Registering a company in Singapore is a wonderful opportunity for those foreign investors who wish to enter the Asia-Pacific markets. Singapore does not charge any capital gains taxes, your intellectual property is well protected in the country, and the corporate tax there is one of the lowest corporate taxes in the world. Due to these factors, Singapore has been at the top of the World Bank’s ‘ease of doing business’ ratings for many years already.

Singapore has signed 75 double taxation avoidance agreements with other countries and 8 agreements pertaining to the functioning of marine and air carriers. In addition, there are no CFC regulations in Singapore. These factors make the tiny island state highly preferable for registering a company in Asia.

The economic success of Singapore is attributable not only to its active trade operations but also to various government programs aimed at incentivizing both international corporations and rookie entrepreneurs. Below we discuss other reasons why you should give the idea of registering a company in Singapore some serious consideration and describe the process of establishing a company in the country.

Why should you choose Singapore as the home country for your foreign company?

Multiple international organizations that promote a friendly attitude to businesses on the part of governmental agencies always praise Singapore for the ease of doing business there. Several factors make Singapore attractive for registering a company there:

A very strong economy;
A rational tax system with low tax rates;
An easy process of company registration as well as company management;
A strategic geographical location;
A perfect infrastructure;
Productive personnel;
Well- Developed capital markets and financial system;
Opportunities for registering a company remotely.

Types of business structures in Singapore

If you have come to realize that you want to open a company in Singapore, the first thing that you have to do is choose your future company structure from those available in the country. The company structure has to reflect your main business goals and cater to your needs in the best way. Below we list the types of companies that can be opened in Singapore.

Limited Liability Companies

In accordance with the Companies Act, you can established one of the following types of limited liability companies:

A private Ltd company limited by shares;
A public Ltd company by shares;
A public Ltd company by guarantee.

An Ltd company registered in Singapore shall have not more than 50 shareholders. Both natural persons and legal entities can act as shareholders. Nearly 60% of all companies registered in Singapore are registered as limited companies. Why do so many entrepreneurs choose to register limited liability companies in Singapore?

A separate legal entity (legal person) is formed.
Huge tax benefits are of avail: if the company’s annual profit does not exceed 300,000 SGD, the effective corporate tax rate is less than 9%. Above the threshold, the rate is 17% and it is flat.
It is simple to raise funds to expand the business.
Property rights can be easily transferred and the company can remain in existence perpetually.

Partnerships

You can establish a General Partnership, a Limited Partnership, or a Limited Liability Partnership in Singapore. The Partnership shall have minimum two and maximum 20 partners. In a general partnership, the partners are personally liable for the business debts. In limited partnerships, the limited partners are liable only by their respective contributions to the charter capital. This form of company ownership is a hybrid of a partnership and a limited liability company. However, there has to be at least one unlimited partner in a limited partnership.

Sole proprietorships

This is the easiest form of company to create. However, the sole proprietor’s liabilities are unlimited, which means that they risk losing not only their business assets if the business goes wrong but their personal assets too. Besides, growing a sole proprietorship into a large company is often rather problematic.

Registering your company with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore

When you register your company in Singapore with the local business registry (ACRA), you have to make sure that you meet the following requirements:

Your company has at least 1 shareholder.
You have deposited company registered capital of at least 1 SGD;
Your company has a Secretary who is Singaporean.
Your company has at least one Singaporean director.
Your company has a registered legal address in Singapore.

Company subsidiaries in Singapore

Many foreign investors opt for registering their company subsidiaries in Singapore instead of starting new companies. A subsidiary of a foreign company in Singapore is a separate legal entity, which brings the following advantages:

The parent company is protected from the liabilities of its subsidiary.
The parent company can own 100% of the subsidiary shares.
The subsidiary can enjoy the same tax benefits that are available to resident companies in Singapore.

You can also establish an affiliation of your company in Singapore or open a representative office. The affiliation is not considered a separate legal entity so the parent company is liable for any debts that the affiliation might make. A representative office does not have a legal status at all. It can be opened in Singapore for marketing and promotion purposes.

Stages of registering a company in Singapore

Before applying for company registration, you have to ascertain that the following documents are in good order:

Your prospective company name has been approved and you have a document confirming the fact.
The information about the prospective business areas is clear and unambiguous.
Company directors and shareholders have been appointed.
The articles of incorporation are ready.
The legal address in Singapore has been registered.
НA job agreement with a local secretary has been signed.

In addition to that, you will have to open a bank account in Singapore and obtain a bank statement that confirms the deposit of the charter capital. After that, you will have to register with the fiscal and social security authorities in Singapore. If you are going to be engaged in regulated business activities, you have to apply for a license.

Key characteristics of the tax system in Singapore

Single tax. The profit is taxed at the corporate level and this is the only tax that the shareholder has to pay: no taxes are levied on the dividends paid to the shareholders.

Zero tax. Capital gains, dividends, and income from foreign sources are not taxed in Singapore. The same holds for property, inheritance, and gifts.

Low tax rates. The corporate income tax rate cannot be higher than 17% in Singapore. The personal income tax rate cannot be higher than 22%. Besides, multiple tax cuts and tax breaks are available in the country.

No double taxation. Singapore has signed dozens and dozens of agreements on avoiding double taxation. Therefore, your income is going to be taxed only once in all likelihood.