The business opportunities in Singapore are vast and the country is one of the leaders of the economy of Asia. With a GDP of 297.9 billion USD in 2013, it is one of the fastest growing economies and most prosperous countries in the entire world. Besides this obvious benefit of starting a business in Singapore, it can also be said that Singapore has a very friendly and easy-to-follow tax system. If you are a large corporation, you do not need to worry about paying ridiculous amounts in taxes to the government. With corporate tax rate never exceeding 17% and starting at a mere 8.5%, while personal tax rate starts at zero and has a progressive nature, meaning the tax rate increases with the increase of profits of the person, Singapore is indeed a tax-friendly jurisdiction that has a lot to offer.
What You Should Know
If you want to form a company in Singapore but do not know how, this article is for you. To begin with, let’s first focus on what various legal forms of entrepreneurship you can register as in Singapore. The most basic differentiation of business entities is to personal and corporate. In the first case, one can work as a sole proprietor and make money as an individual. If that is the case, the personal tax system applies and if the individual’s profit does not exceed 20,000 SGD, the tax rate is zero. The highest tax rate for individuals is 20% and that only applies to the ones whose profits exceed 320,000 SGD.
Ways To Set Up a Singapore Company
On the other hand, if you are a company, you can register as a head office, a representative office, a branch office, a private limited company or even limited partnership. Even though this article is not meant to be a thorough step-by-step guide on how to register a company in Singapore, the author feels at least a few of the legal forms should be described here. Therefore, let’s take a look at some of them.
A representative office is created when a foreign company wants to register a Singapore company, yet it is not its intention to actually perform any business activities there. Therefore, it is true that it is really just a representation of the original company in Singapore and most often its purpose is of non-commercial character. This character expresses itself in the fact that a representative office is not a business entity in legal terms.
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On the contrary, if a foreign company’s intention is to actually do business in Singapore, it may rather opt for setting up a branch there. Branch differs from representative office in that its main purpose is commercial activity. However, unlike a subsidiary company, it is not a company per se, it is merely an extension of the Head Office of the parent company. Therefore, it is not a separate legal person. This means that any arising liabilities of the branch are not actually liabilities of the branch, they are liabilities of the parent company enforceable in the country where the branch resides (in this case, Singapore).
Furthermore, if you do not wish to operate the business from abroad and want to be active within Singapore and run the company from there, you may choose to incorporate a true company there. You can either register a Private Limited Company (a Pte Ltd for short), whose number of shareholders is limited to 50, or you can start a Public Company, in which case the number of shareholder is unlimited and capital may be raised by selling shares to the general public.
The actual process of incorporating a company in Singapore is pretty straight-forward and simple. No matter whether you are a foreigner or a domestic resident, the opportunities are definitely there and in either case, there is nothing preventing you from starting a company in the country this very week and beginning to earn your piece of the large entrepreneurial pie that the economy of Singapore represents.