Singapore is situated at the southern tip of the Malaysian Peninsula. Strategically located along the major shipping and air routes of Asia, it is the major nerve centre for trade and investments in the region.

Spanning just over 622 sq km, Singapore though small, is undoubtedly an advanced and bustling economy. It thrives on an excellent infrastructure, highly educated labour force, political stability and an efficient business environment. Singapore is an ideal holding company and headquarters location and a gateway for foreign investments in to the emerging economies of Asia, such as China, India, Vietnam, Indonesia and Thailand.

STATUTORY REQUIREMENTS OF A SINGAPORE COMPANY

Type of company for international Trade and Investment.  Resident or Non-resident company, Private Limited Company.

Restrictions on Trading.  Generally no restrictions except for financial services, education, media related or other politically sensitive businesses.

Powers of Company.   A company incorporated in Singapore has the same powers as a natural person.

Language of Legislation and Corporate Documents.  The legislation and language of corporate documents is English.

Registered Office Required.  Yes.

Name Restrictions.  Name resembling names of existing companies or which are undesirable or politically sensitive will be rejected.

Language of Name.  Latin Alphabet.

Name Requiring Consent or a Licence.  Bank, Financial institution, insurance, fund management, university, Chamber of Commerce and other similar names.

Suffixes to Denote Limited Liability.  Private Limited or Pte Ltd for privately held companies.

Directors.  A minimum of one (for both individual and corporate shareholders), who must be a Singapore resident individual.

Company Secretary.  Companies are required to appoint a resident company secretary, who must be a natural person.

Shareholders.  A minimum of one shareholder is required. Shareholders may be corporations or individuals. 100% foreign ownership is allowed.

Disclosure of Beneficial Ownership to Authorities.  No.

Authorised and Issued Share Capital.  The concept of authorised share capital has been abolished in Jan 2006 and the minimum number of issued share is 1.

Classes of Shares Permitted.  Ordinary shares, preference shares and redeemable preference shares.

Taxation

1.  Effective Corporate Tax Rate

The general tax incentives are very attractive tax rates for small-to-midsize companies. For example, a typical Singapore resident company with S$2,000,000 annual taxable income will be taxed as below:

Income tax filings for newly incorporated companies in the first three years:

Income tax filings after the first three years:

2.  Tax Exemption Scheme for New Start-Up Companies

The tax exemption scheme for new start-up companies was introduced in Year of Assessment (YA) 2005 to support entrepreneurship and help local enterprises grow.

With the changes, qualifying companies will be given the following tax exemption for the first three consecutive YAs where the YA falls in with summary below:

Tax Exemption on First S$200,000 of Chargeable Income (where any YA of the first 3YAs falls in or after YA 2020).

Tax Exemption on First S$300,000 of Chargeable Income (where any YA of the first 3YAs falls in YA 2020 to YA2019).

The maximum exemption for each YA is S$200,000 (S$100,000 + S$100,000).

*Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.

Qualifying Cconditions for Start-Up Companies

The tax exemption is open to all new companies except these two types of companies:

• A company whose principal activity is that of investment holding; and
• A company which undertakes property development for sale, for investment, or for both investment and sale.

Rationale for Exception

To qualify for tax exemption for start-ups, eligible companies must satisfy these three qualifying conditions:

1.   The company must be incorporated in Singapore;

2.   The company must be a tax resident in Singapore for that YA;

3.   The company’s total share capital is beneficially held directly by no more than 20 shareholders throughout the basis period for that YA where:

i.    all of the shareholders are individuals; or

ii.   at least one shareholder is an individual holding at least 10% of the issued ordinary shares of the company.

Details of Qualifying Conditions

1.  The company must be a tax resident in Singapore i.e. the control and management of the company must be exercised in Singapore.

2.  Companies limited by guarantee can qualify for the scheme, as long as they have members,

i.   all of whom are individuals throughout the basis period for that YA; or

ii.  at least one of whom is an individual throughout the basis period for that YA, and the contribution of that individual under the memorandum of association of the company to the assets of the company in the event of it being wound up, amounts to at least 10% of the total contributions of the members of the company throughout the basis period for that YA.

3.   Partial Tax Exemption for Companies (PTE)

All companies including companies limited by guarantee can enjoy PTE, unless they have already claimed the Tax Exemption Scheme for New Start-Up Companies.

Qualifying companies can enjoy the following tax exemption:

YA 2020 onwards

The maximum exemption for each YA is $102,500 ($7,500 + $95,000).

YA 2019 and before

The maximum exemption for each YA is $152,500 ($7,500 + $145,000).

Double Taxation Agreements.  Singapore has an extensive investment protection agreement and double tax treaty network. This includes most countries in the Asia-Pacific Region and countries in Europe, Africa and the Middle East. These countries include China, Indonesia, Thailand, Malaysia, Philippines, Vietnam, India, Japan, Korea, Australia, New Zealand, South Africa, United Kingdom, Netherlands, Germany, Switzerland, Sweden, France, Belgium, Finland and the United Arab Emirates.

Singapore is also one of the very few countries to have a tax treaty with Taiwan. This explains the popularity of Singapore holding companies for Taiwanese investments in to China and the region.

Financial Statements Required.  Annual audited accounts are required to be filed with the Registrar of Companies. The accounts must be audited by a registered certified public accountant in Singapore. However, audit exemption is available to qualified companies.

Companies qualifying for audit exemptions are :-

Exempt companies:

20. i)   Members of the company do not exceed 20.
21. ii)  Members of the company are individuals and not a corporation.

iii)  Annual turnover does not exceed SGD$5m.

Dormant companies:

Company that has no accounting transactions for the financial year in question or has not started business since its incorporation.

Procedure to Incorporate.  Submission of name approval, Memorandum and Articles of Association and details of shareholders & shareholdings, registered office address and appointments of directors, company secretary and statutory auditors.

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error omission.