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Doing Business: Singapore vs Australia vs China vs India


With its strategic location in Southeast Asia, favourable tax rates, and a business-friendly environment, Singapore has emerged as an attractive global business hub for companies worldwide to expand their operations into Asia and beyond. Singapore’s economy is considered one of the world’s most competitive economies, making it an attractive destination for foreigners to set up their businesses in the city-state. This article discusses the reasons and incentives for companies in Australia, China, and India to expand their business operations into Singapore and benefit from the lucrative gains.

Australia

Singapore offers a more robust business environment, low tax rates, and other business incentives than Australia. Below is a detailed analysis of why an Australian company should set up its business in Singapore.

Singapore-Australia Business Relations

Singapore and Australia have always maintained good business relations grounded in high-level engagements and collaborations, trade and investment partnerships, and historical ties. With the establishment of Comprehensive Strategic Partnership (CSP) in 2015, the Australian-Singapore business relations were further solidified to bring about greater economic integration, enhanced collaboration opportunities, increased investment flows, and increased cooperation on regional and global issues.

Favourable Tax Environment

Singapore offers a more favourable tax environment as compared to Australia. Australia has a high corporate tax rate of 30% whereas in Singapore, the maximum corporate tax rate is fixed at 17%. Moreover, with several other incentives and tax exemption schemes, the effective corporate tax often comes at a lower rate than 17% in Singapore. This acts as a great incentive for Australian companies to set up their business in Singapore and enjoy lesser tax burdens.

Free Trade Agreements and Double Taxation Avoidance Agreement (DTA)

Australia and Singapore have signed mutual free trade agreements that allow Australian companies to enjoy various exemptions while doing business. Moreover, the Australia-Singapore Double Tax Avoidance Agreement allows Australian residents to operate their businesses in Singapore and avoid double taxation, resulting in maximum profits for businesses. Singapore’s comprehensive IP protection mechanisms also offer great incentives to Australian citizens by safeguarding their intellectual property rights.

Government Support and Incentives

The Singapore Government offers various support programs and incentives that include financial grants, loans, and tax exemptions for company incorporations. Furthermore, training programs also offer non-financial incentives for foreigners.

Ease of Incorporation

Singapore offers much convenience to companies wishing to incorporate in the city-state. One of the biggest conveniences is the easy and straightforward method of registering and incorporating the company. A company can register with the ACRA in as little as one day. Foreigners can claim 100% ownership of the registered business and have several different business structures to choose from while registering.

Streamlined Processes and Lead in Infrastructure

The city-state has well-defined and streamlined processes that allow businesses to operate with much ease and convenience. The legal framework, skilled labour force, and high-standard infrastructure make Singapore more attractive as compared to Australia.

China

Although China itself is considered a huge global market, it has become highly competitive and saturated for new companies and entrepreneurs to start and succeed. Therefore, even for Chinese residents, Singapore shows great potential for new business start-ups and expansion. The following sections further highlight why setting up a business in Singapore from China is a lucrative and worthy investment.

Singapore-China Business Ties

Singapore and China enjoy very good business and trade relationships that serve as a great incentive for businesses to set up their operations in the other country. Singapore offers Chinese citizens the opportunity to expand into the ASEAN region and grasp the booming opportunities that are not easily available in China now, especially for new businesses.

Low Corporate Taxes

In terms of corporate taxes, Singapore’s tax rates are lower as compared to Chinese. In Singapore, the corporate tax rate is flat 17%. The GST in Singapore is 9%. In contrast, China has a high corporate tax rate of 25% with certain small businesses qualifying for lower corporate tax rates of 20% or 15%. China also imposes value added tax which stands at 17% for companies with an annual turnover exceeding CNY 1.8 million, whereas the VAT for all other companies is fixed at 6%.

Ease of Incorporation

Singapore offers a convenient system of company registration and incorporation as compared to China. In China, if you want to incorporate a company, it involves transactions and communication with several government bodies and authorities for which you have to wait for approval before moving on to the next step. Thus, the whole process of approval and incorporation can take anywhere between 2 to 3 months. On the other hand, Singapore offers a highly easy and fast incorporation system with minimal formalities. Therefore, the whole registration process can take as less as 24 hours.

Foreign Ownership

Singapore allows foreigners to open a limited liability company in the city-state with 100% foreign ownership. The company can engage in any type of business activity under this ownership as there are no restrictions. On the contrary, China does allow foreigners to set up a Wholly Foreign Owned Enterprise (WFOE) which is 100% foreign owned but the company can only engage in specific “encouraged” business activities that the government has distinctively specified. Foreigners cannot engage in other fields of activities marked as “restricted” or “prohibited”.

Minimum Statutory Requirements

Singapore offers very lenient minimum statutory requirements for company registration as compared to China. For example, in Singapore, you only need a minimum paid-up capital of SGD 1 whereas China requires you to have a minimum registered capital between CNY 100,000 and CNY 1 million; the exact threshold depending on the nature of business and other legal requirements.

India

In recent years, more and more Indians are starting their new businesses in Singapore or expanding their current businesses to Singapore. The reason? Singapore’s business-friendly environment, high-trading economy, and a corruption-less business environment that offers great opportunities for Indians especially when they compare this situation with that of India. Many prominent entrepreneur Indian companies such as Flipkart, Mobikon, and Medialink have incorporated their businesses in Singapore. Below are some of the reasons why Indians prefer to set up their businesses in Singapore.

India-Singapore Business Relations

India and Singapore are trading partners in various sectors with their trading and investment relations deepening with each passing day. Both the countries have signed trading treaties with each other that offers great incentives to Indians to tap the Singaporean market. Moreover, there is a large Indian community in Singapore that makes it a big financial and investment hub for Indian companies and businesses.

Low Corporate Taxes

The corporate tax rate in India for all registered companies is 30% which is significantly higher than the corporate tax rate in Singapore, 17%. This translates to greater revenues and profits for a business if it is registered in Singapore as opposed to if it were registered in India.

No Capital Gains Tax nor any Tax on Dividends

India imposes a capital gains tax on businesses ranging from 15-20%. It also imposes a tax on dividends paid to shareholders that are paid from a company’s profits after they have already paid the corporate tax. On the contrary, Singapore neither imposes any capital gains tax nor are the shareholder dividends taxed. This is because Singapore adopts a double taxation avoidance scheme.

Government Incentives

Singapore offers many types of incentives, support, and grants to new startups opening their businesses in the city-state. India, on the other hand, does not provide any specific government support or tax advantages to startups registered in India.

Tax Treaties

Singapore has an extensive network of treaties not only with the neighbouring countries and ASEAN states but with other countries worldwide. This offers a significant advantage to Indian companies registered in Singapore to utilise the tax treaties and avoid double taxation as they tap into international markets. They can maximise their revenues and profits when operating in Singapore as compared to in India.

Fixed GST

India imposes a GST or VAT on goods and services that range from 5% to 28% depending on the type of service or product. However, in Singapore, there is a fixed GST of 9% which is also exempted in certain cases.

Corporate Tax Rate Comparison

Here is a comparison table of corporate tax rates, GST rates, dividend and capital gain tax rates of the above-mentioned countries:

CountryCorporate Tax RateGST RateDividend TaxCapital Gain Tax Rate
Singapore17%9%Tax FreeTax Free
Australia30%10%Subject to normal CIT rateSubject to normal CIT rate
China25%13%20%20%
India30%5%, 12%, 18% and 28% depending on slabs20%10-20%

In addition, with Singapore Budget 2024, Corporate Income Tax Rebate (CIT Rebate) for the year of assessment 204 is increased from 25% which is capped at $15,000, to now 50%, capped at $40,000. There is also a cash grant of $2000 if your company has at least 1 local employee is 2023.

Final Thoughts

All these above-mentioned sections describe in detail how Singapore excels in creating the best business-friendly environment for entrepreneurs and foreigners from Australia, China, and India. If you also belong to one of these countries and are considering expanding your business operations to Singapore, StartupBCS can help you create your regional or global headquarters in Singapore with services like company incorporation and corporate tax filing. We can also assist you in efficiently structuring your investments, reviewing your applications, business plans, and projections, and following up with the relevant authorities in compliance with regulations.

With bespoke advice and assistance in all areas of taxation, bookkeeping and financial report, and corporate secretarial, you can be assured of reaping the full benefits of incorporating a company in Singapore.