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Why incorporate a company in Singapore?

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You’re probably reading this because you’ve heard Singapore is an excellent base to do business in South East Asia, but you aren’t sure how incorporating a company here could benefit your business.  This guide will discuss several key reasons why a company benefits from using Singapore as its base in the region.

Tax Benefits - the Delaware of Asia

For many companies, tax is the main reason why many companies choose to incorporate a company in Singapore. Singapore has business-friendly tax rates and a wealth of tax incentives to encourage the growth of businesses and entrepreneurship, which makes incorporating a company in Singapore a good idea.  Here’s a quick rundown of some of the favourable tax policies:

  • Tax-exempted profits: For the first S$100,000 of profits earned in Singapore for the first 3 years from a company’s incorporation are exempted from taxes.
  • Tax Minimization: International profits earned outside of Singapore's borders are not subjected to local tax, provided certain conditions are met.
  • Double Taxation Avoidance Agreements (DTA) - Singapore currently has treaties with over 50 countries including some of the most influential economic nations in the world such as the US, China, Japan, UK, Canada, France, and Germany.
  • Extra tax reduction - On top of tax exemptions, an incorporated company can further lower its taxable income through setting up benefits programs for its employees. Specific programs can be classified as business expenses such as leasing of vehicles, pension, and retirement funds.

Ease of access to capital

Singapore has an excellent international reputation as a stable jurisdiction with a robust financial infrastructure and a well-regulated economy.   From government grants, accelerators, incubators, VC, and banks, there are several ways to get access to capital at any stage of development.

 

This has spurred on the growth of the start-up scene in Singapore, with capital pouring into the city-state: in 2016 there was US$3.5 billion in private equity and VC investment alone.

 

In comparison to other countries like China, opening a corporate bank account is also a simple process.  Some corporate service providers offer matchmaking services with their network of bankers, making the process even smoother.  Singapore banks also offer excellent Letters of Credit (LC) support to Singapore companies engaging in international trading.

Entrepreneur-friendly government policies

In addition to the ocean of venture capital pouring into Singapore, the Singapore government has also adopted several very pro-innovation and entrepreneur-friendly policies in a bid to attract foreign startups.  These policies include several forms of grants, tax incentives, and assistance schemes. Additionally, if your business falls within specific economic sectors, the government also subsidizes labor costs for your new business.

The gateway to Asia

Singapore is an international hub with a prime location in South East Asia. Sometimes referred to as ‘entry level Asia’ or ‘Asia lite’ by expats (and currently rated as  the #1 city in Asia for quality of life), it’s a country where east meets west.

 

As a logistics hub, Singapore is one of the best locations for regional business – the award-winning Changi International Airport is known for its efficiency and frequency of flights.  Business is best when it’s done face-to-face – and with a base in Singapore there are several key emerging markets like Indonesia, Malaysia, and the Philippines a few hours’ plane ride away.

 

Singapore companies also enjoy a positive and transparent image in the region–a reputable foundation for the promotion of the company to customers, suppliers and investors, as well as opening doors to business alliance opportunities.

Finding and managing local talent

If you have a head office in an English-speaking country, setting up a subsidiary or other corporate entity in Singapore is a smart choice – Singaporeans have a reputation for being hardworking, rule-abiding, and highly productive.  The talent pool is highly educated, literate, and English-speaking, minimising communication difficulties between offices.

Singapore’s liberal immigration laws also allow businesses to easily hire employees from any country, which can lower the company’s operating costs. Nearly a third of the country’s workforce are foreigners and Singapore makes it easy for any foreign professional to obtain work visas or permanent residence (PR) status (see our guides on employment and visas).

Unlike the other visas, EntrePass applications are reviewed by 3 separate government bodies –  Infocomm Media Development Authority (IMDA), Enterprise Singapore and the National Research Foundation (NRF).

World-class telecommunication infrastructure

In today’s world, the availability of lightning fast internet communication infrastructure is crucial to the success of any new business. The telecommunication infrastructure of Singapore covers the entire country, with near zero blackouts or downtime.

 

Based on official figures, there are over 43,000 public Wi-Fi access points and 15 millions of mobile subscribers. Businesses can connect to the internet from almost anywhere without suffering a loss of network connection or delays.

Strong anti-corruption stance

Singapore has a strict policy against corruption on any level. To deter corruption, their government employees are some of the highest paid in the world. This policy is effective as Singapore is currently ranked as one of the least corrupt countries in the world.

 

Instead of dealing with “connections” or bribes, which makes palm-greasing necessary to get things completed, Singapore is the exact opposite.  In this sense, you can know your business will succeed or fail based on its own merits, and not because of corrupt officials.

Easy incorporation process

The requirements for starting a company in Singapore are low. It’s one of the easiest places to start a company in the world – it’s currently ranked #2 in the World Bank’s Doing Business rankings. The company only needs to have a minimum of:

  • 1 local director (defined as a SG citizen, permanent resident, or employment pass holder)
  • 1 shareholder
  • company secretary
  • $1 paid-up capital

You can set up a company in as little as 24 hours, compared to other countries in the region where typical processing times can take over a month (such as in the Philippines and China).

Next steps

Incorporating in Singapore is a strong choice when deciding where to base yourself.  Stable economy, strong workforces, and business-friendly tax policies let you get up and running sooner- so you can spend less time tangled in admin and more time growing your business.

 

At Sleek we help people everyday to set up their businesses in Singapore.  Talk to us for practical advice if you have any questions about incorporation at [email protected]

We help entrepreneurs streamline their company incorporation, governance, and accounting using clever technology.

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