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Starting a business: Singapore versus Australia

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Where does Australia stand compared to Singapore for doing business? Its educated workforce, business-friendly laws and attractive tax incentives and government support definitely represent an attractive growth opportunity for companies looking to access Southeast Asia’s growth markets.

If you’re currently operating in Australia and are considering opening a Singapore subsidary, this guide is for you – we’ll cover an analysis of the benefits of doing business in Singapore and Australia.

The global ranking

 

World Bank’s 2019 Ease of Doing Business Index

Singapore

Australia

Overall

2

18

Starting a business

3

7

Taxation

8

26

Cross-border trading

45

103

Contract enforcing

1

5

 

What does this mean? That if you’re looking to build a presence in Southeast Asia, you’ll find it an easier and more business-friendly process compared to Australia. In comparison, take a look at the rankings of other popular hubs in Southeast Asia:

  • Hong Kong at #4
  • Malaysia #15
  • Thailand at #27
  • Indonesia at #73

Singapore is also an obvious choice if you have IP you’re bringing over with you – the World Economic Forum’s Global Competitiveness Report ranked Singapore as having the best IP protection in Asia (and ranked #3 globally).

Company registration

Ease of incorporation

If you’re based in Australia (or overseas generally), you will need a Filing Agent to submit your incorporation on your behalf.

 

Although businesses may consider other structures such as a branch or representative office, a subsidiary is the most common approach for a company wanting to set up shop in Singapore. The minimum requirements for a private limited company in Singapore are:

  • One shareholder (can be foreign)
  • One locally resident director (this person can be someone on a work visa or a citizen/permanent resident of Singapore)
  • $1 paid-up capital
  • A registered address in Singapore
  • A company secretary - this is someone who manages your ACRA deadlines and shareholder and director activity like annual returns and AGMs

Filing Agents (like us at Sleek) will often offer services to appoint a nominee director and registered address services are available where you don’t have physical office space.

Directors and requirements

Minimum requirements for a private or proprietary company

Singapore

Australia

Directors

1 locally resident director

1 locally resident director

 

Shareholders

 

1 shareholder

 

1 shareholder

Other requirements

  • Local address
  • SG$1 paid-up capital
  • Company secretary
  • Local address
  • No minimum paid-up capital

Taxation

Singapore occupies 8th position against Australia’s 26th rank for ease of paying taxes.  The table below demonstrates differences in the tax rates in two countries.

             Tax Types

               Singapore

         Australia

Income tax

Up to 22%

Up to 45%

Corporate tax

17%

30%

GST

7%

10%

Branch tax

17%

30%

Capital gain tax

No

30%

Withholding tax on dividends

No

30%

Withholding tax on interest

15%

10%

Grants, tax benefits for startups

Both countries offer funding, tax incentives, and facilities for targeted startups. Australia offers R&D tax incentive in the form of a 40% refund of development expenses to companies spending above $20,000 on research. A matching grant is offered for startups in the renewable energy sector. Major grants by the government include up to $20,000 as a business growth grant, incubator support grant between $5,000 and $500,000 for entrepreneurial support.

 

In Singapore, a startup can receive up to 70% funding with tax rebates on loans. The government offers no-tax incentive to all new businesses on S$100,000 income. For the next three years, they get a 50% exemption on S$200,000 income. For every S$3 spent, tech startups get a grant of S$7 (S$50,000 limit). The city-state also has also dedicated incubator schemes, cash grant, and seeding funds for fintech, knowledge-based, and smart tech startups.

Workforce

Both Australia and Singapore have multicultural, multilingual, and educated workforce. About 40% of Australians have tertiary education. In Singapore, which also has a 100% urban population, 47% of residents have degrees or diplomas. Here is a labor force comparison ranking based on the Global Competitive Index.

Institutions and Infrastructure

Australia and Singapore have very good institutional and infrastructure support. According to the World Bank report, Singapore leads the world in infrastructure while Australia is at 30th position. The city-state also scores over Australia in critical areas, such as:

  • The burden of government regulation
  • The efficiency of the legal framework
  • The future orientation of government
  • Quality and efficiency of transport and seaport services
  • ICT adoption and technological readiness

Bottom line

Australia has a vast market and huge natural resources while the city-state offers fast cross-border trading, easy access to amenities, and greater foreign market access. Although Australia can be on the doorstep to Asia Pacific, if you are looking to take advantage of business-friendly laws, favourable tax policies and even closer access to the Southeast Asian market, Singapore is likely to be a great choice for you.

 

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

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