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Singapore is a popular and thriving business hub in Southeast Asia with a strong economy; corporate-friendly schemes and digital enhancements make Singapore a destination for foreign investors. Singapore’s strategic location and excellent infrastructure in Southeast Asia make it more business-friendly; register a company in Singapore helps to navigate trade, has an excellent system for import and export and helps in foreign exchange. It also provides a transparent business registration process and tax exemptions for startup companies.
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The Accountability and Corporate Regulatory Authority (ACRA) is the national regulator of business entities. ACRA oversees the registration and regulation of all entities in Singapore, including companies, partnerships and sole proprietorships.
Reasons why you should consider registering a company in Singapore. Some of the important reasons have been discussed below:
Singapore is known for its macroeconomic policies and a well-developed market economy relying on trade, finance and manufacturing. Therefore, it is recommended to register a company in Singapore. The Gov. of Singapore has implemented various measures to promote economic growth, allowing foreign investment and investing in education and innovation.
Singapore also has been designed to attract foreign investment. To register a company in Singapore, the tax rate, i.e., 17%, is expectedly low compared to other developed countries. No tax is imposed on capital gains or dividends obtained from a business which makes the country lucrative for entrepreneurs who wish to register a new business. Additionally, there is a tax exemption for new startups, so it is advisable to register a company in Singapore.
Singapore has signed over 50 double-taxation agreements with countries around the world. After registration, a company in Singapore avoid double taxation agreements. This ensures that the transaction between Singapore and other treaty countries can help reduce the tax burden for businesses operating in multiple jurisdictions.
In Singapore, an individual or entity owns all the company’s outstanding shares; they have complete management control over the company. To obtain 100% ownership of a company’s stock in Singapore, one can either register a company or acquire an existing one. Here, any local partners or shareholders will not be required. There are certain restrictions on foreign ownership, but no liabilities imposed where the amount of capital one can bring from their home country to invest in the Singapore Company.
Registering a company in Singapore involves several steps, including choosing a business structure, reserving a company name, registering with the ACRA, obtaining a license and permit, and registering for taxes with the Inland Revenue Authority of Singapore. The process can be complex at times when it comes to foreign entrepreneurs.
Singapore has a pro-business environment with a simple tax regime, making it a strategic place for entrepreneurs to register a company to expand in Asia.
Singapore has a well-developed infrastructure that supports registering a company of all sizes. The port of Singapore is also one of the busiest in the world and acts as a central hub for shipping and logistics. It is also a leading startup ecosystem with a strong focus on innovation and technology.
There are three major types of registering a company in Singapore. These include:
A sole proprietorship is a business structure in Singapore where an individual operates a business. The investor has complete control over the business management and is personally liable for all debts and obligations. A sole proprietorship is not a distinct legal entity from the owner; therefore, the owner is responsible for paying taxes earned from the business. However, they do not require minimum capital to run a business; those who want to register a company with limited funds can easily opt for the company structure in Singapore.
A partnership is a company structure in Singapore where two or more persons carry a business together to earn profits. There are different kinds of partnerships in Singapore to register a company.
General Partnership: A general partnership requires a minimum of two partners and a maximum of 20 partners to carry out business activities together. The general partnership is not a separate legal entity. Therefore, partners are responsible for reporting and paying all taxes on their share of the partnership’s income. A general partnership does not have any minimum capital requirements. All the partners of the general partnership have unlimited liability for the debts and obligations of the partnership. The one-time registration fee for a general partnership is $115, and $175 for three-year registration. These fees are subject to change; hence, checking with ACRA for the most up-to-date fees is advisable for registering a company under general proprietorship.
Limited Partnership: To register a company structure in Singapore, a limited partnership consists of at least one general partner and one limited partner. In a limited partnership, partners have limited liability which means their liability is limited to the amount of their investment in the partnership. A limited partnership does not have any minimum capital requirement. There is no limit on the number of members in a limited partnership. A limited partnership structure is a simple and cost-effective way to start a business.
Limited Liability Partnership: A limited liability partnership (LLP) offers limited liability protection to all company partners. An LLP is not a separate legal entity from the partners. Therefore, they are responsible for paying taxes on their share of the partnership’s income. Registering a company as LLP is a simple process. They must register a company with ACRA and obtain permits or licenses to start a business. Every LLP requires at least two partners, such as natural persons, corporations, partnerships or other LLPs. Every LLP must appoint a manager who must be a Singapore resident responsible for managing and operating the business.
A company is a distinct legal entity from its members and directors, meaning it can enter into contracts, own property, sue, or be sued in its name. Registering a company in Singapore is subject to a corporate tax rate of 17%. However, it offers several tax exemptions to companies. Shareholders of a company in Singapore have limited liability protection, which means their assets are secured from the debts and obligations of the company. Companies in Singapore are further sub-divided into the following:
Exempt Private Company: An exempt private company (EPC) meets sure compliance and is exempted from some regulatory requirements. The EPC can have up to 20 shareholders but does not include the corporation. To register a company as EPC in Singapore must have at least one director who is a resident of Singapore. These companies need to add ‘Pte Ltd.’ with their names. These companies do not have any minimum capital requirements. Overall, an EPC can be an option for entrepreneurs looking for a simplified regulatory regime and limited compliance requirements.
Private company limited by shares: A private company limited by shares is a commonly used company structure in Singapore. A private company in Singapore can have up to 50 shareholders, and the shares cannot be publicly traded on a stock exchange. A private limited company must have at least one director who is a resident of Singapore, and shareholders have the power to appoint or remove directors. Here, the Private company limited by shares is a distinct legal entity from its shareholders and directors. It offers flexibility in ownership and management and raises capital by issuing shares.
Public Company Limited by shares: To register a company structure like PLC in Singapore permitted to raise capital by providing its shares to the public in general. A PLC in Singapore can have an unlimited number of shareholders, and the shares are publicly traded. To make such an offer, the company has to register the prospectus with the Monetary Authority of Singapore. A PLC is required to have at least two directors, one of whom must be a resident of Singapore. These companies are required to attach ‘Ltd.’ with their names. Here, the PLC has limited liability protection, which protects its assets and protected debts or obligations of the company. In the PLC, the compliance procedure is more stringent, and the cost of listing can be high.
Public Company Limited by guarantee (PCLG): The Public Company Limited by guarantee (PCLG) are typically incorporated for non-profit organisations such as charities, social clubs or Industry associations. These companies, too, need to attach ‘Ltd.’ with their names. These companies do not have any share capital, and the members do not own shares. Instead, they agree to contribute a fixed amount in the event of winding up. Registering a company like PCLGin Singapore that requires at least two directors and can have unlimited shareholders. It guaranteed limited liability protection to its members, typically individuals or organisations with a common interest.
Unlimited Private Company: An unlimited private company (UPC) is a hybrid company with no limit on its liability; it means that the shareholders of a UPC are individually liable for all the company’s debts and obligations. No minimum capital requirements exist for an unlimited private company, and it can issue shares to raise capital. The private company can have unlimited shareholders, and the shares are not subject to public trade. These companies are required to attach ‘Unlimited’ with their names. It is suitable for small-sized businesses or companies with low risk of liability.
Unlimited Exempt Private Company(UEPC): An unlimited exempt private company combines the features of an unlimited company and an exempt private company. The only difference is that the members have unlimited liability, meaning its shareholders are personally liable for all the company’s debts and obligations. Registering a company like UEPC is uncommon in Singapore.
Unlimited Public Company: An unlimited public company has no limit on its liability, and the shares are publicly traded. Its shareholders are personally liable for the company’s debts and obligations. These companies, too, need to attach ‘unlimited’ with their names. It can be a suitable business structure for companies that want to raise capital through public offerings and have relatively high liability risk.
Registering a company-like subsidiary structure in Singapore is set up as a separate legal entity from its parent company which can be local or foreign. However, it has a board of directors and management team to look after the day-day operation. It has been allowed to use a different name. T It is subject to Singapore’s corporate tax regime, which includes a competitive tax rate of 17% on chargeable income. It needs to have at least one local manager resident in Singapore. The minimum share capital required to run a subsidiary in Singapore is $1. Considering the various legal, financial and regulatory implications of setting up a subsidiary in Singapore is essential.
5. Branch Office
A branch office is set up as an extension of its parent company. It is not a separate legal entity from its parent company that can be local or foreign, meaning its liabilities are not separate from those of the parent company. This entity survives in perpetuity. Its activities are taxed as a non-resident entity. The minimum capital required to set up a branch office is $1. A branch office should have at least one manager/local representative resident in Singapore who is responsible for the day-to-day operations of the branch.
6. Representative Office
Registering a company like a representative office allows foreign companies to establish a presence in Singapore without engaging in Commercial business activities, which means that it cannot enter into contracts or generate revenue. To establish a representative office in Singapore, the parent company must be in business for at least three years and have a turnover above $250,000. It is not a separate legal entity but a temporary administrative office. It will bear the name of its parent company with the addition of a ‘representative office’. It can conduct market research and promote the parent company’s products or services. A chief representative who will relocate from the parent company and provide customer support must be appointed. The minimum capital required for opening a representative office is $1. It suits the business structure that wants to establish a presence in Singapore.
In conclusion, incorporating a business in Singapore is straightforward and efficient. The country has a well-developed legal and regulatory framework supporting business growth and innovation for foreign investors. Singapore has several business structures, including sole proprietorship, limited liability, and public limited company. Each has its drawbacks and advantages. Foreign companies are also eligible for a branch or representative office in Singapore. However, Singapore’s pro-business environment, competitive tax regime and robust infrastructure make it a strategic location for entrepreneurs and businesses.
Read our Article:An Overview: How to Open a bank account in Singapore
Minakshi Bindhani has completed LL.M. with a specialization in Criminal Law from Madhusudan Law University, Cuttack, Odisha. She is more inclined toward legal research and writing and have prior experience in Civil and Criminal litigation and content writing.
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