challenging due to stricter anti-money laundering regulations. In this article, we will cover the two most essential questions and the basics of how to.
Why are banks making it so difficult to open bank accounts?
What do banks look for to approve your bank account opening?
Due to the changing landscape, most banks allow remote bank account openings. In exchange, of course, is stricter compliance.
Why are banks making it so difficult to open bank accounts?
The Organisation for Economic Co-operation and Development (OECD) emphasizes the importance of global cooperation in taxation to address the challenges of a rapidly globalizing world. In response to this need, The Common Reporting Standard (CRS) was introduced.
The CRS calls on tax authorities across the world to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
Since 1 January 2017, Singapore based Financial Institutions such as banks are required to:
Establish the tax residences of all their account holders
Report to the Inland Revenue Authority of Singapore (IRAS) the financial account information of relevant account holders
If the company is NOT a tax resident in Singapore or a tax resident elsewhere, the information will be exchanged with other jurisdictions under the CRS. The information consists of the details of financial assets they hold on to behalf of non-resident taxpayers and the income derived therefrom.
Similarly, overseas Financial Institutes must identify account holders who are Singapore tax residents and report their financial accounts to IRAS through their respective local tax authorities.
What do banks look for to approve your corporate bank account opening?
As a result of CRS, and understandably so, banks would like to avoid the hassle of the additional reporting of client information. If a company does not have tax substance in Singapore, they are likely to reject the application for an account opening.
Therefore, your company needs to have tax substance in Singapore.
Tax substance is commonly measure by tax residency. A company is tax resident in Singapore when the control and management of the company is exercised in Singapore.
How can you achieve tax substance?
Having local supplier or customers invoice, contracts, or agreements
Having a physical or virtual office in Singapore, according to company business activity
Having local staff located in Singapore
Contribute CPF for staff working
Pay employee tax for staff working
Tip: Your account opening must have a substantial purpose aside from the reduction of tax liability (and of course, it can’t be fraudulent activities) companies might enjoy under Singapore’s tax law.
Challenges to Opening a Corporate Bank Account in Singapore
Many of our clients effectively run their businesses from overseas without a physical presence in Singapore. However, this presents challenges, particularly when it comes to opening a bank account for new companies or maintaining existing accounts.
Banks typically require a physical presence in Singapore, which can be problematic if you haven’t established operations yet or cannot secure a bank account.
Paul Hype Page solutions:
1. Obtain an employment pass
Obtain an employment pass to live and work in Singapore. This implies that control and management is in Singapore which directly contributes to local tax residency, or that an employee is located in Singapore.
2. Engage local staff through our Shared Services Solution
Our Shared Services Solution enable your business moving by employing physical local staff for multiple roles as below. Having physical presence in Singapore will contribute to your business substance and meet current requirement from the government.
Other roles if specifically requested
Key factors for successful corporate bank account opening
Whether you have a case for your account opening or not, abide by these best practices- do not jeopardise your chances in a rush!
1. Get all your legal documents ready
Common documents requested by bank for verification are:
Certificate of incorporation
Corporate account opening form
Board of directors’ resolution
Bizfile of the company
Constitution of the company
Directors or shareholder identification documents
2. Work with the right people
The ideal situation would be to have a local representative speaking to bankers. Your local representative should have a direct affiliation with your company, such as being your company secretary or an employee. Conversely, selecting the right bankers is crucial. This involves subjective criteria, which Paul Hype Page satisfies through years of fostering industry relationships.
3. Applying with the right bank
Match your business needs and risks with the right bank. Banks may have their own preferences for business activities or profiles of ultimate beneficiary owners.
Steps to open a corporate bank account in Singapore
Paul Hype Page’s focus is to prove that your company has a tax substance* and select an account that best fits your business needs. We are working with numerous banks, including traditional banks, digital banks and we have alternative solutions that will best tailor to your business.
Most importantly, you DO NOT need to be physically here! We work closely with our trusted bankers to give you a higher success rate in opening a corporate bank account.
Here are the 3 steps:
Compilation of all documents and compliance checks on a local level by our compliance team.
Compliance checks by our banking partner at an international level.
Submission to bank, where they conduct a deep background check with information provided by our banking partners.
Financial institutions in Singapore include DBS, UOB, and many more as listed below:
How long does it take to open a corporate bank account?
The process to open a corporate bank account in Singapore typically takes between 2 to 6 weeks, varying based on the bank and compliance requirements. In instances where additional information or documents are needed, it can extend beyond 6 weeks.
If you are a foreigner opening your corporate bank account from overseas, you should consider seeking professional advice. The landscape has changed significantly since 2018, when the process was simpler. Paul Hype Page specializes in assisting foreigners with company setup and business operations in Singapore.
READY TO SETUP YOUR SINGAPORE COMPANY & OPEN A CORPORATE BANK ACCOUNT?
Come down to our office or get in touch virtually for an assessment today.
All documents submitted must be in English. For all non-English documents, the company must ensure all documents are translated into English by an official translator and certified by the directors of the company who are to sign on every page of such documents.