Why Choose Singapore for Your Business Relocation?
An investor-friendly tax system is one of the main reasons that drive foreign companies relocating to Singapore. Singapore does not impose any taxes on capital gains and dividend income.
Furthermore, Singapore’s highest possible corporate tax rate on taxable income is 17%, a figure far lower than other countries in the Asia-Pacific region.
For example, the highest possible corporate tax rate in Japan is 30.86%; New Zealand, 28%; China, 25%; and Australia, 30%. If the company’s corporate profits do not exceed S$300,000, then the tax rate falls to a paltry 8.5%. All foreign-sourced income is also exempt from taxation as long as the income has been taxed in a country which has a minimum headline tax rate of 15%. Finally, Singapore’s regulatory framework grants foreign investors the same opportunities afforded to local ones. This is due to the lack of foreign exchange controls and foreign ownership restrictions.
Immigration Policies in Singapore
Singapore also provides many different visa schemes for entrepreneurs and working professionals. Among these are the Employment Pass Scheme, the Entrepreneur Pass Scheme, the Personalised Employment Pass Scheme, the S Pass Scheme, and the Miscellaneous Work Pass Scheme. These schemes were initiated by the Singaporean government to attract foreign investment and surround the local workforce with some of the best talent from abroad.
When combined with Singapore’s open immigration policies, these visa schemes make Singapore an even more attractive location to which foreign businesses could relocate.
Transparency in Conducting Business
Singapore’s political stability and relative lack of corruption also contribute to its business-friendly atmosphere. The Corruption Perceptions Index, published by Transparency International, ranks Singapore as the sixth-least corrupt country in the world. The Global Economy, a website that serves researchers, academics, investors, and business people who need reliable economic data on foreign countries, ranks Singapore’s political ranking as the world’s third-most politically stable country, only trailing Monaco and New Zealand. This allows companies in Singapore to conduct business in a safe and transparent environment, thus adding another compelling reason for foreign companies to relocate there.
Singapore’s government policies in regard to business are also transparent. Therefore, those who relocate their businesses there will be assured of a stable environment in which they will work.
Foreign companies intending to enter Singapore may do so by utilizing one of several options.
Most small to mid-sized foreign businesses will attempt to enter Singapore using a subsidiary company. This is because Singapore allows locally-incorporated companies to be completely foreign-owned. The structure of a subsidiary company offers protection against liabilities and is relatively tax-efficient.
A foreign company may also opt to commence business operations in Singapore after setting up a branch office. In Singapore, branch offices are regarded as extensions of foreign companies despite being registered legal entities. Therefore, a branch office’s liabilities extend to the foreign company and its income is ineligible for tax exemptions and incentives. This may be a reason why this option is less commonly chosen than that of using a subsidiary company.
Before a foreign company commits to any large-scale investments or business venture in Singapore, it may choose to set up a representative office if it is interested in learning more about the Singaporean market. Representative offices may conduct studies and market research but may not carry out business activities or trade. This is due to the fact that representative offices are temporary setups that do not have any legal persona.
However, the cost of registering a representative office is much lower than that of registering a subsidiary company or branch office.
In 2017, the Singaporean government introduced an inward re-domiciliation regime as an amendment to the Singapore Companies Act. This regime is open to those who wish to relocate their businesses to Singapore, but do not wish to create a subsidiary company or branch office. Foreign companies relocating to Singapore under this regime must comply with a minimum of two of the following requirements:
- The turnover for each financial year must not exceed S$10 million.
- The total value of all assets held by the company at the close of each financial year must not exceed S$10 million.
- The company must have 50 or fewer employees at the close of each financial year.
Requirements for Singapore Company Incorporation
There are also several other requirements imposed on companies relocating to Singapore.
For example, laws in the foreign company’s home country must be able to provide for the re-domiciliation of businesses. The company must also file several documents.
One document must be a proof of the company’s financial soundness. The other documents must include a genuine copy of the company’s incorporation documents, registration papers through which the company seeks re-domiciliation, and a receipt proving the company’s payment of a registration fee. Within 60 days of relocation, the company is required to file evidence of de-registration issued by its home country’s Companies Register with the Accounting and Corporate Regulatory Authority. This then completes the transfer of operations, allowing the company to conduct business in Singapore.
Singapore is a country whose stock in the corporate world continues to rise. Its vibrant business culture, laws conducive to business activity, and transparent and stable environment contribute to this reputation.
Considering everything that has been mentioned, when choosing to relocate a business to another country, Singapore should always be an option.