Form a Company in Singapore
Reasons to Form a Company in Singapore
Singapore has become one of the world’s leading destinations for investment and business purposes. Many foreign investors and important corporate figures have taken advantage of thegrowing economy and the positive economic climate inwhat has now become one of Asia’s economic powerhouses. Today, Singapore’s economy is one of the most open in the world. The country’s policies are of a decidedly pro-business nature; therefore, success in the business world is easy to come by in Singapore. As a result, many local and foreign entrepreneurs and investors have decided to form a company in Singapore with a registered address there.
How Singapore Companies Are Protected from Negative Circumstances
Company incorporation in Singapore has been on the rise. This is because companies which have been formed in Singapore are reasonably well-protected in cases of financial losses due to various reasons. In matters related to taxation, protection from bankruptcy, and liabilities in cases of debts caused by business activities, the current laws and regulations in Singapore ensure that company owners will not encounter much trouble or suffer negative consequences.
Singapore’s corporate taxes are among the lowest in the world. Every company in Singapore, whether it be a resident or non-resident company, is taxed at a rate of 17%. There is also no tax on capital gains. Furthermore, if the company is a start-up, the company may utilize the tax exemption scheme for start-up companies to save on its tax bill. This exemption is one of Singapore’s most important tax exemptions. It was deemed necessary by the Singaporean government because start-ups tend to consume large amounts of money at their outset. Due to this fact, the government worried that business ventures in the country were being stunted. Therefore, to encourage entrepreneurship among people living in Singapore, this scheme was formulated. It gives a full tax exemption on the first S$100,000 of the start-up’s normal chargeable income and a subsequent exemption of 50% on the next S$200,000 of normal chargeable income which the start-up has earned. “Normal chargeable income” is defined by the Inland Revenue Authority of Singapore (IRAS) as income which is to be taxed at the standard corporate tax rate of 17%.
We at Paul Hype Page & Co can help you handle any taxation issues you might face. We can work with you and your company to make sure that you save as much tax money as you can while still remaining compliant with Singaporean tax laws.
When a company goes bankrupt, its assets will be collected and sold off to finance the paying of its debts. This process is known as liquidation. Liquidation may be done in either a voluntary or compulsory manner. Voluntary liquidation may either be done via a members’ voluntary winding up (if the company is solvent) or a creditors’ voluntary winding up (if it is insolvent). Meanwhile, compulsory winding up is a fate suffered by companies which are not able to pay their debts. A shareholder, liquidator, creditor, judicial manager, minister, or even the company itself may apply to liquidate a company in a compulsory manner. After liquidation has been completed, any money and assets left over will be distributed among the company’s shareholders. Any entitlements and preferences of shareholders, including those related to share certificates, will be suitably honored according to the company’s memorandum and articles of association. Once these entitlements and preferences have been properly handled, the remaining assets will be divided equally among ordinary shareholders.
Sometimes, business activities incur debt for the company. However, if the company is a private limited company, its owners will not be held liable for any debts incurred by the company. This fortunate turn of events is the case because according to Singapore’s current business laws, private limited companies are considered to be separate legal entities from their owners. Unfortunately for those who own a sole proprietorship, however, this advantage does not extend to them. This is because all liabilities and debts which have been incurred by a sole proprietorship are deemed to be the liabilities and debts of the owner. However, all assets and profits which have been generated by the sole proprietorship’s business activities also belong to the owner of the sole proprietorship. Therefore, regardless of whether one owns a private limited company, sole proprietorship, or any other business entity, there is a positive outcome to counteract the possible negative circumstances that may arise with regard to debts.
Singapore Companies and Legal Requirements
Those who are interested in forming a company in Singapore need to know that the advantages that have already been mentioned come with certain responsibilities. The process of forming a company is linked to certain legal actions which are regulated by the authorities. This has to be the case so that tax evasion, money laundering, financial abuses, and other illegal activities will be as rare as possible. The authorities in Singapore are always vigilant about such issues.
One of the legal actions which has to be performed before one is allowed to open and run a Singaporean company is the appointment of a director for the company. The company director is required to be a person who is either a permanent resident or citizen of Singapore or an Employment Pass holder. This can be proven by the residential address of the person to be appointed. If this address is in Singapore, then the person is eligible for the role of director. Every company can have one or more directors, but at least one of them must be from Singapore. In this way, the state has a guarantee that at least one person is accountable for the actions of the company. The company director must also be at least 18 years old. It is the shareholders’ duty to select the company director. Once appointed, the director is required to carry out a variety of duties including, but not limited to, the following: complying with reporting and disclosure requirements according to the Singapore Companies Act, complying with all obligations related to financial reporting, and providing those who require copies of financial statements with such copies, among others.
All Singapore companies also require a company secretary. This secretary, just like the director, must be a permanent resident or citizen of Singapore or an Employment Pass holder and at least 18 years old. Company secretaries must also possess the necessary qualifications, such as being a qualified person under the Legal Profession Act and a member of a recognized organization in Singapore. The secretary is appointed by way of a decision made by shareholders. The company secretary is required to be appointed at any time during the six-month period that immediately follows the registration and incorporation of the company. Among the duties of a company secretary include ensuring the accurate filing of tax assessments, making sure that procedures are followed during meetings of any type, and upkeeping the company’s constitution.
It is not always easy to ensure that all your company’s secretarial needs are fulfilled at all times. Fortunately for you, we at Paul Hype Page & Co can be of assistance in this regard. We offer high-quality secretarial services to companies in Singapore and beyond at reasonable prices.
Some of the other requirements for the incorporation of a Singapore company include a number of shareholders between one and 50, a registered address in Singapore, an approved company name, and paid-up capital of at least S$1. Once everything has been settled, the prospective company owner will receive a Certificate of Incorporation and a Company Business Profile from the authorities.
Singapore Companies and Financial Year-end Documents
Just as is the case in any other country, companies in Singapore need to submit documents at the end of the company’s financial year. The annual returns must be submitted after the annual meeting of a company to the Accounting and Corporate Regulatory Authority (ACRA), which serves as the country’s company registrar. All financial year-end documents must include information on tax returns, the directors’ report, and Form C should the situation call for it. Form C is the company’s declaration of income for the year of assessment (YA). Form C is submitted every year to IRAS, the nation’s primary tax authority. Filing of Form C must be completed by November 30 every year if paper filing is used, or December 15 if e-filing is used.
Estimated chargeable income (ECI) is also required to be filed after each financial year. A company’s ECI is the estimate of its taxable income in the most recent financial year. All Singapore companies are required to file ECI within the three months directly following the end of the financial year. During the final month of the financial year, all companies will receive a notification from IRAS to remind them to file ECI.
Not every company must file ECI. Companies which have an annual revenue of S$5 million or less and an ECI of “nil” are not required to do so. The companies which fulfil these criteria must, however, conduct self-assessment. There are also certain entities which are also exempt from filing ECI. These entities include foreign universities, approved CPF unit trusts, designated unit trusts, certain foreign ship owners or charterers, and certain real estate investment trusts. In some cases, IRAS might even grant a specific waiver via an advance ruling.