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Singapore is a prime destination for foreign companies, corporate entities, and businesses worldwide to set up their operations and pursue business opportunities across the ASEAN regions and Asia. The country is considered an attractive destination for foreign companies due to its strategic position in South East Asia, favourable tax laws, and many other factors. In this article, we will go through the several benefits of starting a business in Singapore and why it is considered one of the most attractive global business hubs. The article also discusses tips on how to start a company in Singapore and benefit from the country’s business-friendly policies.

Starting a business in another country comes with its set of challenges. However, there are numerous benefits for foreigners to set up their business in Singapore and reap the benefits. Several factors make Singapore an attractive business hub, including the following:

Favourable Corporate Tax Rates

Singapore has one of the world’s most attractive corporate tax regimes from which businesses can take advantage through the following incentives:

  • Whether you are a local or a foreigner, your business will be charged at a flat 17% corporate tax rate of the chargeable income.
  • Singapore has one of the lowest value-added tax rates in the world.
  • Singapore’s tax system works on a territorial basis and income tax is levied only on locally generated income. Thus, income generated from foreign sources of companies, for example, dividends or branch profits, are exempt from tax. This acts as a great incentive for foreigners to form holding companies in Singapore.
  • There are no capital gains taxes in the country.
  • In the budget of 2024, it was announced that for the Year of Assessment (“YA”) 2024, companies will receive a CIT Rebate Cash Grant amounting to $2,000 in cash payout. The company must have employed at least one local employee in 2023 to qualify for this cash grant. Moreover, for YA 2024, a CIT Rebate of 50% of the payable corporate tax will be granted to all tax-paying local and foreign companies. This CIT Rebate is capped at $40,000.
  • Newly incorporated companies are tax-exempt on the first $200,000 of chargeable income during the first three years of their operation. However, the exemption rate is different for the first $100,000 and the next.
    • The percentage exempted from tax is 75% for the first $100,000, making the total exempted from tax $75,000.
    • For the next $100,000, the percentage exempted is 50%, making the amount exempted from tax at $50,000.
    • The maximum exemption for each YA is $125,000 ($75,000+$50,000).
    • To qualify for this tax exemption, the company’s first three YAs should fall in or after YA 2020. However, these tax exemption schemes are subject to approval. A qualified tax agent can help you complete all the legal requirements and ensure your new start-up company qualifies for tax exemption.
    • All new start-up companies are eligible for tax exemption except for those businesses whose principal activity is that of investment holding and those companies that undertake property development for investment, sale, or both.

Robust Economy

Singapore is considered one of the world’s strongest economies and seems to be doing well even when other countries face economic crises. According to statistics, Singapore is considered 1st in Asia as the most digitally competitive company and 1st in the world as the best global smart city. This economic powerhouse has low inflation and corruption rates in addition to having a very low unemployment rate. All these factors contribute towards making Singapore one of the most stable economies in the world.

Moreover, Singapore is a free-market economy, with services making up almost 80% of the country’s GDP. The economy is primarily fueled by trade, manufacturing, and finance. Singapore’s gross national savings are almost 50% of its GDP. Its exports amount to almost $500 billion per annum, making the country’s trade-to-GDP ratio one of the highest in the world. All these factors contribute towards a robust economy which attracts overseas companies to start their businesses in Singapore and benefit from the country’s innovation, entrepreneurship, and business landscape.

Strategic Location

Singapore is located in the centre of Southeast Asia and is close to economic superpowers like India, China, and Japan. Singapore is also a gateway for emerging markets like Indonesia and Malaysia, and its port is a major international maritime center. It is considered one of the busiest ports in the world. Furthermore, Singapore’s Changi International Airport connects almost 330 destinations worldwide through more than 80 international airlines, allowing efficient access to the Asian markets. The airport caters almost 20 million passengers every year. Due to its central location in Southeast Asia, passengers can travel to Asia Pacific cities in just a few hours. A home business in Singapore allows entrepreneurs to establish strong and lucrative trade relations across the region.

This prime strategic location allows Singapore to be an effective trading hub, facilitating trade through a comprehensive logistics infrastructure and dynamic supply chain management systems. The country is home to many leading logistics and shipping firms, including FedEx, UPS, and DHL.

Tax Incentives For Businesses

Singapore has emerged as one of the world’s most business-friendly landscapes, and tax incentives draw companies from all over the world to start a business in Singapore. To foster growth and technological innovation across various industries and sectors, the country offers a wide range of tax incentives including:

  • Enterprise Development Grant
  • Investment Allowance Incentive
  • Enterprise Singapore Market Readiness Assistance Grant
  • Development and Expansion Incentive
  • Industry-Specific Tax Incentives
  • Enterprise Financing Schemes
  • Startup SG Tech
  • Pioneer Tax Incentive
  • Progressive Wage Credit Scheme
  • Tax Deductions For Training Expenditure
  • Double Tax Deduction For Internationalisation
  • Partial Tax Exemptions
  • Intellectual Property Acquisition Expenses
  • Merger and Acquisition Loan Scheme

 

Interested companies can apply for any of the applicable tax incentives through the IRAS.

Attractive Personal Tax Framework

Singapore also has a progressive personal tax framework where residents can benefit from tax rebates. Individuals with a higher income pay higher personal income taxes with the highest rate being 24%. For YA 2024, a personal tax rebate of 50% capped at $200 is granted to all tax residents of the country. Furthermore, chargeable income that falls in the range of $500,000 and $1 million is taxed at a rate of 23% while income greater than $1 million is taxed at the rate of 24%.

The progressive resident income tax rates from YA 2024 onwards is as follows:

Chargeable IncomeIncome Tax Rate (%)
First $20,000

Next $10,000

0

2

First $30,000

Next $10,000

3.50

First $40,000

Next $40,000

7

First $80,000

Next $40,000

11.5

First $120,000

Next $40,000

15

First $160,000

Next $40,000

18

First $200,000

Next $40,000

19

First $240,000

Next $40,000

19.5

First $280,000

Next $40,000

20

First $320,000

Next $180,000

22

First $500,000

Next $500,000

23

First $1,000,000

In excess of $1,000,000

24

Double Tax Agreements

Singapore has one of the world’s most expensive double tax agreement (DTA) networks that attracts people globally to start a business in Singapore as a foreigner.  The country has signed over 100 DTAs with different countries of the world that allow foreign businesses not to pay their taxes twice. Moreover, based on the DTA grant for each country, some taxes are exempted or reduced. These cover several income types including:

  • Tax on royalties, interests, capital gains, and dividends.
  • Director’s fees
  • Shipping and air transport
  • Students and researchers
  • Dependent and independent personal services
  • Income from immovable property

There are three types of DTAs that Singapore has signed with other countries, that include the following:

  • Comprehensive: Comprehensive DTAs provide tax reductions or exemptions on all types of incomes between the two parties.
  • Limited: Limited DTAs cover only the incomes generated from shipping or air transport activities.
  • Exchange of Information Arrangements (EOIAs): The EOIAs include provisions for tax information exchange.

Free Trade Agreements

Singapore has a widespread free trade agreement network with FTAs signed with neighbouring Asian countries and other world economic giants. It currently has 26 FTAs that comprise 15 bilateral and 11 regional agreements. Due to its agreements with the ASEAN states, which in turn have FTAs with the European Union states, India, China, and Hong Kong, Singapore can offer anyone starting a business in the country exclusive free trade access to all these corresponding countries. This vast system of DTAs and FTAs shows Singapore’s commitment to improving and expanding its trade relations with countries worldwide and continuing to be a default business hub for entrepreneurs.

Dynamic Workforce

Singapore’s workforce is highly skilful and talented. The country’s labour force is well-versed in the English language. Moreover, they share linguistic and cultural relations with the other ASEAN states’ people, allowing foreigners to communicate through them with other potential investors easily. Singaporeans are known for their hard-working attitude, having gained comprehensive experience and skills in many different industries and sectors. Due to the country’s emphasis on education and hands-on training, businesses can employ a multi-talented workforce for their operations. Foreign companies can hire just the kind of employees they want from the highly educated and skilled workforce — a great incentive for foreigners to buy a business in Singapore and start their operations.

Business Friendly Ecosystem

Singapore’s business environment has been lauded globally for providing companies with the ease of business. It has consistently been ranked among the top three economies of the World Bank’s Ease of Doing Business report. The country has devised streamlined business processes and a stable infrastructure that allows investors and businesses to access capital easily. This is achieved through the country’s 120 commercial banks and 31 merchant banks. The transparent economic and legal policies of the country provide equal business opportunities to local and foreign companies. The business-friendly ecosystem and support for free market competition, thus, attracts thousands of multinational companies and is a constant testament to Singapore’s resolve to become a hub for sustained growth and a thriving inter-connected business society.

Comprehensive Intellectual Property Protection

Singapore has a comprehensive Intellectual Property protection system has streamlined and transparent legal processes to protect intellectual property rights. Individual businessmen and companies can register their trademarks, copyrights, and patents through an efficient system provided by the Intellectual Property Office of Singapore (IPOS), which oversees all IP-related issues. Singapore is the only city out of Geneva with an office of the World Intellectual Property Organization (WIPO). Another important organisation in Singapore is the WIPO Arbitration and Mediation Center Office, which provides guidance for resolving procedural disputes by WIPO rules. Moreover, the centre organises training sessions for intellectual property and technology-related disputes and is considered a facilitator between parties.

The comprehensive IP protection system ensures that companies can continue to do business in Singapore with the peace of mind that their intellectual property will be safe after being protected by the Trademark, Copyright, and Patent Act under IPOS.

Fast and Simple Incorporation

Another great incentive for people to start their business in Singapore as a foreigner is its fast and simple company registration procedures. The only requirements for a foreigner to start a business in Singapore is to have the following:

  • At least one shareholder
  • One director
  • One company secretary that must be a local resident
  • A local address for the company
  • A share capital of at least $1

Once these requirements are met, investors can apply to incorporate their company. A Singapore resident owner can apply for incorporation through the online Accounting and Corporate Regulatory Authority (ACRA) website. However, foreign investors cannot self-register their company in Singapore on their own. They need the services of a registered resident filing agent to incorporate the company or any other legal entity on their behalf through ACRA. On average, it only takes three days for company incorporation in Singapore. Once the business has been registered with ACRA, it provides them with a business registration number after which they can open their corporate bank account and apply for other licences, permits, and tax incentives. Annual ACRA filing and compliance is required for all businesses in Singapore.

Stable Political Environment

One of the most important factors that plays a crucial role in making Singapore a safe place to expand business is its stable political environment. Singapore has one of Asia’s most honest and politically stable governments that provides businesses with a safe and conducive environment to grow and thrive. The country has a strict and transparent legal system that enacts laws and punishments for any kind of corruption or fraud. This gives businesses the security that they will not be at the mercy of corrupt officials. Their hard work and honest approach to business will be met with a similar honest response. As a result, more and more people are exploring business ideas in Singapore and eventually starting their operations in the country.

Excellent Quality of Life

Singapore is considered one of the most well-functioning and modern countries of the world that provides an excellent quality of life to its residents. The country is home to modern architecture and world-class infrastructure that provides convenience and comfort to whoever visits or lives there. Singapore attracts millions of visitors and potential businessmen every year through its international airports, subways, commercial buildings, hotels, parks, and other attractions. A well-functioning infrastructure and a pleasing and comfortable living environment ensure greater productivity at work, which is the hallmark of Singapore’s business landscape.

How to Start A Business In Singapore

Starting a business in Singapore involves some steps that must be followed before you can start your business operations in the country.  The following steps describe the process of starting a business in Singapore.

Choose a Business Structure

The first step in starting a new business as a foreigner is to choose a business structure that best suits your business. You have the option of choosing from:

  • Sole Proprietorship
  • Partnership
  • Limited Partnership (LP)
  • Limited Liability Partnership (LLP)
  • Local Company

Each structure has pros and cons and comes with its own incentives. The nature of your business, the amount of capital invested, the number of owners, and other unique business needs will drive your decision to choose a particular structure over the other.

Choose a Name for your Business and an Address

The next step towards starting a business in Singapore is registering the business address with the ACRA. This address cannot be a P.O. Box number. Moreover, you will have to choose a unique name for your business and reserve it. The name should not be very similar to an already registered business name, should not be vulgar or obscene, and should not be prohibited. You can reserve your business name on ACRA’s BizFile+ portal.

Register your Business

The next step is to register the business with ACRA according to the chosen business structure. You can employ the services of corporate service providers or register the business yourself at the ACRA’s BizFile+ portal. Once the company has been registered, it will be assigned a Unique Entity Number (UEN), which will then be used for all future correspondence with government agencies.

Register a Corppass Administrator

Once your business has been registered, you must register for a Corppass Administrator (Admin) account that allows you to carry out any transactions with the Government agencies. You can register for Corppass Administrator directly on the Corppass portal.

Open a Corporate Bank Account

Finally, you should open a corporate bank account that will allow you to track your business transactions, the ash flow, expenses, and all related financial information you will need while filing your income tax returns. Should you require help, it is best to hire bookkeeping services to ensure compliance.

These benefits show why a foreign business should set up its operations in Singapore. With StartupBCS, you can rest assured that you will have a smooth transition of moving your business operations to Singapore, where you can expand into new regional and global markets.