A Guide On How To Easily Start A Business In Singapore

Information on starting a business in Singapore, including a list of Singapore government agencies who can help employers.

 

  1. What are the benefits of starting a business in Singapore?
  2. How to register a company in Singapore?
  3. Types of businesses in Singapore

 

What are the benefits of starting a business in Singapore?

The economy of Singapore is a highly developed free-market economy. Singapore’s economy has been ranked as the most open in the world, 3rd least corrupt, most pro-business, with low tax rates (14.2% of gross domestic product (GDP))and has the third-highest per-capita GDP in the world in terms of purchasing power parity (PPP). APEC is headquartered in Singapore.

To preserve its international standing and further its economic prosperity in the twenty-first century, Singapore has taken measures to promote innovation, encourage entrepreneurship, and re-train its workforce.

1. Tax Incentives for a new start-up

The tax exemption scheme for new start-up companies was introduced in Year of Assessment (YA) 2005 to support entrepreneurship and help our local enterprises grow. As another support for companies to build capabilities is being strengthened, it was announced in Budget 2018 that the tax exemption under the scheme will be revised. The changes will take effect from YA 2020 for all qualifying companies that claim the tax exemption under the scheme.

With the changes, qualifying companies will be given the following tax exemption for the first three consecutive YAs where the YA falls in:

YA 2020 onwards

  • 75% exemption on the first $100,000 of normal chargeable income*; and
  • A further 50% exemption on the next $100,000 of normal chargeable income*

YA 2019 and before

– Full exemption on the first $100,000 of normal chargeable income*; and

– A further 50% exemption on the next $200,000 of normal chargeable income*.

*Normal chargeable income refers to income to be taxed at the prevailing corporate tax rate.

The tables below summarise the amount of tax exemption.

Tax Exemption on First $200,000 of Chargeable Income (where any YA of the first 3 YAs falls in or after YA 2020)

Chargeable Income

% Exempted from Tax

Amount Exempted from Tax

First $100,000

75%

$75,000

Next $100,000

50%

$50,000

The maximum exemption for each YA is $125,000 ($75,000 + $50,000).

Tax Exemption on First $300,000 of Chargeable Income (where any YA of the first 3 YAs falls in YA 2010 to YA 2019)

Chargeable Income

% Exempted from Tax

Amount Exempted from Tax

First $100,000

100%

$100,000

Next $200,000

50%

$100,000

The maximum exemption for each YA is $200,000 ($100,000 + $100,000).

* Learn more about “Tax Reliefs” here

 

2. Capable and Skilled people

Consistently ranked as one of the world’s most competitive, Singapore’s workforce is highly educated and skilled. More than 30 percent of our workforce hold a university degree, with another 15 percent having earned a diploma or professional qualification.

Singapore’s bilingual education policy also means that our people are proficient in English and at least one other language, such as Mandarin, Bahasa Melayu, or Tamil.

The Singapore Government has introduced initiatives such as SkillsFuture to help their people upgrade their skills or learn new ones. It means your business always has access to potential employees with the right capabilities.

Singapore governments are also strengthening their digitally capable workforce. TechSkills Accelerator (TeSA), a SkillsFuture initiative, provides various programs to prepare workers for digital and tech roles.


How to register a company in Singapore?

Below you can find the steps required to register a company in Singapore. These steps can be easily applied also to foreigners interested to start a business in Singapore:

The company must have at least one shareholder. You will need to provide the personal identification details, contact information (telephone number and e-mail address), and residential address of each of the shareholders when submitting the application online.

You must also indicate the amount of issued capital i.e. the total amount that shareholders have paid for their shares. The minimum issued capital must be at least $1. However, there is no minimum paid-up capital required.

  • Register Office address and Constitution

You must provide a registered office address during your application to incorporate a company. A registered office address refers to the place where all communications and notices to the company are addressed to, and the place where the company’s register and records are kept.

A registered office must be operational and accessible to the public during normal office hours, but need not be where the company conducts its activities (e.g. the registered office address may be in Raffles Place but the factory could be located in Tuas).

  • Decide on a Financial Year End

You must also decide on the first financial year-end (FYE) of your new company. The FYE will determine when your corporate filings and taxes are due. Common choices by companies include 31 March, 30 June, 30 September or 31 December. You must also decide whether your accounting period covers 12 months or over 52 weeks.

  • What you have to file each year
  1. Annual General Meeting
  2. Annual Return
  3. Register of Registrable Controllers
  4. Electronic Register of members
  5. Electronic Registers of Directors, Secretaries, Auditors and CEOs
  6. Change in Company Information
  7. Changes in Personal Particulars of Company Officers and Shareholders

           

Types of businesses in Singapore

Below you can find a list of the different legal entities that you can choose to start a business in Singapore:

  • Limited Liability Company (LLC) – A LLC can be considered as a mix between a Partnership and a Corporation because of its similarities to both. Like a Sole Proprietorship/Partnership, finances are sent to owners for their personal tax returns. Additionally, it is also a separate legal entity like a Corporation and has similar liability protection, but there is no stock involved. This type of company suits for SME’s, Startups, and Entrepreneurs. A Singapore Limited Liability Company (LLC) is a very efficient tax entity. The effective corporate tax rate for Singapore companies for profits up to USD$ 220,000.00 is below 9% and capped at 17% for profits above USD$ 220,000.00.
  • Subsidiary Company – A Subsidiary Company suits small to medium-sized foreign businesses, this type of entity is the most preferred choice of registration in Singapore. A subsidiary company is a locally incorporated private limited liability company and in most cases, shareholders are another local or foreign company.
  • Branch Office – A Branch Office is a registered legal entity that is treated as an extension of the foreign parent company. if you are running a medium to a large-sized business that has specialized operations in international locations, and intend to conduct a wide range of business activities in Singapore, a Branch Office make it eligible.
  • Representative Office – A Representative Office is a temporary setup which enables foreign companies to research the market or manage company affairs in Singapore, However, It won’t allow conducting any profitable business activity.

 

Conclusion

Businesses are looking to open companies in Singapore more and more with the current booming economy. However, legal complexity, recent tax reform, and foreign trade barriers pose a challenge to start a business in Singapore.

NNRoad’s team of experts guides firms through the complex incorporation process, minimizing risks for smooth market entry. NNRoad makes your global expansion as easy as possible. Opening a company in Singapore will not be a barrier while you partner with NNRoad.

Learn more about our services in Singapore

Contact us today to get a free quote