Singapore, known for its business-friendly environment, rational tax system, strong economy and skilled workforce, presents lucrative opportunities not just for entrepreneurs but also for multinational companies. Multinational companies around the globe prefer company incorporation in Singapore for many reasons but most of all because of its business laws. Asia’s most desirable place for setting up a business has also been a preferred location for offshore company incorporation. What is Singapore offshore incorporation? When should you Consider Forming an Offshore Company? What are the benefits of company incorporation in Singapore? Let’s find out.
What is a Singapore Offshore Company?
A Singapore offshore company refers to a company registered, managed and operated in a foreign land where it has been provided with certain legal, financial and tax benefits. In other sense, an offshore company is a company which has been set up in a foreign country that has its own jurisdiction and receives special benefits for being incorporated in that country.
When should you Consider an Offshore Company Incorporation in Singapore?
Before you register an offshore company in Singapore, the following points must be considered.
- You are expanding your business and there is an increase in investment or shareholders. This is because many investors, especially institutional investors prefer to invest through an offshore jurisdiction
- The company is into investment holding entity. And in Singapore there is a substantial relief from Stamp Duty and Capital Gains
- You are developing an Intellectual Property and intend to use it in various jurisdictions
- To get higher return on investment
- Tax planning and relief
- Estate Planning
- Enhanced Privacy
Reasons for Setting up an Offshore Company in Singapore
With its straight-forward incorporation process and a wider outreach in the world market, Singapore is known for bazillion business opportunities for an entrepreneur to set up their business. Singapore offshore company formation has been a game changer for many big MNCs, because of the following reasons:
Taxes are one of the key considerations while setting up a business in Singapore. And this is where Singapore as location is advantageous. Company incorporation in Singapore cuts out taxes like capital gain tax, withholding tax, VAT (Value Added Tax), sales tax and accumulated earnings tax. The corporate income tax rate is approximately 8.5% for profits up to S$300,000 and a flat 17% above S$300,000. Furthermore, a newly incorporated company enjoys 0% tax rate on the first S$100,000 taxable income for each of the first three tax filing years, provided the company has a maximum of 20 shareholders of which at least one is an individual shareholder holding at least 10% of the shares.
2.Reliable Image in the Market
Being an offshore company in Singapore will build for you a trustworthy and credible image among the stakeholders, bankers, employees and other professionals. And since Singapore is not exactly a tax haven, offshore company that is established in this country communicates credibility and stature as a proper legal entity. This helps in businesses being taken more seriously by the stakeholders.
3.Ease of Company Incorporation in Singapore
One of the reasons to start a business in Singapore is the ease of company incorporation here. Singapore, over the past several years, has been consistently ranked as one of the easiest places in the world to do business. Among the reasons for being the same includes, quick and efficient company registration process which is free of bureaucratic red-tape. It takes only 3 days for company registration in Singapore, which makes it easy for MNCs from the point of view of expansion. The steps are fully computerized, involving just two steps- acquiring approval for company name and submitting the required documents for incorporation.
Singapore’s foreign ownership policies are open and liberal. An offshore company in Singapore receives 100% foreign ownership, as per its liberal ownership policy. A company is permitted by the Singaporean government to have full foreign ownership without restriction in all types of businesses. Additionally, foreigners looking to register an offshore company in Singapore do not require prior approval from Singapore authorities.
5.Politically Stable Environment
Singapore has the most politically stable environment for the business world. Singapore is Asia’s least bureaucratic country. Governmental integrity and professional approach make it attractive for MNCs. According to the Political and Economic Risk Consultancy, Singapore has been rated as the most politically stable country in Asia. It is often described as rational, pragmatic, transparent, and corrupt-free.
6.Wide Choice of Banking Facilities
As Singapore is one of the leading business hubs in the world, the country offers vast choice of banking facilities for offshore banking. The entrepreneurs and the investors have choice to open multi-currency accounts and transfer funds from international banks to local banks and vice versa. Offshore company formation with bank account packages is easily available in the markets of Singapore.
7.Enormous Opportunities to the Startups
Singapore provides plenty of opportunities to startups and internet entrepreneurs from all over the world. It is one of the preferred locations to set up and grow your business. The government is pro-business in providing incentives and is a supporter of free market.
8.Big Market for the Investors
Industries such as chemical products, electronic parts and components, mineral fuels, transport equipments, manufacturing goods, among others have a big market in Singapore. The businesses have huge scale of opportunities in import and export.
Things to Know before Offshore Company Registration in Singapore
There are certain things that’d benefit you to know before setting up a business in Singapore:
The company name should be approved by the Company Registrar prior to incorporation and company registration, as part of the company formation process. ACRA, the company registrar of Singapore, has laid down a few rules when it comes to proposing a name for your company. The name has to be unique, meaningful, and decent. It must not violate any copyright or trademark laws, it must not be similar to the name of any existing company, and it cannot be from the black-list.
2)Company Secretarial Service
The company secretary is one of the most people of a company and has direct involvement in the registration process. The company secretary should be a local resident and a qualified professional. He/she has to be a natural person and not an organization. No member of the board of the company can act as its company secretary. Availing the right company secretarial service for a company can speed the process of its registration.
3)Board of Directors
An offshore company in Singapore should have at least one local resident as a member of the board. The company can have an additional foreign or local board member, and the director should be 18 or above in age and cannot be a corporate body.
The maximum number of the shareholder in an offshore company in Singapore is 50, at least one of whom should be a local resident. A director can also be a shareholder of the company.
5)Capital and Document Requirements
Company registration in Singapore does not require any minimum capital; a company can have $1 as their paid-up capital, and no authorized capital is required. The documents required for company registration are:
- Passport copies of all the proposed directors and shareholders
- Residential proof of the proposed directors and shareholders
- Details of the parent company (if any) are also mandatory at the time of registration
6)Business Licenses and Permits
You need a proper business license if you wish to open offshore company in Singapore depending upon the nature of the business. There are only a few types of business activities which require a business license. It must be obtained from the relevant government agencies after company in corporation but before commencing the business operations.
Sectors where Offshore Companies are best Used in Singapore
There are a few main spheres where offshore company formation in beneficial in Singapore. They are:
- Investment holding
- Asset Holding
- Professional services or consultancy
- Intellectual Property holding
- Ship management and yacht owning
Singapore has been a business hub for many MNCs across the world and now we know the reasons why. The government of Singapore has been encouraging and inviting foreign investors to invest by attracting them with financial and tax offers. An offshore company in Singapore is the best choice for company expansion and entrepreneurial activity. There are certain other minutiae to know before you register your offshore company in Singapore, and we at Business Setup Worldwide can guide and help you with it. For any queries regarding offshore company setup in Singapore, you can contact us, we’d be glad to be of assistance.