Singapore is one of the lucrative places in the world for doing business with multi-ethnics five millions of populations. The country has good political stability and business-friendly government encourage foreign investment in Singapore.
For doing business in Singapore, one may have few options. These are:
- Start a Sole Proprietorship or partnership company
- Limited Liability Partnership Company.
- Private Limited Company
- Establish a Branch Office
- Establish a Representative office
- Establish a business trust.
One may choose the different option from above list based on the intended activities of business and tax consideration.
The Sole Proprietorship business may begin with an individual by obtaining a business name and by registering a business with Accounting and Corporate Regulatory Authority (ACRA). The online system of ACRA allows a user to fill information electronically and also retrieval information. If anyone wishes to conduct business in partnership then they also need to be registered with ACRA’s website and a maximum number of twenty persons may join in partnership and ten people in banking partnership. Potential business personnel also have the flexibility to start the business as Limited Liability Partnership (LLP) Company. The LLP companies enjoy the benefits of the private limited company and they have the limited liability when the company in debt. To establish an LLP company one has to pay $165 Singaporean dollars which include the $15 name approval fees. According to Singapore laws, every LLP company may have at least two partners and the partners may two individuals, two local companies or one foreign company or another LLP.
Potential investors may open their company as Limited Partnership Company (LPC) while doing business in Singapore. According to the Limited Partnership Act (LPA) introduced at May 2015, any LPA business does not have to separate their legal entities from the business partners. In LPA companies, there should have one general partner and one or more limited partner. For every day’s operation, the general partner is responsible and limited partners are only responsible for business debts and law obligation of LPA business. LPA companies also have to register with ACRA and they have to provide the details of each partner if they are the general partner or limited partner. One can also start their business as a Limited Liability Company (LLC) and participation by a Singaporean nationality is not required for this type of company. They can be fully owned by the foreign companies. In order to establish an LLC, the company has to register with ACRA and companies have to include unique types of document such as business letters, account statement, official notice, and publication. The company has to pay $15 for name approval and $300 for the incorporation of the company. Usually, the process gets completed within hours and an email notification from ACRA provides evidence that the company is incorporated. However, these types of companies are not bound to display their company name outside their office and also there is no minimum capitalization required.
Foreign companies may establish their bases in Singapore and use as the branch office or representative office. A branch office is not a separate entity from the mother company and by law; the mother company is responsible for any activities conducted by the representative company. Any branch office of a foreign corporation must be registered with ACRA and they have to pay one-time registration fees of $300 to ACRA. If the foreign companies have no shared capital then they bound to pay $1200 to ACRA as one-time registration fees.
For doing business in Singapore with a representative office, the company has to fulfill a few requirements before proceeding. One of the conditions is, the company’s yearly turnover should exceed US$250,000 and foreign companies should run with at least three years. The maximum number of allowed staffs in representative office should be five personnel. For registering foreign office, companies have to submit the company’s latest audit report, an electronic copy of a company’s certification of incorporation and also the business brochure of the company. Generally, it takes three weeks to receive the clearance for a representative office in Singapore.
Tax law in Singapore is business friendly and it does not imply the tax on capital but if the gain is recurring nature then it may be regarded as income and subject to tax. For doing business in Singapore, general tax rate for resident and nonresident is 17%. For the newly incorporated companies, the income for first $100000 and after $200000 of chargeable income for the first three years of assessment is exempt from income tax. Representative office in Singapore is exempt from paying any taxes as they are not conducting any business activity or revenue generating activity. In any case, if representative office generates revenue then the tax authority of Singapore may also impose the tax on the representative office. Additionally, the property tax is different is Singapore and real estate companies are required to pay 0% to 16% tax based on the annual value of the property.