Singapore is one of the highest economic open countries. Singapore takes a great advantage of globalization which makes it's being a developed country. Since 2009, Singapore works out economic crisis and turn to increasingly economics grow up.
Singapore is becoming a sovereign nation in 1965, its population over 5 million. Even Singapore is a small country but its multicultural developed garden country along with a stable environment, low crime, and good reputation.
The registration type established in Singapore companies can be divided into two categories, one is Private Company, the company established in Singapore is mostly privately funded small and medium-sized companies, and the other is Singapore company registration. If there is an actual business activity, the net profit tax is fixed at 26%. If there is no business after the establishment of the Singapore company and no foreign income (such as mainland investment income) is transferred to Singapore, then there is no need to pay taxes, only annual reports and government fees are required.
Advantages of Investing in Singapore
Singapore is one of the famous trading and financial center along with the listed top investment environment in the world as below:
1. Great location: a famous port and transfer trading center.
2. Great infrastructure: the busiest port in the word, excellent airport and the fastest internet etc.
3. Stable social environment: lowest crime in the world and with a stable political environment.
4. Widely business: along with many investing business ranges.
5. Financing channels: famous international financial center.
6. Completely legal system: an Excellent legal system with better appeal system.
7. Clean and Efficient government: Highly efficient government always bring stable and fare invest environment.
8. Preferential policies: Singapore promotes a variety of preferential policies of investing Singapore which same with local enterprises.
The characteristics of setting up a Singapore company
- Political, economic and trade environment is stable, and international image and prestige are good in Singapore.
- Singapore company registered holding company is suitable for application in many countries.
- Singapore has signed free trade agreements with many countries, and Singapore companies have set tariff conditions that are suitable for international trade operations.
- Singapore and China have signed bilateral agreements, investment guarantees, and other agreements, so it is suitable for the establishment of Singapore companies to invest in the mainland.
- Registered company in Singapore, the shareholder data is low in privacy, and the tax treaty with too many countries is not recommended for international tax planning.
- Singapore has no controls on foreign exchange in and out, funds are free to flow, and it is suitable for international trade in Singapore companies.
Issues of Singapore Investments
Even Singapore famous of the opening market but still few issues have to pay attention :
1. Currency circulation: Nonresidents have the limitation of holding Singapore dollars.
2. Limitation of resources: Part of natural resources depends on import which has a certain influence on international price.
3. The actual address is required whatever set up company or representative office.
4. The government has the right to use any land if used by public requirements.
5. Highly CQI/ environment standards, heavy fine if any against.
Business Award Activities
1. All high value along with actual activities companies are allowed to apply for a variety of awards in Singapore.
2. subject to a certain activity or industry those who have benefit for Singapore economics, taxpayer gains tax favorite.
3. Normally, it is extremely strict and taking time to inspect and approve for each applicant. However, applicants have to bring and improve Singapore priority industry, have great contributions for developing and studying which could connect other industry.
Key programs as below :
Manufactories who have a capacity of high tech products or provide qualified services companies can apply for tax-free by 5 -15 years. After the company grows stronger, tax decrease accordingly as below discussion.
Development and expend encourage
The company can apply for a 5% decrease of tax for 10 years in the beginning if the products are qualified for the program, however, each decrease is no longer than 40years. ( included tax-free period if any )
According to relevant stipulations, all qualified programs are allowed to apply for investment allowance which limited by Singapore dollar 10millions.
Qualified programs have 10% tax favorite is mostly subject to Singapore company invest overseas. Besides, double tax deduction can be waived according to Singapore relevant regulations.
It is a newly encouraging item which encourages R&D of intellectual property side. Full details to be confirmed.
Subject to below 6 items are involved PIC system:
1. Purchase and rental of IT or Automatically facilities
2. Employee training
3. I purchase
4. Copyright register
However, from 2015 to 2018 annual estimation, qualified small and medium companies can apply for PIC benefits maximum 600,000 of the Singapore dollar.
Merge and Purchase allowance
Merge allowance application based on companies incorporated in Singapore, tax residents and companies operating in Singapore. The transaction costs incurred in a qualified transaction (estimated at up to $100, 000 a year) also receive a 200% allowance.
FSI covers bond intermediaries, Asian currency unit, derivatives dealers, fund managers, equity capital market intermediaries, operational headquarters, support financial activities of the high value-added processing service providers. Qualified financial entities can apply accordingly to highly strict conditions.
Under the financial steady index system, from the bond market, derivatives market, the stock market, and the credit union enterprise high value-added services can be taxed at 5%, the range of financial activities will be eligible for a tax rate of 12%. qualified income has been expanded. The tax incentive period may last five years, seven or ten years, but it must meet certain conditions.
All approved activities of international capital and fund management activities, enterprise financing and advisory services, economic and investment research and analysis, and credit control and management have 8% deduction of tax.
Majority participants are allowed to have tax favor.
IBD is a protective incentive for the insurance sector. Among the incentives offered, which operates an insurance business in Singapore with 10% preferential tax rate. This includes Marine and insurance. The eligible income of insurance companies and brokerage firms in qualified professional insurance business can further reduce the franchise tax rate.
The listed REITs is allocated to foreign invests with a 10% tax rate but certain conditions have to be met. Listed REITs obtain goods and services tax exemptions, allowing them to business spending for goods and services tax, whether related assets are directly or indirectly through special purpose companies or holding subprime trust.
Islamic Financing Arrangements
Islamic financing income tax, stamp duty and GST literally are the same but have to meet up certain conditions.
Infrastructure Program Award
Qualified investment in eligible infrastructure projects/assets is tax-free. Qualified FSI enjoys certain tax favorite with 10% tax rate.
Wealth fund or approved entity could tax-free.
Approved and qualified overseas income to enjoy a 15% tax rate. HQ applies for each tax favorite accordingly includes tax deduction and tax-free.
MSI is Singapore MSA master plan, in which incentives offered include tax breaks for shipping companies and 10% preferential tax rate for international freight and logistics operators. The approved ship investment manager shall also be taxed at 10% of the relevant income.MSI also includes approved ship investment vehicles, which are exempt from tax on qualified ship rental income. After approved container investment enterprises, the qualified income of container leasing shall be levied at 5% or 10%; And approved container investment management company, according to the qualified management 10% tax.
According to the MSI plan, the qualified ship operator and lessor are also free to dispose of the ship, the proceeds from the construction of the ship and the new construction contract.
Since Feb 21,2017， International actual trading with qualified income can enjoy 5% or 10% preferential tax rate.
Incentives for nonprofits and international legal services include tax exemptions10 %. The approved aircraft lessor also enjoys a preferential tax rate of 8%.
Overseas Income Tax Credit
Detail refers to the confirmation of income or overseas income.
Financial Centre of Singapore
Singapore builded an enthusiastic financial centre, no only serve domestic economics but also service Asian area.
US Dollar Market in Asia
Singapore has a significant position in the Asian market for financing. Singapore banks collect a variety of currencies and using this capital widely.
Capital Market :
Singapore's is a major source of capital for growth and development in the region. Learn more about the Singapore debt and equity capital markets, the foreign exchange and real estate investment trust fund and the business trust framework and its role in promoting the development of the region.
Wealth management and insurance :
Singapore is recognized as the premier wealth management center, enabling investors to access a wide range of regional and global investment opportunities. Singapore's strong and transparent legal framework, coupled with its economic and political stability, provides an ideal location for wealth managers to tap into the region's asset collection opportunities. As Asia's leading insurance market, Singapore also has a vibrant ecosystem, including general insurance companies, reinsurance companies, captive, intermediaries and ancillary services providers.
Economics Agreement by Singapore and Taiwan
Singapore and Taiwan officially signed up an economics agreement by NOV 7, 2013. and it was the first country signed up such contract with Taiwan. Besides Singapore is the founder of TPP and partner of RCEP.
Singapore and Taiwan worked closely, the transaction amount turned to 28.2billions by 2012. Singapore is the fifth trading partner, the fourth export market and the eighth import of Taiwan. Meanwhile, Taiwan also the eighth trading partner, the tenth export and the fifth import of Singapore.
ASTEP consists of 17 chapters, is a high quality, high standard, the comprehensive economic cooperation agreement, involving a wide range of areas, including trade in goods, rules of origin, customs procedures, sanitary and phytosanitary measures, technical barriers to trade, electronic commerce, service trade, investment, competition policy, government procurement, intellectual property rights, and dispute resolution system. Taiwan and Singapore formally negotiated ASTEP in May 2011 and concluded in May 2013, and the two sides reviewed the legal texts carefully before signing the agreement.
Singapore has signed 20 regional or bilateral free trade agreements with 31 trading partners, and it's trading system strictly abides by international standards. In fact, ASTEP will help Taiwan connect with the world. The signing of ASTEP will strengthen Taiwan's development of the open trading system, its overall competitiveness and its ability to respond to competitors. It also demonstrates to the international community the Taiwan commitment to trade and investment liberalization and will serve as an example of Taiwan's negotiations with other countries on economic cooperation agreements. In addition, ASTEP will push Taiwan to join the TPP and RCEP, participate in the momentum of regional economic integration, and push Taiwan to achieve the goal of becoming a "free economic island".
Singapore company registration documents and basic requirements
- Registered Singapore company registration name must be in English, Chinese is not allowed (English name must end with Private Limited or Pte., Ltd.)
- The standard registered capital set by a Singapore company is SGD 100,000. (Singapore companies can also increase their capital, but they must increase government fees.)
- To set up a company or office in Singapore, the office address must be the actual address.
- At least one director is required to register a Singapore company.
- Singapore company establishment director must be a Singapore citizen, Singapore permanent resident or employment pass holder, not a legal director.
- The establishment of a director of a Singapore company may be selected by the shareholders or externally employed.
- Singapore company registered director must be at least 18 years old.
- Singapore company registration requires at least one shareholder. If it is not Singaporean, it must be notarized.
- A company in Singapore must be assigned a local company secretary. If a Singapore company has only one director, it cannot be a concurrent secretary and must be a member of the Singapore Secretarial Association.
- Registered companies in Singapore Whether the company is open or not, the company's accounts are required to be accountant visas each year.
- If the company you are applying for has no business in Singapore, you do not need to pay tax, but you must still provide an accountant's visa. If you register a company in Singapore and have a local business, you will be required to file tax returns.
- Singapore established company can not issue bearer shares.
- The directors and shareholder information of the company registered by the Singapore company must be kept at the office and available for public inspection.
- Singapore has established a number of industries, companies, such as banks, insurance, and securities brokerage companies, which require a special permit before registering with a Singapore company.
- The establishment of a Singapore company and the production of certain goods, such as cigars and firecrackers, must also apply for a special license in advance.
Singapore company registration process
- Confirm company directors and shareholders
- Confirm company name / business scope / registered capital / registered address
- Fill out the application form and provide relevant personal identification (Singapore ID card or foreign passport)
- Organize registration related materials and submit a company registration application.
- Singapore company starts to operate after registration (Singapore bank account opening, leasing company address, hiring employees)
Taxation for the establishment of a Singapore company
The direct taxes for Singapore are corporate tax, personal income tax, property tax, Estate Duty, stamp duty and Central Provident Fund and Goods & Services Tax. There are no plans for taxation on capital income tax, sales tax, value-added tax, national defense donation, education donation, etc.
1. Company Income Tax in Singapore
In principle, Singapore’s establishment of a company must pay taxes on income earned or received foreign income in Singapore. In terms of corporate tax, if the conditions are met, the dividends returned from the foreign exchange, the profits of foreign branches and the income earned from foreign countries may be tax-free.
The current registration of Singapore corporate tax is based on profit-making income after deducting deductible expenses, depreciation, transaction losses and approved charitable donations, based on 17% of the net amount.
Some other deductible fees allowed for the establishment of a Singapore company are as follows:
Investment deduction (depreciation).
The loss of the company in the previous year can be deferred to the profit of the future year, but the shareholder portfolio cannot be changed significantly, and at least 50% of the shares have not changed shareholders.
Expenditure on minerals and oil wells.
Expenses that are fully used in Singapore for foreign purposes can be calculated based on the established equation.
Only the management fee for the cost component and the expenses allocated by the parent company for the registration of the Singapore subsidiary are included.
Provision for bad debts.
In addition to the company income tax in Singapore, the registration of Singapore companies is also subject to the following taxes:
- Skill Development Fund Levy means that employers are required to pay a Skills Development Fund tax for all employees (including temporary workers) at a rate of up to 0.25% of the employee's monthly salary (or compensation) of up to SGD $ 4,500 per employee per month. The minimum tax is SGD $ 2.
- Central Provident Fund, CPF: The employer is required to pay a certain percentage of the monthly salary to the government according to the employee's age.
- Foreign Workers Levy: There is no quota limit for employers to employ employment permits. S permits and work permits are subject to the upper limit of the employment rate of foreign workers (the upper limit of the dependency ratio, DRC) and are taxed according to the number of employees.
2. Personal Income Tax in Singapore
The personal income tax is based on the progressive number, with a minimum of 0% for residents and a maximum of 20% (over SGD $320,000).
(1) Income that has occurred since the establishment of the Singapore company.
(2) Foreign income received after the establishment of the Singapore company.
The income tax payable for foreigners to work in Singapore is as follows:
(1) 60 days or less: No tax is payable. This does not apply to entertainment professionals, company directors and executive professionals (experts, foreign speakers, consultants, and coaches, etc.).
(2) 61 days or more: 15% or the Singapore resident income tax rate to 20%, whichever is higher.
(3) The company's directors' income and consultancy fee income is 20%.
3. Property Tax
The property tax in Singapore is taxed as real property, including land and housing, at a certain percentage of the value of the current year. The so-called value of the current year is the rent that the property is expected to receive within one year. Except for the temporary construction and approved development plan used by the owner, it can enjoy the preferential tax rate of 6 and 12% per year, since 2001. All properties are taxed at a single rate of 10% from the 1st of the month.
The self-use house has been converted to a progressive tax rate since January 1, 2011. The first year's value of the first 6,000 yuan tax rate is 0%, the second 59,000 yuan tax rate is 4%, and the tax rate over 65,000 yuan is 6%.
4. Goods & Services Tax
Consumption tax is a broad basic consumption tax levied on imported goods and almost all goods and services supplied in Singapore. A few exempted consumption tax items include residential rentals and most financial services.
Exported goods and international services are subject to a zero consumption tax rate. Since April 1, 1994, the tax rate is 3%, and the Singapore tax is also subject to a consumption tax on imported goods. However, since January 1, 2003, Singapore’s consumption tax has been increased to 4%, and since January 1, 2004, it has been adjusted to 5% to compensate for the loss of fiscal revenue, which was adjusted to 7 % from July 1, 2007.
Tax incentives for setting up a company in Singapore
The following items are tax incentives for foreign investment in Singapore companies.
- Concessionary Tax Arrangements for Non-Residents.
- There is no restriction on the interest earned by a Singapore-registered company on the remittance of non-resident banks in Singapore.
- Non-resident interest income tax exemption.
- Non-residents with Asian Currency Units (ACUs) and state-owned property bonds with Asian dollar bonds and Star Government bonds.
- Income from insurance institutions or offshore credit loans through Singapore banks or financial institutions is subject to tax exemption under certain conditions between 1983/4/1 and 1993/3/31, and the above income is exempt from 1993/4/1 and extended for another 5 years.
- Double Taxation Relief: Singapore has signed a comprehensive double taxation agreement with 71 countries including China, Canada, Japan, and Taiwan, as well as the United Kingdom and other important countries, making good use of the temporary withholding tax that can significantly reduce royalties, dividends, and interest.
- A multinational company that is a subsidiary of a Singapore-registered company overseas can apply to become an operational headquarters (OHQ) in Singapore and enjoy a low tax rate of five to ten years.
Singapore company annual report process
Set up a company in Singapore, private accountant accounting, tax filing, etc. only need to be done once a year, do not have to do accounting every month. The annual general meeting of shareholders (AGM) will be held within 18 months after the registration of the Singapore company. The accounting chronology and financial report will be submitted to the Registration Authority (AR) and the tax office will be notified. This series of work will be conducted once every financial year.
- Produce annual financial statements.
- Annual General Meeting of Shareholders AGM.
- Produce an annual tax report.
- Company tax declaration.
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