Foreign business owners’ work visa
There are two options for a foreigner to start a business in Singapore:
- Relocate to Singapore and manage your company
- Stay in your home country and let someone else hold the rights
If you want to relocate to Singapore, there are three (3) options for you:
- Incorporate a Singapore company with Entrepreneur Pass (EntrePass)
- Incorporate a Singapore company with Employment Pass (EP)
- Incorporate a Singapore company with a Tech Pass
All work visas can be applied from the Ministry of Manpower.
Different types of the company set up in Singapore
- Private Limited Company (Recommended)
Limited by shares and is a separate legal entity from its shareholders. It is recognized as a taxable entity.
- Sole Proprietorship
A business entity owned by one person.
Two or more individuals carrying out a business. Assets and returns are typically shared internally, although the amount may differ.
- Limited Partnership
A business owned by two or more individuals. At least one must be a General Partner, and one a Limited Partner.
- Limited Liability Partnership (LLP)
Each partner’s own liability is generally limited.
If you are a foreigner, you can also incorporate a branch, a subsidiary, or a representative office in Singapore if you have a company in your home country.
Tax exemption scheme for newly incorporated Singapore Companies
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 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 the 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 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.
Whether you are a local or foreign entrepreneur, engaging a professional firm like Paul Hype Page to register a company is a good idea. Paul Hype Page is knowledgeable with the local law and regulations governing companies and is also skillful in handling ongoing Singapore company incorporation’s regulatory and compliance requirements.
Happy with our explanation? Do you have more questions? Contact Paul Hype Page & Co. Today and get our dedicated corporate specialist to guide you through your entrepreneur journey.