With its strategic location, the availability of modern infrastructure and a multi-lingual and well-educated talent pool, Singapore is an attractive investment destination for foreign corporate entities expanding their business operations to the region.
If you wish to establish operations in Singapore, here is your all-in-one guide to the setting up process, from the different types of business entities that foreign corporate entities and multinational companies in Singapore can choose from to manpower and work pass options and compliance requirements.
Select Type of Business Entity
Foreign companies must register a business entity in Singapore before commencing business activities here. Depending on the extent and scope of your Singapore operations, your foreign corporation or multinational company has several set-up options to choose from.There are three types of company structures to choose from:
- Representative Office
- Branch Office
- Subsidiary Company (i.e. a private limited company)
Regulatory requirements will vary depending on the type of structure you choose. A key distinction is that representative offices are only allowed to conduct market research and liaison activities. To conduct actual business activities in Singapore, you may consider registering a branch office or subsidiary company instead.
For more details on the differences, please refer to this link.
Tax Schemes and Incentives
If you choose to set up a Subsidiary Company, you will be able to enjoy attractive incentives. For instance, your company will be taxed only on profits derived in Singapore at a headline corporate income tax rate of 17%. Foreign-sourced dividends, profits and income will not be taxed.In addition, your company may benefit from the Start-up Tax Exemption (SUTE) scheme and Global Trader Programme (GTP).
Start-up Tax Exemption (SUTE) Scheme
Under the Start-up Tax Exemption (SUTE) scheme, Singapore-incorporated companies can qualify for tax exemptions. For Year of Assessment (YA) 2020, your company may qualify for 75% tax exemption on its first SGD 100,000 of chargeable income, and a further 50% exemption on its next SGD 100,000.However, companies whose principal activity is that of investment holding or property development for investment purposes are not eligible for the SUTE scheme.
Global Trader Programme (GTP)
The Global Trader Programme (GTP) aims to encourage more trading activities in Singapore and attract foreign investments from companies dealing in the wholesale trade. Specifically, companies must be carrying out physical trading, brokering of physical trades or earn derivative trading income.Companies that qualify for the GTP can enjoy a reduced corporate tax rate of 5% or 10% on qualifying trading income for three or five years.
To qualify for the GTP, companies must fulfil the following requirements:
- Conduct substantial operations in Singapore
- Larger players should perform strategic functions such as compliance and risk management, financial, derivatives and logistics management
- Committed to make significant use of the banking, financial infrastructure, logistics, arbitration and other supporting services in Singapore
- Contribute to manpower development in Singapore
To find out more about the GTP, please contact Enterprise Singapore.
Relocate or Engage a Nominee
If you choose to set up a Branch Office or Subsidiary Company, you are required to appoint a local agent or resident company director.Employment Pass holders can also qualify for this role. To apply for an Employment Pass, the company must have been incorporated. Hence, you may wish to engage a nominee agent or director in the interim for the incorporation process, before transitioning once the Employment Pass has been approved.The requirements to obtain an Employment Pass include:
- A fixed monthly salary of at least SGD 3,600, though more experienced applicants need higher salaries
- Possess acceptable qualifications, usually a good university degree, professional qualification or specialist skill
If you are an overseas company without a registered office in Singapore, you will need to get a corporate services company or Singapore-registered company to act as a local sponsor and apply on your behalf.
If you are setting up a Representative Office, you must appoint a Chief Representative who will relocate from your overseas headquarters.
Incorporating a company or office in Singapore does not end with setting up and paying a registration fee. There are plenty of compliance requirements, paperwork and checks involved.If you choose to set up a Branch Office or Subsidiary Company, they will continue to be registered until you close them down. A Representative Office, however, has to be renewed every year up to a maximum of 3 years.A Branch Office will be required to file both its accounts and its parent company’s accounts, while a Subsidiary Company will be required to file only its accounts. A Representative Office will not be required to file any accounts, since it is not allowed to generate income.Where taxation is concerned, Branch Offices will be taxed as a non-resident entity and will not be able to enjoy local tax benefits. Subsidiary Companies will be taxed at resident rates and will be able to enjoy local tax benefits. Since Representative Offices are not allowed to generate income, they will not be taxed.
Engage a One-Stop Corporate Solutions Provider
To simplify your setting up process in Singapore and be effective at governance, consider engaging a one-stop professional corporate services provider that can provide you with all the corporate support you need.
At Corporate Services Singapore, we provide a comprehensive range of services from incorporation to keeping and maintaining statutory books and registers, to helping you meet the various statutory compliance deadlines. Besides leaving you with more time and resources to plan your move and focus on your core business, this ensures that your business never misses a submission or statutory filing.
Corporate Services Singapore offers a complete suite of solutions to ensure that your business runs smoothly from Day 1. To set up your local entity in Singapore or find out more, give us a call at 6602 8286 or email us at firstname.lastname@example.org to get started today.