Singapore as a Major Trading Hub in ASEAN in 2021
As a major financial and trading centre, Singapore has the expertise and infrastructure corporations need to efficiently access ASEAN markets. The nation’s stable tax and regulatory systems and business-friendly setting make it easier for foreign entrepreneurs to do business in the country. Moreover, Singapore offers topnotch services and workforce, making it an excellent base to grow into the rest of ASEAN.
Apart from these advantages, several factors make the country the perfect place for foreign investors who plan to tap into ASEAN’s promising business potential. This article highlights the city-state’s strengths that make it a major trading hub in ASEAN in 2021.
Singapore as an Efficient Location for Business Set Up
Singapore offers one of the most transparent procedures for business set up. Aspiring entrepreneurs can readily find most legal regulations only, allowing businesses to evaluate the market before completely perpetrating the market. Once business owners are ready to incorporate their company, they will have to register their credentials on Bizfile, an online electronic filing platform that combines business and tax requirements on one form.
The Bizfile system is handled by ACRA or the Accounting and Corporate Regulatory Authority, a statutory organisation responsible for monitoring newly-registered businesses in the country. The platform allows entrepreneurs to store, upload, and download critical data on businesses registered in Singapore.
Business owners need to pay a one-time fee of SGD 300 to register their company and another SGD 15 to register their company name. The timeline required to incorporate a new company in Singapore differs from a few hours to days.
Singapore Provides a Favourable Tax System
Singapore offers one of the favourable tax systems in Asia with a low corporate income tax of 17%, which is the lowest in ASEAN. The city-state practices a single-tier tax system, wherein each business pays corporate income tax only on changeable profits, and every dividend is not taxable. A company can get many benefits from becoming a tax resident in the country.
Incentives that companies in Singapore can get include new startups being qualified to obtain a 75% tax exemption on the first SGD 100,000 of chargeable profits and up to 50% exemption on the next SGD 100, 000 chargeable income. All other businesses will get a 75% tax exemption on the first SGD 10,000 and up to 50% on the next SGD 190,000 of chargeable profits. Moreover, Singapore does not have a capital gains tax.
The country also provides industry-specific tax incentives and has a large network of double tax and free trade agreements.
Industry-specific Tax Incentives in Singapore
Singapore has four key government bodies which can administer tax and business incentives to entities in Singapore in specific domains, which include:
- EDB or Singapore Economic Development Board: This government agency is responsible for executing and developing plans that facilitate Singapore’s industries’ investment.
- IRAS or Inland Revenue Authority of Singapore: This government body is the country’s tax regulatory authority.
- ESG or Enterprise Singapore: This body assists Singaporeans companies to grow globally and supports local exports.
- MAS or Monetary Authority of Singapore: This body serves as the country’s principal bank and financial services authority.
Industries qualified for tax incentives in Singapore include banks, financial services, fund management, global trading sectors, tourism, shipping and maritime, processing services, insurance, headquarter operations, research and development, legal agencies, event organisation, and e-commerce.
Singapore’s Large DTA and FTA Networks
Compared to other ASEAN countries, Singapore has by far the most extensive double tax and free trade agreements networks. It has more than eighty-five DTAs, and every DTA treaty’s tax rates vary for every country. They typically cover various income types, including taxes on dividends, royalties, capital gains, and interests. Moreover, the country is a signatory to twenty-four FTAs, including exclusive access to some of the globe’s biggest free trade areas via its affiliation with ASEAN, in addition to FTAs with Hong Kong, India, and the European Union.
Hong Kong vs Singapore
Singapore has more FTAs and DTAs than Hong Kong and provides a more distinct investment community. Singapore has more than seven thousand multinationals operating its Asia-Pacific businesses in the country, whereas only more than one thousand multinational companies are based in Hong Kong.
Moreover, Singapore is strategically situated among the swiftest growing economies in Southeast Asia, especially Vietnam and Indonesia. ASEAN itself is anticipated to become the fourth-biggest economy by 2050. The city-state shares many linguistic and cultural similarities with other ASEAN nations, especially Malaysia and Indonesia. More importantly, the country also offers diverse and highly talented manpower.
How Singapore Corporate Advisory Services Can Help
Professional Singapore incorporation services and corporate advisory services help streamline company registration processes in Singapore and ensure the newly registered company stays compliant with current statutory requirements. Hence, the easiest way for local and foreign entrepreneurs to set up and run a new company is by opting for a high-quality corporate advisory agency. Most services providers offer various company formation packages to satisfy different business needs.