Benefits of Setting Up a Company in Singapore

Benefits of Setting Up a Company in Singapore

There are numerous advantages to setting up a company in Singapore. The city-state is noted for a number of things, including its perfect location, politically stable climate, business-friendly legislation, and role as a gateway to other ASEAN countries. So, what attracts foreign entrepreneurs and businesses to Singapore?

Reasons for Setting Up a Company in Singapore

Singapore is increasingly being chosen by entrepreneurs and firms worldwide to incorporate their businesses. They chose Singapore for a variety of reasons, including:

Singapore’s robust economy

Singapore’s economy is a well-developed free-market economy that has been recognized by the World Economic Forum as one of the most open, least corrupt, most pro-business in the world. Last year, the country’s economy expanded at its fastest annual pace.

Singapore’s annual gross domestic product (GDP) growth was the fastest since a 14.5% expansion in 2010 when the economy emerged from the global financial crisis. The manufacturing sector is by far the country’s largest industry, which contributes more than 20% of the country’s annual GDP.

Furthermore, Singapore has been actively investing its capital abroad. The country effectively uses its strong financial position by subsidizing housing, education, transportation, and health care. These characteristics combine to make the city-state’s economy exceptionally strong and well-managed. 

Singapore’s strategic location

One of the major benefits of setting up a company in Singapore is its strategic location. The country is centrally located in Southeast Asia, allowing your company to tap into a market of 2.8 billion people in just a few hours. Moreover, the country is designated as an international maritime center of excellence, and it has one of the busiest ports in the world.

Changi Airport in Singapore is a world-class airport that serves nearly every major city in the globe and serves roughly 20 million people per year. For decades, the airport’s emphasis on competitiveness, efficiency, and quality has helped it earn the title of “Best Airport in the World.”

Singapore’s attractive tax system

Taxes are at the top of any entrepreneur’s priority list, and they are one of the most important factors to consider when setting up a company in Singapore. The country’s low effective personal and corporate tax rates are one of the country’s distinct benefits. 

Both personal and corporate taxes in Singapore are based on a tiered system. During their first three years, new businesses receive enormous tax benefits, with the first S$100,000 of income subject to a 0% tax rate. The corporate tax rate is limited to 17%.

Similarly, the personal tax rate begins at 0% and gradually climbs to a maximum of 20% for incomes above S$320,000. When gains are distributed to shareholders as dividends, they are not taxed twice. To put it another way, dividends are paid to shareholders tax-free. 

Furthermore, the government has implemented a more broad-based consumption tax known as the Goods and Services Tax (GST) to shift away from relying on income taxes and make the economy more competitive. As a result, Singapore has one of the lowest GST rates in the world (now 7%), which is lower than the global average VAT/GST rate of 16.4% and the Asia-Pacific average of 10.5 percent.

Singapore’s foreign income exemption

Another advantage of setting up a company in Singapore is that Singapore-based holding companies or headquarters can tax-free repatriate dividends from their directly held international subsidiaries. Meanwhile, those whose foreign subsidiaries are engaged in substantial economic activity but do not meet the tax exemption’s qualifying standards may petition for a particular exemption.

Thanks to Singapore’s territorial tax system,  foreign-sourced income is taxed only when repatriated back into the country. Furthermore,  no tax is levied on foreign-sourced dividends remitted back into the country if:

  • the dividends are received from a country with a headline corporate tax rate of at least 15%;
  • some tax was paid in that country (such as withholding tax paid on the dividends or income tax paid on the profits out of which the dividends were paid); and
  • the exemption is beneficial to the Singapore company. 

For further information on the tax treatment of foreign-sourced income in Singapore, please refer to this page

Singapore’s avoidance of double taxation

Over 90 countries have signed Avoidance of Double Taxation Agreements (DTAs) with Singapore. These agreements are intended to prevent double taxation on commercial transactions between Singapore and the treaty countries. Furthermore, for nations with whom it does not have a DTA, Singapore offers Unilateral Tax Credits (UTCs). As a result, a Singapore-based corporation is unlikely to face double taxation.

Singapore’s foreign ownership policy

In Singapore, a foreigner can own 100 percent of a company’s equity. You don’t require any local investors or partners. This allows you to form a business with the capital structure you choose and distribute ownership according to your investment needs. There are no restrictions on the amount of money you can invest in your Singapore firm from your home country.

In addition, profits can be repatriated without limits in Singapore. Capital gains from the sale of a business are exempt from taxation. Dividends provided to shareholders are also exempt from taxation.

Singapore does not place any limitations on foreign currency movement into or out of the nation. This frictionless transfer of payments across borders can give a company a lot of flexibility, unlike in other countries like China and India, where the unrestricted foreign currency movement is severely restricted.

Singapore’s ease of incorporation

Singapore’s regulatory framework is one of the most efficient and devoid of bureaucracy in the world. The country has been consistently recognized as the world’s best place to do business in the World Bank’s annual survey of 189 economies around the world.

Compared to many other countries that are regarded business hubs, registering a company in Singapore is easier and faster. The process takes only one day to complete if all necessary conditions are met, and the application is properly submitted. Anyone, including foreigners, can start a business in the city-state. The introduction of an online system that allows you to submit your application forms via the internet has made the process simple and quick.

Singapore’s government support for startups

Singapore’s government pursues policies that are pro-growth and pro-innovation. It assists entrepreneurs through a variety of subsidies, tax incentives, and in-kind aid programs. It can also support a new business’s labor costs in specific sectors. Both local and foreign-owned enterprises can take advantage of these perks.

In addition, Singapore’s venture capital community has grown during the last twelve years. It is presently Asia’s most popular venture capital destination. By setting up a company in Singapore, you can have access to these funding sources.

Singapore’s intellectual property (IP) protection

Singapore’s copyright rules are stringent. Any sort of copyright infringement is considered a criminal offense in Singapore.

Singapore-registered companies can file for global trademark registration in addition to registering a trademark in Singapore because the country is a signatory to major IP conventions and treaties like the Patent Cooperation Treaty, Paris Convention, Berne Convention, Madrid Protocol, Budapest Treaty, Agreement on Trade-related aspects of IP rights, and World Intellectual Property Organization.

For more information on Singapore’s IP protection, please refer to:

A Quick Guide to Singapore Intellectual Property Law

Singapore’s excellent infrastructure

Singapore’s world-class infrastructure astounds the majority of first-time visitors to the country. The airport, freeway system, subways, internet infrastructure, commercial buildings, museums, hotels, and public parks all fall under this category. Much of the infrastructure was built in the last decade, so it is relatively modern and new. Plus, this outstanding infrastructure boosts the efficiency of its enterprises and generates a pleasant work environment.

Singapore’s strong legal system

Singapore hires the “best and brightest” residents for its public service and pays them generously; therefore, there is no incentive to commit corruption. If any government misbehavior is discovered, the country will impose severe penalties for such crime. As a result of these regulations, the country is considered one of the least corrupt in the world today. Furthermore, a modern regulatory system provides substantial intellectual property rights, so there is no expropriation of the country’s wealth by its elites, and commercial courts effectively enforce contracts.

Singapore’s flexible immigration policy

Singapore’s open immigration policy makes it easier for foreigners to relocate and set up businesses here. If you are an entrepreneur who needs to migrate to Singapore to run your company or recruit foreign specialists, the government has anticipated your needs and created Singapore work visa rules that meet your needs.

Singapore has a relaxed immigration policy to help value-adding individuals settle permanently, making it easier for foreign professionals to obtain Singapore Permanent Residence (PR) status.

Singapore’s highly skilled workforce

Singapore has developed an appealing, world-class, and productive workforce, which is critical to any company’s success. The country’s human resources are professionally qualified, as it is primarily a knowledge-based economy. Moreover, they are also known for their high educational attainment, high productivity, technical skill, and work-hard, work-smart ethos. 

Overall, Singapore’s educated and productive workforce is vital to the economy’s performance and long-term viability. The workers here are both cosmopolitan and international, attracting professionals from all over the world who bring a wealth of knowledge and business experience with them. They have also been trained to meet the demands in their industries.

Singapore’s high quality of life

Most entrepreneurs who relocate to Singapore to set up their businesses bring their families to the country. This is why the quality of life here is one of the main concerns for newcomers.

The Lion City offers excellent public and private transportation, top-notch healthcare, a safe and healthy living environment, easy access to many other countries, excellent schools, a great support system for businesses, entrepreneurs, and corporations, and an endless array of cultural and educational opportunities to all of its residents.

Singapore’s positive image

Lastly, the positive perception of Singapore rubs on its businesses as well. Thanks to its law-abiding, well-functioning, modern, and trustworthy image. Customers, partners, and suppliers will notice professionalism and quality if your company is based in Singapore. They will have the first impression of your company as one that is professional, knowledgeable, honest, and well-run.

Conclusion of Benefits of Setting Up a Company in Singapore 

Singapore is a well-functioning first-world country that offers new entrepreneurs a business-friendly environment. Its strong economy, excellent geographic location, favorable tax policies, and efficient government make it an appealing area to start a business.

Are you ready to create a company in Singapore and want to learn more about how to start a business in Singapore? To begin the registration procedure and learn more about Singapore business registration, you can go to our Company Incorporation page

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