Company Incorporation in Singapore
Singapore is one of those countries where it is great to start a business. The country that has managed to rise above its condition and reinvent itself as a new, business-attractive spot on the world map.
Everything about it is carefully designed to be as friendly as possible for small and large entrepreneurs alike. From the Singapore company incorporation process to the tax rates and tax redemption offered to new businesses, everything in here makes doing business in Singapore a great deal.
If you are thinking of incorporating a company in Singapore, then think no more because this is your chance. Making this step can be extremely beneficial for you and it can bring you face-to-face to a country where business is done in high style.
Even more, the entire process will be easier than it may appear at first and that is because Singapore has tried to eliminate bureaucracy as much as possible, just enough to become even more business-friendly.
Before we continue further, you must first understand that there are only two different types of Singapore company incorporation.
- Locally incorporated companies
- Offshore companies
The Difference between a Locally Incorporated Company and an Offshore Company
Let’s make it in a very layman term. Offshore companies and locally incorporated companies are essentially the same.
An offshore company in fact carry out the same types of business as a locally incorporated company and the liability of its shareholders is generally limited to the amount of capital they have invested into the company, and they both will essentially be a private limited company.
The key difference between the onshore and local company is that the way of the company’s incorporation by jurisdiction.
What we mean is, a locally incorporated company will go through the usual process of a Singapore company incorporation. Whilst an offshore business goes through the same process, the only different is the offshore company will be incorporated by a local nominee director instead of a director preferred by you.
For Foreign companies whom will like to operate a Singapore Company, and do not wish to relocate personally to Singapore, will also opt for the offshore company incorporation option.
To be a director, if you are not a Singaporean citizen, you will need an Employment Pass where it will enable you to be a director for your company.
if you do not have the required visa to be the director, the as mentioned above, we will assist you with a nominee director service so you can incorporate your company with ease.
However, there may be an easier and faster pathway as well, and if you do not mind not running the company yourself, then it may be the best alternative.
Basically, you can incorporate an offshore company in Singapore, case in which you will not need any work passes or work visa. However, you will not be able to live in Singapore for extended periods of time.
Incorporation with Nominee Director
What is a nominee director? It is an individual who is appointed to represent the interests of another group or person or company.
As the name suggests, in this context, a nominee director helps foreign individual or investors for a Singapore Company Incorporation, and they function as the director of a company for meeting the legal requirement to own a local director. Due to the functions, a nominee director acts passively and lacks some power in the company.
Nominee Director Incorporation Risk
In our experience as an Accounting and Corporate Regulatory Authority (ACRA) license corporate service provider, we have not seen any issue thus far. That is also we have all our customers covered.
However, our professional advice is that all nominee directors must be appointed with a legal written arrangement. This is to safeguard you as a business owner and your company as a legal entity.
The risks of not using proper documents to set up the arrangement is that you incur damaged which can’t be controlled.
Incorporation documents and app forms samples
Listed below are the sample documents and application form you need for your Singapore Company Registration with a Nominee Director.
- Nominee Director-Direct from
- Nominee Director to client
- Application for wavier to file tax to IRAS
- Application to strike off Company (dormant company)
- Application to strike off Company (Non-Dormant)
- Director resolution to strike off
- EGM for striking Off
- Letter of Authorization to strike off
- Letter to IRAS – Strike off
- Member resolution to strike off
- Notice of EGM for striking off company
What are the Requirements for Offshore Incorporation?
The actual incorporation process is not difficult at all, but you will have to make sure you have all your paperwork in order. Furthermore, you should know that you must meet a set of basic requirements and that means that you will have to be very careful about the details.
First, you will have to make sure that you get your name pre-approved (which is the very first step towards incorporation). Also, you will have to know that you are unable to incorporate in Singapore without making sure that at least one local director and one company secretary are locally residents of Singapore. (Eg, citizens, permanent residents or people who have any of the three forms of work permits emitted by the Singaporean government).
The minimum paid-up capital for incorporating a company in Singapore is S$1 and you may also want to know the fact that this country does not know the concept of “authorized capital”. Also, you will have to have a registered address for your company (and P.O boxes are not allowed in any case).
Do bear in mind that as a foreigner, it is in regulation that you can’t do all the steps on your own and that you have an obligation of hiring a specialized company that can incorporate your business for you.
Also, you may want to know the fact that you don’t have to be in Singapore throughout the incorporation process and that the only place where you may have to be physically present is the bank, when you create a corporate bank account for your company.
Tax Exemption New Singapore Business
The tax exemption scheme for new start-up companies was introduced in Year of Assessment (YA) 2005 to support entrepreneurship and help the local enterprises grow.
During the Singapore budget that was held in 2018, it was announced in Budget 2018 that the tax exemption under the scheme will be revised. The changes will take effect from YA 2020 for all qualifying companies that claim the tax exemption under the scheme.
With the changes, qualifying companies will be given the following tax exemption for the first three consecutive YAs where the YA falls in:
YA 2020 onwards
- 75% exemption on the first $100,000 of normal chargeable income*; and
- A further 50% exemption on the next $100,000 of normal chargeable income*.
YA 2019 and before
- Full exemption on the first $100,000 of normal chargeable income*; and
- A further 50% exemption on the next $200,000 of normal chargeable income*.
*Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.
Corporate secretaries would be in wholly responsible for the practice of ensuring that these conditions are met and as such, it is important to ensure that they are highly qualified and well versed in local regulations and corporate laws. They will also be responsible for upkeep of important company files, reports and records.
The tax exemption is open to all new companies except these two types of companies:
- A company whose principal activity is that of investment holding; and
- A company which undertakes property development for sale, for investment, or for both investment and sale.
Rationale for Exception
To qualify for Tax Exemption for start-ups, eligible companies must satisfy these three qualifying conditions:
- They must be incorporated in Singapore;
- They must be a tax resident in Singapore for that YA;
- Their total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:
- all the shareholders are individuals; or
- at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company.
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