In this article:
- Why is Singapore the Preferred Country in Asia for Offshore Company Incorporation
- What are the Requirements for Offshore Incorporation?
- Things to Consider When Choosing to Incorporate Offshore In Singapore
- How Corporate Services Singapore Can Help Your Offshore Company
An offshore company is a company that is established, supervised, and maintained in a foreign country that is not the jurisdiction of the company’s main operations or that is not the residence of the company’s principal investors.
Being an offshore company means getting certain tax, legal, and financial privileges for being incorporated there. Most multi-national companies view an offshore company as an essential tool for gaining international exposure, market expansion, and revenue growth.
Why is Singapore the Preferred Country in Asia for Offshore Company Incorporation?
Choosing a specific jurisdiction for offshore company registration and operation is one of the most significant decisions you can make for your business. Singapore has become one of the top destinations in the world for forming an offshore company because of the many viable investment options, theoretical benefits, and practical advantages it offers as compared to other jurisdictions, namely:
Strong Political Stability
Singapore ranks first in terms of high political stability and low bureaucracy in all of Asia. With its pro-business, corrupt-free, and transparent government system as well as clear-cut, sound, and pragmatic business rules and regulations, setting up and operating an offshore company in Singapore has minimal risks both financially and legally.
Progressive Foreign Ownership Policy
The policy pertaining to offshore company incorporation in Singapore is open and liberal. Foreigners and non-residents do not require prior approval from the government before registering an offshore company. Both individuals and corporate bodies can be assigned as shareholders. Foreign shareholding, whether in part or 100%, is allowed in all sectors.
Reduced Tax Liability
The tax system in Singapore is known for its business-friendly characteristics:
- Low personal income tax rates
- Low corporate tax rates
- Absence of dividend tax
- Absence of capital gains tax
- Territorial one-tier tax system
- Tax free rate for foreign-sourced income not remitted in Singapore company
- Tax free rate for foreign-sourced income received in Singapore company (certain conditions must apply)
- Tax-free rate on the first S$100,000 taxable income during the first three tax filing years of a newly set-up company (certain conditions must apply)
What are the Requirements for Offshore Incorporation?
Once you have decided to register an offshore company in Singapore, you must take note of the following key requirements as it will allow for a smooth and speedy overall incorporation process from start to finish.
Company Name
- Must have a proposed name that is not similar or phonetically identical with an existing company
- Must be desirable enough for recommendation (not rejection) by the Minister
- Must have the approval of the Accounting and Corporate Regulatory Authority (ACRA)
Directors
- Must appoint at least one (1) director
- No limit to additional directors (can be local or foreign)
- All directors must be above 18 years of age and natural persons
- At least one (1) director must have local residency (Singapore citizen, Singapore permanent resident, or Singapore work pass holder)
- Nominee directors are allowed (in cases where it is difficult to satisfy the local director requirement)
Shareholders
- Must appoint at least one (1) shareholder (can be local or foreign)
- Maximum limit of fifty (50) shareholders
- All stakeholders must be natural persons
- Residents and non-residents can be appointed as shareholders
- The director can also assume the position of the shareholder
- Shareholders can be individuals or corporate bodies
- Nominee shareholders are allowed
Company Secretary
- Must appoint one (1) professionally qualified company secretary
- Must be a natural person and a local resident
- Non-residents and corporate bodies are not allowed
- A sole director/stakeholder is not eligible
Registered Address
- must be a local Singapore address
- can be a commercial or residential address
- a PO Box is not allowed
Paid-up Capital
- Must have minimum paid-up capital of S$1
- No maximum limit on capital share value
- No authorized capital required
- Total share capital of SG $50,000 is recommended
- Paid up share capital shares may be paid in any currency
Information and/or Documents for Submission
- Passport copies of proposed directors and shareholders
- Residential address proof of proposed directors and shareholders
- Pertinent details about the parent company (for corporate entities functioning as shareholders)
Things to Consider When Choosing to Incorporate Offshore In Singapore
- Secure all the necessary information/documents before submitting to the Singapore company registrar to avoid complications or delays. In most cases, the process can be accomplished in a single day.
- After your offshore company incorporation, you will need to open a corporate bank account. All banks in Singapore adhere to stringent regulations and laws so make sure to comply with all the requirements requested.
- Your Singapore-incorporated offshore company may need to process its GST (Goods and Services Tax) registration and ongoing compliance.
- Certain types of business activities require a license from the relevant government agencies to be able to proceed. Determine if the nature of your business requires you to obtain one.
- Take note of the annual auditing requirements for offshore entities in Singapore. An auditing statement of approval, however, is not required if your company is characterised by any of the following:
- Has an annual turnover or gross assets that does not go beyond SGD $10,000,000
- Has employees less than 50
How Corporate Services Singapore Can Help Your Offshore Company
Be assured of a hassle-free incorporation process for your offshore company in Singapore through the skilled competence of an established company registration service provider like Corporate Services Singapore. Whatever needs you might have in Accounting & Taxation, Audit & Assurance, Company Incorporation & Company Secretarial Services, Corporate Services Singapore is fully-equipped to provide legal, effective, and personalised solutions for your company success.
FAQs
What is a Singapore offshore company?
It is a company incorporated in Singapore that conducts its business activities outside of Singapore, taking advantage of Singapore’s favourable tax regime and business environment.
Can a foreigner own 100% of a business in Singapore?
Yes, there are no restrictions on foreign ownership of companies in most industries in Singapore; 100% foreign shareholding is allowed.
How do I register an offshore company in Singapore?
By appointing a professional company registration firm to handle incorporation. The basic steps are name approval, filing company documents like M&AA (memorandum and articles of association), director/shareholder details, and tax registration.
Do offshore companies pay tax in Singapore?
Yes, but they can take advantage of tax exemptions or incentives and pay 0-10% corporate tax for first $200,000 profits instead of the standard 17% rate if they meet certain conditions.
What is the corporate tax rate for foreign companies in Singapore?
The standard rate is 17%. But they can enjoy lower rates of 0-10% under schemes like Partial Tax Exemption and Startup Tax Exemption.
