Why should I incorporate a Private Limited Company in Singapore
Along with being one of the world’s top financial centres with wide availability of funding and assistance schemes for start-ups or established companies, the city-state of Singapore is also known for its ease of doing business and pro-business regulatory environment, along with a very attractive corporate tax framework.
Singapore also has comprehensive trade agreements with over 100 regions of the world, excellent connectivity, strategic geographical location, proximity to world’s largest emerging markets including India and China, and robust IP protection.
What is the major advantage of incorporating a private limited company in Singapore?
Apart from the huge tax advantage, and benefits of over 100 comprehensive trade agreements, one of the major advantages of incorporating a private limited company is that it is a separate legal entity and is limited by shares. As a result, shareholders of a Singapore company are not liable for its debts and losses beyond their amount of share capital.
What are the different types of business structures in Singapore?
There are five different structures to choose from – Sole-Proprietorship, Partnership, Limited Partnership, and Limited Liability Partnership (LLP), and the most common and flexible business entity – the Private Limited Company (applicable for non-Singaporeans and permanent residents). Do note that all companies in Singapore must be registered and abide by the country’s Companies Act.
What are the key requirements to incorporate a company in Singapore?
at least one shareholder which may be an individual or a corporate entity
one resident director (either a Singapore citizen, permanent resident, Employment Pass holder or a Dependent Pass holder)
one resident company secretary
initial paid-up share capital of at least S$1, or equivalent in any currency
a physical Singapore office address, and cannot be a PO Box
What are the various types of companies in Singapore depending on the number of shares and types of shareholders?
Exempt private company (EPC): – If the number of shareholders are 20 or less, and there are no corporate shareholders
Private Limited:- If the shareholders are more than 20 but less than 50.
Public company:- If the number of shareholders exceeds 50, it becomes a public company.
What are public companies in Singapore?
A public company can offer shares, debentures and other interests to the public. It can have unlimited number of shareholders, and can be unlisted or listed on a stock exchange. When a private company has grown and has more than 50 shareholders, it must be converted to a public company limited by shares.
It is important to note that the compliance requirements for public companies are much higher than that of private companies.
What is treated as a private company in Singapore?
For a private company in Singapore, maximum number of shareholders is limited to 50.
Importantly, the memorandum and articles of association (MAA) of a Singapore company puts restriction on its members to transfer their shares in the company.
What is an exempt private company in Singapore?
A private company limited by shares is classified as a exempt private company (EPC) in Singapore. An EPC has:
no more than 20 shareholders; and
all the shareholders are individuals
What documents are needed to incorporate a company in Singapore?
Copy of passport, proof of residential address and bank reference letter for every non-resident shareholder and director; whereas for each resident shareholder/director, documents needed are a copy of Singapore ID, and copy of passport for foreign individuals.
Meanwhile, if the shareholder is a corporate entity, documents needed are copy of the parent company’s certificate of incorporation, and copy of official documents reflecting the registered address and directors of the parent company.
Does Singapore allow 100 percent foreign shareholding of a company?
Yes, 100 percent local or foreign shareholding is allowed in Singapore.
What’s the minimum paid up capital required to register a company in Singapore?
In Singapore, a company can be registered with a minimum paid up capital of S$1 (or its equivalent in any currency).
What is the minimum and maximum amount of shareholders permitted in a Singapore company?
In Singapore, a private company limited by shares must have at least one shareholder and no more than 50 shareholders.
Is it compulsory for a private limited company in Singapore to have a Singapore resident company director?
Yes, every Singapore company must have at least one director who is “ordinarily” resident in Singapore, which means either a Singapore citizen, a Singapore permanent resident, an employment pass/entrepreneur pass holder, or a dependant’s pass with a residential address in Singapore.
Importantly, a company director and shareholder can be the same or different person in Singapore
For those who wish to set up a Singapore company but cannot relocate to Singapore, we provide the services of a resident nominee director on a long-term or temporary basis. This can help you in fulfilling the Singapore companies’ statutory requirement of a resident director.
Is it compulsory for a private limited company in Singapore to have a local registered address?
Yes, a registered address is required in Private Limited Company registration. It is mandatory for every company registered in Singapore to have a local address as all official correspondences are sent to it. Though some businesses are allowed to use residential addresses.
Also, the official address of your company must be a physical address and cannot be a PO Box.
Do you provide virtual office services?
Yes we do, and our Virtual Office services include a dedicated phone for your business, an automated greeting service. All recorded messages, posts etc. are forwarded to you in a reasonable time.
Is it compulsory for a private limited company in Singapore to have a resident company secretary?
Yes, the Singapore Company Act mandates that all companies in Singapore must appoint a company secretary within six months of incorporation, whose is responsible for ensuring all regulatory compliances of your company.
You can outsource this requirement to us, under the ambit of our corporate services and we will take care of your company secretary requirements.
Is it compulsory for a private limited company in Singapore to have an auditor?
In Singapore, all companies, unless exempted under Section 205B, or 205C, of the Companies Act, are required to appoint a company auditor within three months of company incorporation.
Though before July 2015, exempt private companies with yearly revenue of less than S$5 million were exempted from audit compliance. Now, that has been replaced by a “small company” concept
What is defined as a small company in Singapore?
In Singapore, a company qualifies as a small company if:
it is a private company in the financial year in question; and
it meets at least 2 of 3 following criteria for immediate past two consecutive financial years: - total annual revenue ≤ $10m; - total assets ≤ $10m; - no. of employees ≤ 50
For a company which is part of a group:
the company must qualify as a small company; and
entire group must be a “small group” to qualify to the audit exemption.
How much time it takes to incorporate a company in Singapore?
Easy answer is, just under a day. As part of our Singapore company incorporation services, we can get your company registered with the Accounting Corporate Regulatory Authority within one day.
Do I need to be present in Singapore to incorporate a company?
No, it’s not needed. All signing of documentations can be done via email or digitally.
Does opening a bank account in Singapore requires physical presence?
Depends. As some – though not all – banks may require you to be present for the corporate bank account opening process.
How will I receive the documents for my newly incorporated Singapore company?
We will email you the electronic copies of all relevant documents as soon as the company is incorporated. All copies are also uploaded in a secured dedicated project dashboard which we will provide.
Can we increase the paid-up capital for my Singapore company at a later stage?
Yes, paid-up capital of a Singapore company can be increased at any stage after incorporation.
Can I apply for a residency pass to live and work in Singapore?
Yes, you can apply for an employment pass, entrepreneur pass, or a permanent resident visa depending on your circumstances.
Can I be a tax resident of Singapore?
Yes, you can be a tax resident of Singapore and enjoy Singapore tax rates if you;
a. stay or work in Singapore
i. for at least 183 days in a calendar year; or
ii. continuously for three consecutive years; or
b. work in Singapore for a continuous period straddling two calendar years and your total period of stay is at least 183 days.
This applies to foreign employees who entered Singapore from 1 Jan 2007 but excludes directors of a company, public entertainers or professionals.
If you are issued with a work pass that is valid for at least one year, you will also be treated as a tax resident upfront. However, your tax residency status will be reviewed at the point of tax clearance when you cease your employment based on the tax residency rules. If your stay in Singapore is less than 183 days, you will be regarded as a non-resident.
Does Singapore have Double Tax Treaties to avoid double taxation?
Foreign income earned by a Singapore company may be subjected to taxation twice - once in a foreign jurisdiction, and the second time when the foreign income is remitted to Singapore. Likewise Singapore earned income may also be subjected to taxation twice - once in Singapore, and the second when the income is repatriated outside.
To avoid double taxation, there are 2 ways;
A double tax relief (DTR) is the relief provided under an avoidance of double tax agreement (DTA) to reduce double taxation. In the form of a tax credit, it allows the Singapore tax resident to claim a credit on the amount paid in the foreign jurisdiction, against the tax what is payable in Singapore on the same income. Singapore has DTAs with 97 countries. A DTR will be granted if the foreign tax was paid in accordance with the DTA provisions and is capped at the lower of the foreign tax paid and the Singapore tax that would have been payable on the same income. A company is a tax resident of Singapore if the control and management of its business is exercised in Singapore.
For countries without DTAs, a unilateral tax credit (UTC) will be granted to Singapore tax residents for foreign income received in Singapore.
Am I subjected to personal income tax if I am a tax resident of Singapore but the income is generated from outside Singapore?
In Singapore, foreign income remitted into Singapore into a personal account is not taxable. So DTA and UTC is not relevant.
Does Singapore charge withholding tax?
Withholding tax is only charged when the Singapore entity or individual makes a payment to a non-resident (company or individual). The payer is required to remit the withheld amount to IRAS. For more see here.