Company registration in Singapore

Singapore is the fourth-largest financial center in the world. As a leader in modern infrastructure and a technological powerhouse, it will serve as a prestigious business card for your operations. Under favorable taxation, Singapore offers a tax system based on the territorial principle—what does this mean?

A company in Singapore allows you to pay income tax only if the income is derived from Singapore’s territory. In comparison, majority of companies is taxed on all income, regardless of whether it originates from territory of registration or not.

Singapore is particularly recommended for holding and trading companies.

Company registration in Singapore – Key Information

Company registration in Singapore – What to keep in mind before establishing it?

Singapore is suitable for all types of business activities. It is a location offering attractive tax conditions as well as a unique reputation.
Singapore offers various incentives for foreign investors, such as:

• International Headquarters Award (IHQ) – allowing foreign companies that decide to manage their operations from Singapore to reduce their tax to 15% (from 17%).
• Global Trader Programme – allows companies registered in Singapore and engaged in international and regional trade (with a turnover exceeding USD 100 million) to reduce their income tax.
• Singapore Economic Development Board (EDB) – may recognize certain types of activities, which are not sufficiently present in Singapore, as priority. Companies conducting such activities may be eligible for tax incentives for up to 15 years.

Wealthy individuals with personal assets worth at least SGD 20 million may, after meeting certain conditions, obtain permanent residency status in Singapore and benefit from Singapore’s income tax rates.

The corporate tax rate in Singapore is one of the lowest in the Asia-Pacific region. Currently, the corporate tax rate in Singapore is 17%.

The tax system in Singapore is territorial in nature. This means that income tax is levied on the net income of companies derived from sources located in Singapore and on income from foreign sources if it is remitted to Singapore. Non-resident Singaporean companies, as well as other business activities, are taxed under the same rules.

When generating taxable income, expenses incurred wholly and exclusively for the purpose of generating income can be deducted from revenue. Generally, an expense cannot be deducted if:

(A) It is prohibited under the Income Tax Act;

(B) It is in kind; or

(C) It is a contingent liability.

There is no capital gains tax in Singapore. Singapore operates a unified corporate tax system. Under this system, the income tax paid on a company’s taxable normal income is the final tax, and shareholders are not required to pay tax on dividend income.

Singapore does not impose a withholding tax on dividends.

Interest, royalties, or payments for equipment rentals made to non-residents are subject to withholding tax at a rate of 15%.

Company registration in Singapore – minimum capital

Singapore does not require companies to have a minimum capital for incorporation.

Company registration in Singapore – bank account

A bank account will be established for your company with online access, a VISA or MasterCard ATM card.

Company registration in Singapore – board of birectors and shareholders

The board of directors of the company can be of any nationality, and the services of so-called nominee directors responsible for managing the company will provide you with additional confidentiality. The services of nominee shareholders are another solution that ensures the preservation of confidentiality and anonymity.

Company registration in Singapore

Do you want to establish a company in Singapore or learn more about the tax system or the rules for obtaining tax residency?

You’ve come to the right place. Our law firm has been assisting clients in setting up and managing companies abroad for over 10 years—if you want to know more, please contact us.

Company registration in Singapore – FAQs

Company registration in Singapore – the procedure

Company Registration:

1. Reservation and Approval of Company Name: Reserve and get the company name approved in the commercial register.
2. Submission of Required Documents: Submit the necessary documents along with the registration application to ACRA.

Required Documents for Company registration in Singapore:

• Passport of the ultimate beneficial owner of the company;
• Utility bill (electricity, gas, water) of the ultimate beneficial owner;
• Bank reference letter regarding the ultimate beneficial owner.

Shareholders of a company in Singapore:

• A minimum of one shareholder is required to establish a company, with a maximum of 50 shareholders allowed.
• Foreign shareholders are permitted, but it is required that at least 51% of the company’s shares be held by a Singapore resident.

Company registration in Singapore – Board of directors:

• At least one director is required to run the company, and the director can also be a shareholder.
• At least one director must be a resident of Singapore.
• It is also necessary to appoint a company secretary (who must also be a resident). If the company has only one director, that person cannot simultaneously serve as the company secretary.

Company registration in Singapore – registered address:

• The company must have a registered address in Singapore, which will appear on official company documents and correspondence.
• There is an option to use virtual office services, including a dedicated phone number.

Company registration in Singapore – Establishment time:

• The time required to establish a company is approximately 2 weeks.

Company registration in Singapore – capital:

• There are no requirements regarding minimum capital.

Company registration in Singapore – Taxes and Finances

• Corporate Tax Rate: Singapore has one of the lowest corporate tax rates in the Asia-Pacific region, currently set at 17%.
• Territorial Tax System: Singapore’s tax system is territorial in nature. This means that income tax is levied on the net income of companies derived from sources located in Singapore and on income from foreign sources if it is remitted to Singapore. Non-resident Singaporean companies, as well as other business activities, are taxed under the same rules.
• Deductible Expenses: When generating taxable income, expenses incurred wholly and exclusively for the purpose of generating income can be deducted from revenue. Generally, an expense cannot be deducted if:
• It is prohibited under the Income Tax Act;
• It is in kind; or
• It is a contingent liability.

• No Capital Gains Tax: Singapore does not impose a capital gains tax.
• Monistic Corporate Tax System: Singapore operates a monistic corporate tax system, where the income tax paid on a company’s taxable normal income is the final tax. Shareholders are not required to pay tax on dividend income.
• No Withholding Tax on Dividends: Singapore does not impose withholding tax on dividends. However, interest, royalties, or payments for equipment rentals made to non-residents are subject to a 15% withholding tax.

Full Corporate Tax Exemption

• Full Tax Exemption for Startups: A full corporate tax exemption is granted for qualifying companies on taxable income up to $100,000 for the first three consecutive years in which the company is taxable. Additionally, a 50% tax exemption is granted on the next $200,000 of taxable income.

To qualify for the full tax exemption for a particular year under this scheme, the company must:

1. Be incorporated in Singapore.
2. Be a tax resident of Singapore for that year.
3. Have no more than 20 shareholders during the basis period for that year.
4. Ensure that all shareholders are individuals during the basis period.

Company registration in Singapore. Effective Tax Rates

• First $100,000 of income: 0% tax rate
• Next $200,000 of income: 8.5% tax rate
• Income exceeding $300,000: 17% tax rate

Companies that do not qualify for the full tax exemption will be subject to partial corporate tax exemption.

Company registration in Singapore. Partial Tax Exemption

• Partial Tax Exemption for Companies: A partial exemption on taxable income up to $300,000 (excluding Singaporean dividends) is available under the standard corporate tax rate:
  • On the first $10,000, 75% of the income is exempt from tax.
  • On the next $290,000, 50% of the income is exempt from tax.

Company registration in Singapore. Effective Tax Rates After the First Three Years

• First $10,000 of taxable income: 4.5% tax rate
• Next $290,000 of taxable income: 8.5% tax rate
• Income over $300,000: 17% tax rate

Company registration in Singapore. Foreign Income Exemption

A Singapore-resident company may benefit from tax exemption on foreign dividends, branch profits, and foreign-sourced service income remitted to Singapore.

• Foreign Income: To qualify for the foreign-sourced income exemption:
  1. The highest corporate tax rate in the foreign country from which the income is derived must be at least 15% in the year the income is earned.
  2. The foreign-sourced income must have been subject to tax in the country of origin.

Company registration in Singapore. Definition of Foreign Income:

• Foreign Dividends: Dividends are considered foreign if they are paid by a company that is not a tax resident of Singapore, even if the dividend income is from trade or business conducted in Singapore by a Singapore resident.
• Foreign Branch Profits: Refers to profits from trade or business conducted by a foreign branch of a company registered as a branch (not a subsidiary) in a foreign jurisdiction.
• Foreign-Sourced Service Income: Refers to income from professional, technical, consultancy, or other services provided by a person in the course of trade, profession, or business. This income is considered foreign if the service is provided through a fixed place of business in a foreign country.

As mentioned, Singapore’s tax system is territorial, meaning foreign income is only taxed if it is remitted to Singapore. Foreign income that remains outside Singapore is not subject to Singapore tax.

Company registration in Singapore. Tax Relief on Foreign Income

Singapore is also an attractive location for holding companies due to tax relief granted for foreign tax paid on income. This means that although dividends received in Singapore by resident companies are subject to tax, a tax credit may be granted for the foreign tax paid.

Double taxation agreements (DTA)

• Singapore has signed Double Taxation Agreements (DTA) with numerous countries to prevent the same income from being taxed twice in different jurisdictions.

Other information

Additional Information

Company registration in Singapore – Nominee services

The board of directors can be of any nationality, and the services of nominee directors, responsible for managing the company, will provide you with additional confidentiality. Nominee shareholder services are another solution that ensures confidentiality and anonymity.

Company registration in Singapore – Audits

Recent changes in Singapore’s corporate legislation have reduced administrative burdens for private businesses, meaning fewer companies will require an audit. The amendments to the Companies Act were passed by the Singapore Parliament on October 8, 2014, introducing a wide range of changes to the Singapore Companies Act (CA). These changes are being implemented in two phases: the first set of changes took effect on July 1, 2015, and the second set in the first quarter of 2016.

Previous Audit Requirement vs. New Regime

• Previous Requirement: All active companies with a corporate shareholder or annual revenue exceeding 5 million SGD required an audit.
• New Regime: All private companies that meet the definition of a “small company” and belong to a “small group” in each of the last two financial periods are exempt from audit requirements.

Company registration in Singapore – Previous Audit Requirement

Before the changes to the Companies Act, a company was required to conduct an audit if:

• It had at least one corporate shareholder;
• It had more than 20 shareholders; or
• Annual revenue exceeded 5 million SGD.

Inactive businesses were exempt from this requirement.

Company registration in Singapore – New Regime

Small companies are exempt from the audit requirement. The amended Companies Act introduced the new concept of a “small company” that is exempt from audit requirements. Under the revised Act, a company can be exempt from the audit requirement if it qualifies as a “small company.”

A company in Singapore qualifies as a “small company” for a financial year if it meets the required criteria in the last two financial periods. The company ceases to qualify as a “small company” if it fails to meet the required criteria in the last two financial periods.

Company registration in Singapore. Definition of a small company

To qualify as a “small company” in Singapore, the company must:

1. Be a private company; and
2. Satisfy at least 2 out of 3 criteria in the last two financial periods:

• Total revenue for the financial period ≤ 10 million SGD
• Total assets at the end of the financial period ≤ 10 million SGD
• Number of employees at the end of the financial period ≤ 50

If the company belongs to a group, the above criteria must also be met by the group as a whole. In other words, the group must also qualify as “small” by meeting two of the three quantitative criteria on a consolidated basis in the previous two financial periods.

Previously, the audit requirement applied to any company with a corporate shareholder. This rule no longer applies, meaning small companies can benefit from the exemption, regardless of whether they have a corporate shareholder. Companies exempt from audit are still required to file financial statements with the Accounting and Corporate Regulatory Authority (ACRA).

What this means in practice

Many businesses will benefit from the audit exemption, significantly reducing compliance costs, especially for businesses in their early years of operation. Private company auditors can resign by submitting a notice of resignation. Under the previous regulations, auditors could not resign before the end of their term unless the company found a replacement auditor.

Under the new rules, auditors can resign by giving notice to the company, and the company has three months to replace them. This greatly facilitates the process for private companies to change auditors. This change does not affect auditors of publicly listed companies or their subsidiaries, which must obtain approval from ACRA if they wish to resign early.

Company registration in Singapore – Changes to share issuance

Private companies can provide financial assistance. Before the amendments, the Companies Act prohibited companies from providing financial assistance for the purchase of shares in the company itself or its holding company.

This prohibition has been lifted, and a private company can now provide financial assistance for this purpose. However, the prohibition on providing financial assistance still applies if the company or any of its holding companies is a public company.

Companies can issue shares for free. A company can now issue shares without any consideration, provided that its memorandum and articles of association allow it. This amendment should reduce related administrative costs.

What This Means in Practice:

Private companies will find it easier to issue shares to employees or third parties outside of employee share schemes. It will also simplify transactions where equity-business swaps or equity-debt swaps are part of the remuneration, shortening the time needed to complete the transaction and reducing legal costs.

Company registration in Singapore – Change of director and company secretary’s duties

Relaxed disclosure requirements for nominee directors. Previously, a nominee director needed special permission from the board to disclose information to the nominating shareholder that they held as a director or employee of the company.

Now, a nominee director can disclose such information with general board approval, provided the disclosure does not harm the company. What This Means in Practice: This should facilitate the flow of information within large corporate groups, improving management efficiency.

Company registration in Singapore – Company secretary does not need to reside at the Company’s registered address

This change applies to secretaries of private companies. If the secretary is easily contactable by phone or other rapid communication methods, they do not need to be physically present at the company’s registered address. What This Means in Practice: This change should reduce costs for companies that do not maintain a member register at the registered office.

CGO Global collaborates with a reputable law firm based in Singapore specializing in assisting Polish residents—our clients. We invite you to contact us.