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Singapore – Highlights

Singapore company incorporation

Most of the Singapore company incorporation is done in a form of a private company. Major restrictions of the private company include restrictions to transfer its shares; maximum number of shareholders is limited to 50; any public subscription of shares or deposits are prohibited.

A name of a limited liability private company has to include the following abbreviation – Pte Ltd.

Procedure for Singapore company registration

The procedure of a Singapore company formation is as following:

  1. Approval of preferred name ( 2 working days)
  2. An application form to be filled in, signed and scanned containing information about a preferred name, details of directors and shareholders of a Singapore company
  3. A beneficial owner declaration and to be filled in, signed, scanned and send to us
  4. we issue an invoice for a Singapore company incorporation
  5. The copy of the passport, consent to act as director letter, signed by the shareholder M&AA have to be certify by notary and send us the originals
  6. Clear scan copy of residence proof (utility bill, bank statement or bank reference not older than 3 month)
  7. Upon receipt of money on our bank account for a Singapore company incorporation, we start an incorporation process in Singapore.  It takes up to 5 working days to complete a Singapore company registration
  8. The following process of legalisation takes up to 7 working days and up to 5 working days for a courier delivery

In the beginning of every year we issue an annual invoice for S$1,050 to cover renewal fees which includes registered office and company secretary of a Singapore company.

Minimum capital requirement for a Singapore company

Shareholders must subscribe at least for two shares. 0.2% of stamp duty is charged on authorised share capital of a Singapore company.

Shares at a Singapore company

There are the following classes of shares that can be issued by a company:

  1. Ordinary shares
  2. Preference shares

Share premium is not allow in Singapore.

Proper instrument of share transfer is required to register the transfer of shares in a Singapore company.

Directors of a Singapore company

Minimum number of directors is one which must be a Singapore citizen or a resident of Singapore to start a Singapore company registration. There is no restriction for foreign nationals to act as a director of a Singapore company.

Corporate directors are not allowed in Singapore.

An annual general meeting of directors of s Singapore company must be held  and not more than 15 months after the previous one.

Shareholders of a Singapore company

There should be at least one shareholder to start a Singapore company formation. There are no restrictions for foreign individuals or corporate body to be a shareholder of a Singapore company. Number of shareholders of private company is limited to 50.

Secretary of a Singapore company

It is obligatory to have a secretary for a Singapore company. Secretary could be a natural person who is a resident of Singapore. The company secretary is responsible for keeping and filing corporate document with ACRA.

Registered office

Every company in Singapore has to have a registered office where a register of directors, shareholder, secretary and minutes of general and director meetings are kept. All changes has to be filed with ACRA within a month from a date of a change.

Accounts of a Singapore company

Every company in Singapore has to keep accounts. Accounts of the Singapore company have to be audited on an annual basis. Some exemptions apply for exempt private companies.

Tax System of Singapore

Below are the major taxes in Singapore

  1. Income tax
  2. Goods and Service Tax (GST)
  3. Capital Gain Tax (CGT)
  4. Withholding tax on
    1. royalties
    2. dividends
    3. interest
  5. Stamp duties

Taxable Income

Singapore operates territorial taxation principle. The major difference with Hong Kong is that in Singapore the payment against sales invoices can be channelled through Singapore unless losing the offshore tax status. Therefore, the following income is taxed in Singapore:

  1. Accrued in Singapore
  2. Derived from Singapore
  3. Money relating to sales are received in Singapore from outside Singapore

Sales proceeds received in Singapore relating to sources outside of Singapore change the status of outside of Singapore income and become subject to income tax in Singapore
There are certain exemptions available from income tax as following:

  1. Foreign dividends
  2. Foreign source service income

Residence test for companies in Singapore

A company is a resident of Singapore if management and control is exercised from Singapore.
Residents are taxed on income accrued in, or derived from Singapore and sales proceeds relating to outside of Singapore income recived in Singapore.

Difference of tax treatment for income from different sources

Foreign source income is exempt from income tax if not remitted to Singapore.

Income is not considered to be derived from Singapore if

  1. A contract concluded and signed outside of Singapore
  2. Services rendered outside of Singapore
  3. Capital is employed outside of Singapore
  4. If title of goods passed outside of Singapore
  5. Receipt of sales proceeds are outside of Singapore
  6. Payment of expenses incurred in provision of services or delivery of goods done outside of Singapore
  7. Place where goods are stored and maintained

Singapore source income is subject to income tax.

Taxation of dividends

Foreign dividend income is exempt from income tax.

Taxation of royalties

Royalty income received is subject to income tax. Foreign source royalty income is exempt from income tax unless remitted to Singapore.

Royalty paid to non-residents of Singapore is subject to withholding tax of 15% unless it is regulated a Double Tax Treaty.

Taxation of interest

Interest received is subject to income tax. The tax system of Singapore does not have a separate tax treatment for foreign or Singapore source interest income.

Interest paid to non-residents of Singapore is subject to withholding tax of 15% unless it is regulated a Double Tax Treaty.

Capital Gains

There is no capital gain tax in Singapore.

Corporate income tax

Corporate income tax rate in Singapore is 18% for 2009 and 17% for 2010.

Partial tax exemption is available for new start-up companies (for first three consecutive years). The exemption is calculated as following:

  1. 100% on first S$100,000 of chargeable income
  2. 50% on next S$200,000 of chargeable income

Certain conditions apply as at least one of shareholder is a natural person holding not less than 10% of issued share capital.

Stamp duties

Stamp duty on transactions with securities is 0.2%

Stamp duty exemption applied to offshore loan agreements and some other documents

Net worth tax

There is no net worth tax in Singapore.

International aspects of Singapore taxation

Anti-avoidance regulation

Singapore tax code is following OECD recommendations.

Transfer pricing

There is no specific legislation in Singapore tax code. However, arm’s length test will apply to related party transactions.

System of Double Tax Treaties

Singapore signed more than 60 Double Tax Agreements (DTA) which can be successfully used for an international tax planning.