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Company Formation in Singapore

Overview :

Singapore -is the most important economic, financial and transport hub for South East Asia. Its dynamic economy, with strong service sectors, has one of the highest per capita gross domestic (GDP) in the world. Its airport, port and road system are among the best in the world. Singapore’s major industry includes electronics, financial services, petroleum refining, pharmaceutical manufacturing, processed food and beverages, rubber products, transport logistic and maritime services. A key objective of Singapore’s Government is and has been to position the country as regional hub and pacesetter in economy development and reform. In particularly, the government has introduced measures to enhance Singapore’s position as a hub for education and training of Singaporeans, with a focus on developing “knowledge and innovation-based economy” and improving productivity.


Advantages of Incorporating a Company in Singapore

Foreign companies who setup a Singapore subsidiary company enjoy tax resident status which means that they can enjoy tax incentives and exemptions which are commonly provided to local businesses. A newly incorporated Subsidiary Company, with at least one individual shareholder that has a minimum of 10% shareholding, is entitled to the local tax exemption of zero tax for the first S$ 100,000 of its chargeable income. The country allows a corporation to be a 100 percent foreign-owned company (as long as it will designate at least one director who is a local resident or a holder of a Singapore Employment Pass, Entrepass, or Dependent Pass).

Singapore is located at the heart of the Asia Pacific region which makes this ideal for international foreign companies that are planning to tap the major Asian markets including China, Taiwan, Malaysia, India, and Australia. The country boasts world-class infrastructure which is one of the contributing factors to raise the business productivity. The Singapore has the fastest-growing economy in the world for several consecutive years.The Singapore government provides several tax incentives to certain foreign companies in an effort to attract more companies to operate their company operations from Singapore.


Tax Regime :

Singapore has a well-known attractive corporate and personal tax rates, tax relief measures, absence of capital gain tax, one-tier tax system, and extensive double tax treaties. Persons including corporation, partnership trustee and bodies of person carrying on any trade, profession or business in Singapore are chargeable to tax on all profits arising in or derived from Singapore and certain foreign-sourced income from such trade, profession or business. Singapore’s corporate tax rate is capped at 17%. There are tax free Dividends. Singapore’s personal tax rates starts at 0% and are capped at 20% for residents and flat rate of 15% for non-residents. Goods and Service tax is at 7%. Goods and Service tax is at 7%. It does not have any capital gain tax and capital losses are not at all allowed as deduction.


Types of Entities
Limited Liability Company :

A LLC is a company limited by shares i.e. liability limited to amount of share capital. In LLC liability of owner is limited to the assets of the company and their personal asset is protected from the business liabilities. Following are the types of LLC


Private Limited Company :

A private Limited company is a LLC in which less than 50 persons and is not available to general public. A private limited company in Singapore usually ends with private Limited or Pte Ltd. The shareholders can either be individuals or corporate entities or both. It is most preferred type of Singapore business entity for serious entrepreneurs.


Public Company :

A public Limited company is LLC that may offer shares to general public. A public limited company must at least have 50 shareholders and is subject to significantly more stringent rules and regulations since they have power to raise fund form public. Usually public limited company is listed on stock exchange.


Public Company limited by guarantee :

A public company limited by guarantee is a type of business entity meant for non-profit purpose.


Sole Proprietorship :

A sole proprietorship is the simplest but the riskiest type of business form in Singapore. A Sole Proprietor is not a separately incorporated entity and therefore the owner and the business are one and the same. The owner personally owns all assets and liabilities of the business. The owner personally owns all assets and liabilities of the business. A Sole Proprietor has unlimited liability and there is no protection of personal assets from business risks and liability.


Partnership :

A partnership structure attempts to address the limited-expansion constraint faced by sole proprietorship by allowing two or more person to establish and co-own the business. A partnership firm has no separate legal status separate from its members.

There can be 3 types of Partnership in Singapore :

General partnership :

A general partnership is like a sole proprietorship business where partners are personally liable for debts and liabilities of the business and partners can be held responsible for the actions of the others.


Limited Partnership :

Here the liabilities of the limited partners are limited to their investment in partnerships and companies. However such partners are unable to participate in management of the business in a limited partnership.


Limited Liability Partnership :

Among the above three partnerships, LLP is the most recent and advanced business incorporation structure. It combines features of partnership as well as company. Registering an LLP gives owners the flexibility of operating as a partnership while enjoying many benefits that come with a corporate body like private limited company. A LLP is primarily meant for carrying a profession where two or more professionals would like to build a joint practice together in a common field. The owners must enter into detailed agreement about the profit and management’s responsibility to be divided.


Time Period

Usually, Incorporating a Company takes about 2-3 days in Singapore.