Singapore is one of the most ideal places to invest in the world. According to the Doing Business 2020 report by the World Bank, Singapore was ranked first in the category “Ease of Doing Business”.
Lion City brings a wide range of advantages to local and international companies that wish to invest in the country. But the benefits are ease of incorporation and taxation.
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Ease of Incorporation
The Singapore government encourages foreign entrepreneurs and businesses to come and invest. So, they made the investment registration simple and fast. This will help Singapore attract not only large corporations but also thousands of small businesses every year.
Indeed, the process of Singapore company incorporation can be done in just 1 day. You can easily register a new company in Singapore with the help of a service provider. The government regulates that if you want to open a company in Singapore, you must have a service provider to register it on your behalf.
A reliable service provider will help you cover all the requirements to open a company in Singapore, including registering a local address and having a director who is locally resident in Singapore. All you need to do is tell the provider the company name and other necessary information, mainly about the company and its shareholders.
Upon the receipt of the required documents from you, the service provider will continue to file an application and send it to the Singapore government on your behalf. If everything runs smoothly, you can expect to receive the result within 24 hours, via email.
Ease of Management for Small Businesses
To reduce the burden of heavy loads of paperwork, Singapore allows small companies to be exempted from auditing requirements. To be considered as a small company, your company must be a private company and meet two out of the following 3 criteria:
- Having a total annual revenue of no more than $10m
- Having the total assets’ value of no more than $10m
- Having the number of employees no more than 50
In addition, Singapore has a very developing outsourcing industry. You can easily find services that help you with accounting and auditing tasks. For a fee, these services will significantly relieve the burden of heavy loads of paperwork, so you can focus more on running your business and generating profits.
Favorable tax system
Tax is one of the main reasons why so many foreign investors aim for Singapore. The Lion City adopts a territorial tax system. It means that income generated within Singapore is subject to income tax. The income earned from foreign sources is not taxed unless it is remitted back to Singapore.
However, your company can be exempted from foreign-sourced income tax when it satisfies certain conditions. Those are:
- The income has already been subject to taxes in the foreign jurisdiction
- The headline tax in the foreign jurisdiction is at least 15% at the time when the income is received in Singapore
- The government is convinced that the exemption is beneficial to Singapore tax residents
As for tax rates, when compared to other developed countries, Singapore has one of the lowest tax rates. Particularly, the corporate income tax rate is only 17%. Regarding personal income tax, individuals are taxed progressively from 0% to 22%. However, your Singapore company’s payable taxes will be much lower, due to many available tax schemes and policies.
The two most common tax schemes in Singapore are Tax exemption for startups scheme and Partial tax exemption scheme for companies. As for the former, if your new company is eligible for such scheme, it can be entitled to:
- A tax exemption of 75% on the first $100,000 of earned income
- A tax exemption of 50% on the next $100,000 of earned income
For the latter, the exemption rates are the same but applied to different proportions of earned income. Particularly, the 75% rate applies to the first $10,000 and the 50% rate applies to the next $190,000.
Moreover, your company can be granted a tax rebate. Every year since 2013, the government announced a tax rebate for all local companies. For example, the rebate rate in 2020 is 25%.
Singapore has also built a network of double tax treaties with more than 80 countries around the world. These treaties bring reduced tax rates or even tax exemptions when income is transferred between Singapore and another signed country. If you can make use of these tax treaties, it can be a huge advantage when doing international business.
And one more thing, Singapore does not have capital gains tax.
Immigrant
You can move to Singapore and become the sole director of your company. To do this, you need to obtain an Employment Pass. This is a pass allowing you to come and work for a Singapore company.
So, what this means is that you establish your owned company in Singapore and hire yourself as a director. When you get an Employment Pass and move to Singapore, you will be considered as a director who locally resides in Singapore. At this point, you can directly manage your company and do not need a nominee director anymore, which can help you reduce the annual incorporation cost for hiring such a person.
In Summary
Here is why you should incorporate in Singapore:
You can register a company in Singapore within 24 hours.
Small businesses or companies in Singapore can be exempted from several compliance requirements. There are many services to help them handle heavy loads of paperwork.
Singapore has a low corporate tax rate and many tax-cut schemes. A local company can easily be entitled to a tax exemption rate of 75%.
Foreign investors can move to Singapore and become the sole director of their completely-foreign-owned company in the country, by getting an Employment Pass.
