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Guide to Company incorporation in Singapore: Legal Compliance

Guide to Company incorporation in Singapore: Legal Compliance

Company incorporation in Singapore is a relatively simple process regulated by the Accounting and Corporate Regulatory Authority of Singapore (ACRA). As per the World Bank’s Doing Business 2020 Report, Singapore ranked 2nd in the world (Score: 86.2 out of 100) for doing business, with New Zealand leading the space (Score: 86.8 out of 100). No doubt, why a Singapore Company can do wonders to flourish your business! However, before expanding your business to the Singaporean space, it’s always recommended to be well-versed with the procedural and compliance aspects of company registration in Singapore.

Who can incorporate Companies in Singapore?

Company Incorporation in Singapore can be done by the following persons:

  1. Individuals: Local as well as foreign individuals, looking towards business opportunities in Singapore, prefer incorporating a Private Limited Company in Singapore. This is usually preferred by those who are setting up a new business in Singapore or converting from a non-corporate to corporate status.
  2. Corporate Entities: Existing corporate entities willing to expand their business within Singapore borders can incorporate a company in Singapore by the following two modes:
  • Subsidiary Company: Corporate Entities can form a subsidiary company in Singapore. This will ensure a separate legal existence and identity of the Singapore Company from the Holding Company. It will be treated as a local Singapore Company and therefore, the benefits that are available specifically for Singapore Companies become available for such subsidiary companies as well.
  • Branch Office: If the corporate entity wants to continue using its own name within Singapore, then opening a branch office in Singapore is the best alternative available as it is the extension of the parent company. This will ensure that the company gains maximum benefits from its goodwill while operating under its own brand name. As it is the branch of the parent foreign company, certain benefits may be disallowed under various laws to the branch, that otherwise are available for local Singapore companies.

Essentials for Company Incorporation in Singapore

  1. Share Capital: The minimum share capital required is S$1 (S$: Singapore Dollar). Share capital can be increased or decreased anytime as per the requirements of the company.
  2. Directors: Directors shall be individuals only, whether residents of Singapore or abroad. (Corporate Directorship is disallowed). However, each company shall have at least one director who is ‘ordinarily resident’ in Singapore. As per the ACRA, the following persons qualify as ordinarily resident in Singapore: 
  • Singapore Citizen
  • Singapore Permanent Resident
  • Employment Pass holder
  • EntrePass Holder

3)    Company Secretary: The company shall appoint a company secretary, who is a natural person and resident in Singapore, within 6 months of its incorporation.

4)    Shareholders: There shall be a minimum of 1 and a maximum of 50 shareholders for a Private Limited Company in Singapore. They can be individuals as well as corporate entities.

Procedural Aspects of Company Incorporation

Following is the procedure to incorporate a company in Singapore:

1)    Name Approval: The name proposed for the company shall be approved by the ACRA through an online procedure. The basic requirements while deciding on the name of the company are:

  • No infringement of any trademarks.
  • The name should not contain any vulgar or obscene characters
  • The name shouldn’t be identical to an existing Singapore business
  • The name should not be reserved by any other company.

2)    Documents: Following the name approval, specified documents, in English language or translated into the English Language, shall be required for the company registration in Singapore:

  • Constitution of the company, also known as Articles of Association. ACRA also provides a standard constitution that can be adopted by the companies, if required.
  • Details of the shareholders and officers of the company including identification and residential details.
  • Singed Consent stating that the person agrees to act as the Director of the company.
  • Signed Consent stating that the Company Secretary agrees to act as the Company Secretary of the company.
  • Such other documents, as may be called by the ACRA, for registration of the company.

3)    Registration with ACRA

ACRA is the Registrar of Companies in Singapore. Once all the documentation part is ready, the application for registration can be done online. The period within which the registration can be granted varies on a case-to-case basis and is based on the need for the involvement of other governmental agencies.

Corporate Taxation in Singapore

Tax Rate: Flat 17%

Companies, whether resident or non-resident, shall be levied corporate tax as follows:

  • Singapore sourced income: as and when it arises.
  • Foreign sourced income: When the income is remitted or deemed to be remitted to Singapore.

However, the following tax exemption has been granted to the companies as follows:

1)    Partial Tax Exemption

(Applicability: For companies from YA2020)

Chargeable Income (In S$) Percentage of Income exempt from tax (In %) Amount of Exempt Income (In S$)
First 10,000 75% 7500
Next 190,000 50% 95,000
TOTAL 200,000 - 102,500

 

2)    3 Year Start-up Tax Exemption

(Applicability: New Start-up Companies where any of the first 3 Yas of the company falls in/after YA 2020)

Chargeable Income (In S$) Percentage of Income exempt from tax (In %) Amount of Exempt Income (In S$)
First 100,000 75% 75,000
Next 100,000 50% 50,000
TOTAL 200,000 - 125,000

 

Bottom Line

Singapore is among the only few countries in the Asian region with a high-grade infrastructure, socio-economic stability, and a supportive tax system. Having entered various agreements with international communities, including more than 20 Free Trade Agreements (FTAs) and more than 75 Double Taxation Avoidance Agreements (DTAAs), the Singapore Government has, by far, been successful in providing a conducive and supportive business environment. If you require further consultation with respect to opening or expanding your business in Singapore territory, feel free to contact the ASC group.

 

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