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10 Reasons for Incorporation of a Singapore Company by Indian Start-ups

10 Reasons for Incorporation of a Singapore Company by Indian Start-ups

The incorporation of a Singapore company by Indian startups is increasingly becoming attractive for various reasons like low corporate tax rates for startups, various tax incentives, foreign ownership, and strong IP and other business laws, etc., which make Singapore a suitable destination for Indian startups to incorporate their business organization through Accounting and Corporate Regulatory Authority of Singapore. After fulfilling the documents required and other legal and operational requirements for the incorporation of a Singapore company, the company starts carrying out its business operations in the nation.

Table of Contents

The Incorporation of a Singapore Company: Boosting Indian Start-up Growth

The incorporation of a Singapore Company by Indian Startups adds to the growing economy and also attracts various benefits and incentives along with the convenience for the Indian startups to grow easily in the business environment and form a strong business entity. A famous e-commerce company, Flipkart Pvt. Ltd. (FPL), holds its subsidiary in Singapore to avail itself of benefits such as more funds, more growth, taxation-friendly rates, and stable economy benefits. InMobi and Capillary Technologies are other examples of the Incorporation of a Singapore Company by Indian Startups.

Incorporation of a Singapore company: Through ACRA

The Incorporation of a Singapore Company by Indian startups attracts a nosiness entity to legally run its operations, followed by the registration of that entity under the ACRA, which stands for Accounting and Corporate Regulatory Authority. It also assures the procedure for incorporation of a Singapore company as per Chapter 50 of the Companies Act. The ACRA is the national governing body formulated as a board in April 2004 that renders services for regulating the registration of business entities in Singapore, financial reporting, and other corporate services like human resources, finance, and administration to make Singapore a favourable nation for incorporating a company along with high compliance optimization.

Requirements for the Incorporation of a Singapore Company by Indian Startups

Certain requirements exist that are meant to be upheld before the incorporation of a Singapore Company by an Indian. These requirements allow the Incorporation of a Singapore Company by Indian Startups more conveniently and appropriately. The essentials are explained below.

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Employment of Director

The director of the company must be above 18 years of age, a legal and natural person, and a permanent resident of Singapore or an Entre Pass Holder (a pass granted by the Ministry of Manpower, required by foreign agents to set up & operate their business operations in Singapore) or an Employment Pass Holder (granted to a foreign professional working in Singapore for at least $5000 per month, eligible to incorporate a Singapore company.

Office Address

The address of the office must be physically registered in Singapore, being a local office address and not a PO Box. This address will be considered the official address along with the proof, and it will be responsible for all types of business communication and further notifications. The address must at least operate for 3 business hours daily.

Employment of Corporate Service Firms

Foreign agents are only eligible to incorporate a Singapore company with the involvement of various corporate secretarial firms and service providers.

Legal name

The company must have a unique name approved by the ACRA. It is considered the company’s legal name containing a registration number granted as per the Companies Act. After 120 days of the grant of the company’s name, the entity is free to move forward with the further incorporation process. Registering a company name does not attract the Intellectual Property Rights for use of the company’s legal name.

Shareholders of the Company

There must be at least 1 shareholder for incorporating a company in Singapore, which may not exceed the limit of 50. The shareholder is not required to be a resident of Singapore but is required to hold or buy shares in the company. Shareholders hold the right to have active participation in the business operations and meetings, where the decisions related to the company’s management are upheld.

Paid-up/ Share Capital of the Company

For the Incorporation of a Singapore Company by Indian Startups, there is a requisite for the contribution of the share capital, which must be equivalent to $1 minimum paid-up capital. Most of the time, the shares for incorporating a company in Singapore are issued in Singapore dollars (i.e., SGD) and can be easily issued and sold by and to the authorities of Singapore, respectively.

Company Secretary

A resident and a legal person of Singapore must act as the Company Secretary of the company within 6 months of its incorporation. The Companies Act of 1967 states the requisites to become a company secretary holding knowledge and responsibility to administer the company along with possessing advisory power towards the directors of the company.

Documents required for the Registration and Incorporation of a Singapore Company

Details of Directors and Shareholders

All the details, from address to identification documents, including certificates of registration of all the shareholders, officers, directors, and other beneficiaries of the company, are required before registering a Singapore Company.

Legal Documents

Every Company must have legal documents like Articles of Association (AOA), which stands as the constitution of the Company and prescribes the supreme rules of the company governing its relationship with the key and foreign actors, and a Memorandum of Association (MOA), which guarantees the company’s details and objectives and other related regulations. These documents are mandatory for constituting a Singapore Company.

Share & Stock Certificates

The Certificates issued by the Company for the purchase of the shares as well as the stocks by the shareholders for the company’s interest must be accompanied by the registration of the Singapore Company.

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Business Certificates and Other Licenses

It is necessary to obtain a business license and other relevant permits, like opening a corporate bank account before the registration and after the Incorporation of a Singapore Company by Indian Startups to easily carry out business operations in the country.

Company Registration form

The form required for the registration of a company is available from the ACRA, which stands for Accounting and Corporate Regulatory Authority of Singapore, regulating and assisting the Business incorporation of a Singapore company.

Certificate of Good Standing

This certificate is granted to certify the company as a bona fide entity established under the provisions of the Singapore Companies Act. Hence, it is generated electronically along with the seal of the registrar of ACRA.

Annual Return

During the incorporation of a Singapore Company by Indian startups, they must provide an annual return report along with the registration fees to the registrar even after their registration.

What attracts the Indian Startup to incorporate a Singapore Company?

The reasons which entail that Singapore is a suitable marketplace for the incorporation of a Company by Indian Startups are listed below:

Establishment at Ease

The incorporation of a Singapore Company by Indian Startups has become more effective and cost-saving mainly because of the nation’s corruption-free environment. Hence, it only takes 1 to 2.5 days on average to incorporate a company under the guidelines set By ACRA; hence, it has been labelled as 1st position on Ease of Doing Business Surveys by the World Bank. It also offers the support of the Singapore government for Indian startups to grow and innovate in a friendly way.

Incentives & Exemptions

The Indian startups incorporated in countries like Singapore attract various tax exemption schemes such as

  1. Startup Tax Exemption Scheme- This scheme attracts 75% exemption from tax for the first 3 consecutive years for the startups on their first Singapore Dollar 100000 SGD of the chargeable income and 50% tax on the further 100000 SGD of the chargeable income for the growth of the local entrepreneurship. 
  2. Partial Tax Exemption Scheme(PTE)- This scheme attracts partial tax exemption by all the companies registered in Singapore under the provisions of the Income Tax Act, i.e., 75% tax exemption on the first 10000 SGD of normal chargeable income and a further 50% exemption on 190000 SGD of the next chargeable income.
  3. Double Tax Deduction for Internationalism (DTDi) – This scheme provides assistance from the government of Singapore to establish a strong overseas market where companies can enjoy double tax deductions while exploring and expanding other business opportunities. This scheme offers 200% tax deductions on the first 150000 SGD of qualified expenses like advertising, packaging, business travel, virtual & international trade shows, etc. These are the tax incentives enjoyed by the companies registered in Singapore.
  4. Foreign Source Income Exemption Scheme- the government of Singapore grants this scheme under the Income Tax Act, where the tax is exempted on certain foreign incomes in Singapore on or after 1st June 2003, making the incorporation of a Singapore company easier.

Cheaper Taxation Regimes

Singapore has a lower rate of taxation, which is cheaper than Indian tax rates. The tax rates for the companies incorporated in Singapore are 17%, while the tax rates for domestic Indian Companies range between 22.6-30% apart from GST laws, which apply 5-28% of GST in India, which is way costlier for Indian startups. The GST in Singapore is 7%.

Strong Corporate Laws

Singapore attracts strong corporate laws for the better protection of Intellectual Property and a strong Arbitration rule for the companies to enforce their legal rights with secure arbitration awards in comparison to India.

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Easy Allocation of Shares

It becomes far easier for an Indian citizen or an Indian startup to issue shares with 100% ownership rights for the formation of a Singapore company. Hence, full access to foreign ownership is allowed without the intervention of any local shareholders.

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Comparison between a company incorporated in India versus a Company incorporated in Singapore

The reason that led to the Incorporation of a Singapore Company by Indian Startups lies behind the fact that incorporating a Singapore company is easier than incorporating an Indian Company. The basis of comparison lies as follows:

Incorporation

The process for incorporation of a Singapore Company by Indian Startups is effective (i.e., within 1 day), while the process of incorporating an Indian company involves a long period.

Investing Policies

The policies for attracting investors for the Incorporation of a Singapore Company by Indian Startups are simple and friendly.

Taxes

The corporate taxes during the incorporation of a Singapore Company are cheaper than the complex taxation system of India.

Economy

The economy of Singapore is the major reason to incorporate the company, being it is stable, diverse, and strongest to carry forward the business entities.

Incentives

Singapore offers incentives for tax exemption for the Incorporation of a Singapore Company by Indian Startups or any other Startups, while this does not apply when incorporating an Indian Company.

Conclusion

As per the report of the decade, several Indian startups hassled to the incorporation of a Singapore company, which allows them easy access to capital, taxation benefits, venture capital, etc. As Singapore is known as the ‘’Silicon Valley of Asia,’’ it has been the biggest land for attracting startups to grow in the flourishing ecosystem of Singapore by offering rebates on various taxes and Foreign Direct Investments, introducing various tax exemption schemes, easy access to shareholders, shareholdings, venture capital, strong and favourable laws supporting the legal background of the Indian and other startups.

FAQs

  1. Can an Indian incorporate a company in Singapore?

    Yes, an Indian who is not a resident of Singapore can carry out the procedure for the incorporation of a Singapore company through the necessary appointments made under the Accounting and Corporate Regulatory Authority.

  2. Why must Indian startups incorporate and launch their company in Singapore?

    The best reasons for attracting Indian startups for the incorporation of a Singapore company are:
    a.       Strong corporate and other relevant laws;
    b.      Easy access to attract shareholders and investors;
    c.       Entitlement for foreign ownership;
    d.      Various tax incentives;
    e.       Low corporate tax rates and other tax incentives.

  3. What are the benefits of registering a company in Singapore by Indian startups?

    The benefits that attract Indian startups for the registration and incorporation of a Singapore company are:
    a.       Politically strong nation for business incorporation;
    b.      Affordable rates of taxes;
    c.       Strong laws, such as laws for Intellectual Property;
    d.      Easy to settle corporate cases with strong arbitration laws;
    e.       Favourable geographical location as it is accessible to all the neighbouring countries.

  4. Is it better to register a company in Singapore or India?

    Yes, it is better to register a company in Singapore, attracting various benefits offered to Indian startups for incorporating their business organization into the nation.

  5. How can I set up a company in Singapore from India?

    Setting up and opening a company in Singapore is done through an application made to the Accounting and Corporate Regulatory Authority.

  6. How long does it take to incorporate a company in Singapore?

    Generally, incorporation of a Singapore company requires 1-3 business days to be registered as per the guidelines issued by the Accounting and Corporate Regulatory Authority of Singapore, i.e., ACRA.

  7. How much does it cost to incorporate a company in Singapore?

    The cost for incorporating a Singapore company by the Accounting and Corporate Regulatory Authority of Singapore is nearly $315.

  8. How much capital is required to start a company in Singapore?

    A minimum of $1 capitalization is required to start a company in Singapore, except for the immigration certificate.

  9. How many directors does a Singapore company need to register?

    The total number of directors a Singapore company requires for its registration is 1 who shall be a resident of that country.

  10. Can a foreigner be a director in a Singapore company?

    Yes, a foreigner can hold a directorship in a company incorporated in Singapore.

  11. Is Singapore good for startups?

    Yes, Singapore is considered to have a business-friendly ecosystem for startups to grow and flourish. In 2022, it was established to rank 5th in Asia for a supportive, business-friendly ecosystem for various startups.

  12. Why do most of the Indians invest in Singapore?

    Most of the Indian startups invest in the operation and incorporation of a Singapore company attracting the following reasons:
    a.       Less time consuming
    b.      Better taxation policies
    c.       Wide investment options.

  13. Which Indian companies are in Singapore?

    The Indian companies that are operating in Singapore's favorable business-friendly ecosystem are Mahindra and Mahindra, Reliance Industrial Group, Infosys, Wipro, etc.

  14. What is the corporate tax rate in Singapore for non-residents?

    The corporate tax rates for non-residents in Singapore lie at a flat rate between 15-22%.

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