Based on the latest study for year 2020 by The World Bank, Singapore ranked as the 2nd country in top 10 best places in the world to do business, after New Zealand. The study concluded by taking into consideration the related factors which affect a business, starting from the setting up of the legal entity, its operations and the closure of a business. There are not one but several reasons why the country has been consistently praised for its business-friendly outlook. Some of the reasons have been listed below.
Setting up a Singapore Company can be as easy with 2 simple steps, firstly company name application and follow by incorporation. Singapore Private Company Limited by Shares have the suffix of “Private Limited” or “Pte. Ltd.” and instant approval for Company Name application in general unless the proposed Company Name is identical to an existing business, undesirable or prohibited by the order of Ministers.
Incorporation of a Singapore Company Limited by Shares will be completed with the following basic information:
- Determination of Company Type: Company type mainly depending on the number of Shareholder(s) which is/are to be registered, at the point of incorporation:
|a) Exempt Private Company
- Has a maximum of 20 individual shareholders.
|b) Private Company
- Has a maximum of 50 Shareholders, including both individual(s) or Corporation(s).
|c) Public Company
- May have more than 50 Shareholders.
- May raise capital by offering shares or debentures to the public.
- Share Capital: Singapore Companies enjoy the following flexibilities in the Company’s share capital:
|a) Minimum number of shares
- One (1) share Ordinary/Preference Share.
- Company allow to maintain any currency or multi-currencies of its Capital, with a minimum of one (1) Shareholder (either individual or corporation).
|c) Par value of share
- Abolished in Singapore with the purpose to give better flexibilities during share structure planning.
|d) Authorized Share Capital
- Abolished in Singapore and it gave Investors the opportunity to focus solely on the Company’s issued capital.
- Company Officers and Shareholders: the following as the Officers to be registered:
- Every Company required to maintain at least one (1) Director who ordinarily resides in Singapore, at all times. Both Singapore Citizen and Singapore Permanent Resident, with valid local residential address, satisfied the requirement.
- There is no limitation to the number of Foreign Directors to be appointed in a Company.
|b) Company Secretary
- Every Company must appoint a Company Secretary as one (1) of the Company’s officer, who is responsible for ensuring the Company complies with the relevant legislations and regulations.
- Appointment of a qualified Company Secretary is essential to keep the Company and the Board informed of their legal responsibilities towards the Company.
- Every Company maintains a minimum of one (1) Shareholder which can be an individual or a Corporation.
- Singapore Companies enjoy flexibility with 100% foreign ownership.
|4. Registered Office Address
- Company address to be registered with Singapore’s Register of Companies where all communications and notices may be addressed.
- Every Company should maintain its Registered Office in a commercial address that must be operational and accessible to the public during normal office hours.
- Formerly known as the Memorandum & Articles of Association (“M&AA”).
- A legal document that outlines rules and procedures to govern the Company and regulate the activities of the Company.
- Constitution form with the provisions of Singapore Companies Act, Chapter 50 and Company are allowed to customize the provisions, as necessary.
|6. Financial Year End
- Refers to the end of the Company’s accounting period, normally recurring every 12 months.
- Newly incorporated Singapore Company should fix its financial year end within 12 months to enjoy fullest tax exemption for the new Company as offered by The Inland Revenue Authority of Singapore (IRAS).
Corporate Tax benefits have always been a key to attract locals and foreigners in setting up Singapore Company.
|1.) General rule for all Singapore Companies
- Singapore Company is taxed on the income earned in the preceding financial year.
|2.) Corporate Tax Rate
- Singapore Company is taxed at a flax rate of 17% on its chargeable income, regardless of whether it is a local or foreign Company.
|3.) Tax exemption schemes for new start-up Companies
- Qualifying new Companies are given up to 75% exemption of its chargeable income for the first three consecutive Year of Assessment.
|4.) Corporate Income Tax
- Singapore Company taxed at a flat rate of 17% based on its chargeable income, irrespective of whether it is a foreign or local organization.
|5.) Industry Specific Tax Incentives
- Specific tax incentives to industry-related businesses offered by the Government of Singapore to maintain its economic competitiveness globally.
- Key tax incentives for Industry-related businesses include:
- Investment Holding Companies
- Shipping Companies
- Property Developers
- Construction Companies
- Companies servicing only Related Parties (such services include management services, technical support services, procurement, administrative support services and customer support services).
Intellectual Properties Protections
Based on the International Property Rights Index 2019, measuring a country’s property right regime (both intellectual and physical property rights), Singapore is ranked 4th of 129 countries, within the Global Rank.
Judicial Independence, rule of Law and control of corruption, are important sections that form within the International Properties Rights Index. Singapore, with the existence of a transparent & extremely sound legal system has played a pivotal role in the country’s commercial development over the years. The court system, type of laws & dispute resolutions system all has paved the way for efficient, transparent & extremely sound legal systems in Singapore.
The constructive judicial system of the country has ensured good governance enabling seamless business operations here. It is counted as the most popular Asian jurisdiction or arbitration according to the International Arbitration Survey – Choices in International Arbitration.
It is the least corrupt nation in Asia as per Transparency International, Corruption Perceptions Index. Anyone who has incorporated business in Singapore should know its Singapore’s law which will enable and constrain the business.
Financing Options / Ease of Capital Access
Small and medium-sized enterprises are always vulnerable to the cash crunch. The global economy is in fact saddled with uncertainties. Financial management under such circumstances turns out to be challenging for businesses – especially for small and medium-sized ones.
- Singapore offers several loans to these businesses to support sustenance as well as expansion. Businesses can access both short- and long-term loans as per their needs.
- The DBS Local Enterprise Finance Scheme offers loans that are specially tailored for SMEs. They can access these loans to enhance productivity and working capital eventually introducing new product lines.
- OCBC Business Banking provides ready support for SMEs through working capital up to $1,000,000. Startups can access a fast microloan of up to S$100,000.
- UOB Singapore also offers hassle-free business loans to meet their capital needs:
- Collateral free funding for up to S$1million for SMEs
- Pledge-free Financing of up to S$350,000 for business growth
- Crowdfunding, as a means of pooling in money for businesses, is slowly becoming a popular means of financing in the country. Though crowdfunding is at its nascent stages here, there are quite a few platforms from where businesses can apply for financing:
- Funding Societies
- Angel Investors and Venture Capitalists
- Singapore is dubbed as Southeast Asia’s Mecca of Venture Capitalism with more than 150 Venture Capital Funds. In fact, this form of funding has increased almost tenfold over the past 5 to 6 years. Some of the noteworthy mentions are:
- 500 Durian
- KK Fund
- Play Ventures
- Quest Ventures
- Wavemaker Partners
Strong Government Support – The numerous business-friendly measures adopted by the Singapore government have helped both small, large, and mid-sized companies flourish. Here is a look at the 3 noteworthy government programs backing startups in the country:
- The program designed for start-up owners in Singapore and the rest of the world, allows them to access opportunities pertaining to funding, guidance, talent search, and infrastructural support
- Incubators & Accelerators
- The incubators, accelerators, and venture builders, who are contributing to the growth of the startup ecosystem can seek opportunities for capability enhancements through this program.
- An investor who is looking to facilitate the startup scene can explore co-investment opportunities and incentives that will help them manage risks efficiently.
Besides the aforementioned programs, the government has a range of grants in the offing as well:
- Entrepreneurs, who have just started out can reach out to Startup SG Founder for funding, networks, and mentorship. Startup SG Tech, on the other hand, helps businesses looking for initial funding to fast forward commercialization of scalable internal solutions.
- There is a host of financing schemes meant to help enterprises across various stages of growth, manage risk, tide over short-term crunches, and cash flow problems arising out of non-payment from buyers.
- The companies in Singapore can even claim a 200% tax deduction applicable for costs pertaining to development, overseas market expansion, and globalization.
- The Fund Management Incentive or FMI offers companies a 5% concessionary tax for a period of 5 years.
- The Section 13H Tax Incentive scheme includes tax exemptions on qualifying income streams for 15 years Investments.
- There is a huge line-up of investment opportunities to be accessed by businesses in Singapore as well. One can access:
- Government and private co-investment schemes financing tech companies with an unparalleled global and IP potential
- Investments for innovative start-ups
- Investment for promising companies across diverse industries
Access to Global Talent – Every foreigner looking forward to working in Singapore should procure a work visa before they start working. Even foreign employees working in the country should hold a valid pass. The best thing about the country is these passes can be procured in a hassle-free fashion. Different types of professionals require different types of work passes.
- Type of work pass allows foreign professionals, managers and executives to work in Singapore.
- Suggested minimum salary, at least S$4,500 monthly (higher salaries for more experienced candidates)
- Work pass for mid-level skilled staff, who have a degree or diploma (Singapore Manpower may consider if the candidates possess certain technical certificates), upon hiring Company satisfied the quota requirements.
- Suggested, minimum salary at least S$2,500 monthly (higher salaries for more experienced candidates).
- Pass for eligible foreign students or foreign trainees who want to undergo training in Singapore, for a period up to 3 months.
- The foreign student or trainee must earn a fixed monthly salary of at least S$3,000.
Last but not the least, the country is a powerhouse of a skilled workforce. And, it’s very easy to reach out to them via top-notch job portals like https://www.careers.gov.sg/, https://sg.jobsdb.com/, https://www.jobstreet.com.sg/, https://www.monster.com.sg/, https://www.mycareersfuture.sg, https://www.linkedin.com/jobs/linkedin-jobs/,
There are employment agencies with more than 3,000 Recruitment Firms registered in the country and they include the biggest of players including Kelly Services, Adecco, The GMP Group, Randstad, Manpower Singapore (under the Manpower Group).
With so many business-friendly measures being adopted and improved on, Singapore is definitely that one place to watch out for if one is looking for promising business incorporation opportunities.