Business in Singapore

 

Singapore has attracted various organizations – ranging from the Fortune 500 companies, small and medium enterprises, educational institutions to news bureaus – to form their place in Singapore’s business landscape.

Singapore is well known around the world as a multicultural, multi religious and multi-racial harmonious island food paradise.

Starting as a quiet, laid back fishing village, Singapore has grown exponentially to become one of the most densely populated countries in the world with a population of 4.8 million, living closely together in a land area of 224.5 square miles.

Singapore has also become the richest country in South East Asia and one of the most developed countries in the world.

It is no surprise then that Singapore has attracted various organizations as mentioned above to settle here.

 

| TOP 5 Reasons for Singapore as Business Place

1 - A favorable Business Climate

According to the Ministry of Trade & Industry (MTI), there is an estimated 6,000 Multi-National Corporations (MNCs) in Singapore. Many of these MNCs have chosen Singapore as the prime location of their Asia Pacific headquarters due to its positive business climate.

For example, the World Bank’s Doing Business Report ranked Singapore as the world’s easiest place to do business – ahead of New Zealand, United States and Singapore’s closest competitor, Hong Kong.

The EIU Country Forecast also rated Singapore as having the best business environment in Asia Pacific and third in the world. These rankings by independent bodies are reflections of the Singapore Government’s efforts in providing efficient public sector services that support the private sector growth.

 

2 - World Class Transportation System

Singapore’s Changi International Airport (IATA: SIN) has three heavily used terminals serving over 100 international airlines flying to more than 210 cities in 60 countries.

SIN handles more than 6,100 arrivals and departures weekly, 42.1 million passengers and nearly 2.0 million tons of air freight in 2010, which made it the 18th busiest airport in the world.

With the high cost of owning private transportation, public transportation is efficient, frequent and spans every far reaching corner of the island. Singaporeans flock to the 89 railway stations of the Singapore’s Mass Rapid Transit (MRT) system which has a daily ridership of 2.3 million.

The two public bus companies (SBS and SMRT) with a fleet of 3,445 single and double decker air-conditioned buses transport nearly 3.4 million daily passenger trips safely to over 300 routes island wide.

 

3 - Highly Educated Workforce

Singapore boasts one of the most educated workforces in the world. Literacy rate stands at a formidable 96%. 89.6% of resident non students aged 25-39 have secondary or higher qualifications. A further significant testament to the huge importance placed on education, the Singapore Government invested 7.3 billion S$ in education in 2008. This comes up to 25.5% of total government operating expenditure, making education the second highest expenditure after security and defense. In addition, Singapore’s two long established universities, the National University of Singapore (NUS) and Nanyang Technological University (NTU) also rank favorably on various university ranking surveys.

For example, based on the respectable The Times Higher Education World University Rankings of 2008, NUS achieved the 30th spot while NTU is ranked 77. Therein, businesses have a population of strongly qualified human resources they can count on to advance their companies to greater heights of excellence.

 

4 - Extensive Support for Budding and Established Entrepreneurs

Singapore is a nation birthed from the blood, sweat and tears of pioneer entrepreneurs. Entrepreneurship is promoted in Singapore by the government rather passionately. The Singapore government has provided various support systems for entrepreneurs such as lower tax rates, tax exemptions and numerous schemes to encourage individual business formation.

There are also many nonprofit organizations such as the Spirit of Enterprise that is committed to honor entrepreneurs, providing a network of support and organizing events where likeminded individuals can meet and share ideas.

 

5 - Clean and Efficient Public Sector

The public sector in Singapore has a reputation for being very supportive of private sector initiatives and growth. Numerous policies in various government agencies are created to ensure the private sector is not stifled by bureaucratic practices.

In fact, Singapore was ranked as the least bureaucratic place for doing business in Asia by the respectable Political and Economic Risk Consultancy (PERC) agency. The IMD World Competitiveness Report 2008 also ranked Singapore 3rd in the world and 1st in Asia for having the least corruption in its economy.

Corrupt practices by public officers are investigated by the Corrupt Practices Investigation Bureau (CPIB).

Any malpractice identified is heavily subjected with disciplinary action, public attention in the media, fines and/or jail sentence.

 

 

 

| Singapore at a Glance

 

 

| Advantages & Disadvantages of Incorporating in Singapore

Incorporating a company in Singapore provides several advantages, especially when it comes to taxation and the limit on business-related liabilities and debts. However, it is important to note that this business entity has also some disadvantages which must be considered.

Here’s a rundown of the Advantages & Disadvantages of Singapore company incorporation:

1 - Advantages of Company Incorporation in Singapore

• Foreign entrepreneurs can setup and operate a Singapore Company
• Generally, it takes 3 hours to setup a Company in Singapore
• Foreign companies who setup a Singapore Subsidiary company
  enjoy tax resident status which means that they can enjoy
  tax incentives and exemptions which are commonly provided
  to local businesses
• A newly incorporated Subsidiary Company, with at least one
  individual shareholder that has a minimum of 10% shareholding,
  is entitled to the local tax exemption of zero tax for
  the first S$ 100,000 of its chargeable income
• The Singapore government provides several tax incentives to
  certain foreign companies in an effort to attract more Companies
  to operate their Company operations from Singapore
• Singapore has the fastest-growing economy in the world
  for several consecutive years
• The country boasts world-class infrastructure which is one
  of the contributing factors to raise the business productivity
• Singapore is located at the heart of the Asia Pacific region
  which makes this ideal for international foreign companies
  that are planning to tap the major Asian markets
  including China, Taiwan, Malaysia, India, and Australia
• The country allows a corporation to be a 100 percent
  foreign-owned company (as long as it will designate at
  least one director who is a local resident or a holder of
  a Singapore Employment Pass (EP), EntrePass,
  or Dependent Pass)

 

2 - Disadvantages of Company Incorporation in Singapore

• Corporations are required to file their annual returns
  to the Companies Registry and Income Tax authorities
• Foreign businesses with a Singapore Branch Office are also
  required to file the audited accounts of their parent company
• Foreign companies should designate at least one director who
  is a Singaporean citizen or a holder of Singapore Employment
  Pass (EP), EntrePass, or Dependent Pass
• Individuals who declared bankruptcy in the past and have
  criminal records cannot serve as a company director
• A business should designate a secretary who is a local resident
  within six months of its incorporation
• Under the corporate law, it is mandatory to conduct
  a paper meeting on an annual basis
• While Singapore has a high standard of living,
  its cost of living is also high

 

 

 

 

 

 

 

Singapore has been voted as the ideal location for global entrepreneurs – with world-class infrastructure, well developed capital markets, highly educated work force, stable political institutions, very low crime, safe living environment and an attractive tax regime.

No wonder it is the most sought location for business and migration.

We from MCI help entrepreneurs as our clients to setup their Singapore Company by assisting the incorporation of the Singapore Company and successfully securing their work pass, be it Employment Pass (EP), EntrePass or Personalized Employment pass (PEP).

 

| Overview of Business Structures

Choosing the right business structure is essential to business success when it comes to incorporating a company. Your choice can affect your business’s image and reputation among clients and banks, administrative procedures, taxes, personal liabilities as well as the ability to expand your company operations.

To help you select the right business entity for your business success, we’ve provided you with an overview of the different type of business structures available to start your Singapore company incorporation process. Each entity is subject to different regulatory and tax rates that reflect their organization and ownership.

More details can be requested by you, following the information at the end of this article.

We are also available for consultation if you have questions about a suitable business entity for your company incorporation.

• Private Limited Company
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Branch Office
• Representative Office
• Subsidiary Company

1. Private Limited Company
   A Private Limited Company is the most flexible and advance business structure in Singapore. It is also the most preferred form of company incorporation in Singapore as it protects its owner’s personal assets from liabilities incurred by the company as well as enjoys tax incentives and exemptions
    
2. Sole Proprietorship
   A Sole Proprietorship is a business set up owned by one person who exercises decisive authority and responsibility of all assets and liabilities belonging to the business
    
3. Partnerships
   A partnership eases the limitations of business expansion of a sole proprietorship by allowing two or more people to establish and co-own a business
    
4. General Partnership
   A General Partnership acts very much like Sole Proprietorship because all partners are personally liable for all debts and liabilities incurred during the course of business
    
5. Limited Partnership
   A Limited Partnership requires a minimum of at least one active (general) partner and one dormant (limited) partner. The partners are responsible for all liability and the earnings are taxed according to the partners’ personal tax rate
    
6. Limited Liability Partnership
   Introduced in 2005 by the Singapore government, the LLP business structure is highly suitable for chartered professionals who decided to work together. This model combines a partnership entity that protects co-partners from liabilities that may arise from willful misconduct or gross negligence of one partner or a group of partners
    
7. Branch Office
   The Branch Office is an extension of the foreign company without a distinct legal identity
    
8. Singapore Representative Office
   For foreign companies, setting up a Singapore Representative Office is a good way to explore potential business opportunities before making a decision to set up a Branch Office in Singapore
    
9. Subsidiary Company
   The subsidiary of a foreign company is considered a resident company, and therefore is entitled to tax exemptions and incentives as other locally incorporated companies in Singapore

 

| Business Licenses and Permits

Few types of business activities require a business license in Singapore. Essentially, a business license is a permit issued by a Singapore government agency that allows you to conduct a specific type of business. In order to apply for a business license in Singapore, the company must be first registered with the registrar of companies.

In Singapore, establishing a business is a relatively simple and straightforward procedure. The business licensing procedure has been simplified to a great extent. If all necessary documentation is submitted and satisfies / complies with all other requirements, there is no reason for a license to be rejected. But it is advisable to engage a professional services firm to utilize specific knowledge, save time and resources.

In general, it may take between 1 – 8 weeks to obtain a business license or permit, depending on the type of license.

3 General Types of Business Licenses in Singapore

• Occupational Licenses for Professional Services:
  Professionals such as lawyers, doctors, financial planners, pilots, commodity
  futures traders and accountants need to obtain an occupational license to practice
• Compulsory Licenses:
  Certain types of businesses require a special license before they can operate.
  Private schools, travel agencies, liquor distributors, money remittance agencies
  and childcare centers are some examples
• Business Activity Licenses and Permits:
  Licenses and permits to carry out certain types of business activities.
  For instance, renovation or erection of advertising billboards on premises,
  export of products etc.

Our available Whitepaper Singapore explains further the following most common business licenses in Singapore:

• Hiring Local and Foreign Employees
• Using the Personal Residence as Home Office
• Goods & Service Tax (GST) Registration
• Engagement in Import / Export Activities
• Fund Management / Financial Advisory Company
  (Capital Markets Services License (CMS),
  Commodity License, Financial Adviser’s License)
• IT Services Company
• Employment Agency
• Travel Agency
• Education Business
• Event Management Company
• Restaurant
• Retail Shop

 

| Banking in Singapore

Singapore is a flourishing financial center of international repute – servicing not only its domestic economy per se, but also the entire Asia Pacific region.

The banking industry is a key player in the country’s financial market segment, soon emerging as one of the strongest in the world. Factors such as a sound economic and political environment, conducive legal and tax policies, reputation for integrity, and strict enforcement against crime and money laundering, have contributed to Singapore’s status as an International Finance Centre – the third largest in Asia, after Japan and Hong Kong.

Today there are as many as 108 foreign banks and 6 local banks that dominate the banking scene.

Factors that have contributed to the success of the banking industry in Singapore include:

• Liberalization of the domestic banking market
• Local banks strengthened their regional presence
  through mergers and acquisitions
• Expansion of foreign banks, some of which made Singapore
  a regional or even global platform for important banking services,
  which in turn led to increased competitiveness
• Increased competition spurred the development of innovative
  products and more competitive pricing models
• Provision of sophisticated banking services like corporate and
  investment banking activities, apart from traditional lending
  and deposit-taking functions
• Strict banking secrecy laws, tax friendly policies and a suite
  of wealth management services created a private banking boom
• Recognizing and catering to the needs of Small and Medium
  Enterprises who comprise a sizable banking market in Singapore

Types of Banks in Singapore

Most banks in Singapore cater to different types of clients – individuals, corporations or government agencies. These banks provide commercial banking (catering to businesses and corporations), retail banking (catering to individual members of the public) and private banking (catering to HNWIs) services.

Banks can be classified into 2 main categories:

Local Banks

Foreign Banks – further sub-divided into

• 26 Fully licensed Banks:
  They provide the whole range of banking business approved under the Banking Act.
  Six of the foreign banks operating in Singapore have been awarded Qualifying Full Bank (QFB)
  privileges. These banks include: HSBC, Citibank, Standard Chartered, Maybank,
  ABN AMRO and BNP Paribas
   
• 42 Wholesale Banks:
  They engage in the same range of banking activities as full banks, except Singapore Dollar
  retail banking activities. All wholesale banks in Singapore operate as branches of
  foreign banks. Examples: ING Bank, National Australia Bank, Barclays Bank,
  Fortis Bank, Deutsche Bank etc.
   
• 40 Offshore Banks:
  They engage in the same activities as full and wholesale banks for businesses
  transacted through their Asian Currency Units (an accounting unit, which banks
  use to book all foreign currency transactions conducted in the Asian Dollar Market).
  The banks’ Singapore dollar transactions are separately booked in the Domestic
  Banking Unit (DBU). All offshore banks in Singapore operate as branches of foreign
  banks. Examples: ICICI Bank Ltd, Korea Development Bank, Bank of Taiwan,
  Bank of New Zealand, Canadian Imperial Bank of Commerce etc.
   
• 50 Merchant Banks:
  They provide corporate finance, underwriting of share and bond issues,
  mergers and acquisitions, portfolio investment management, management
  consultancy and other fee-based activities. Most merchant banks have,
  with MAS’ approval, established ACUs, through which they compete with
  commercial banks in the Asian Dollar Market. In their DBU, they may accept
  deposits or borrow only from banks, finance companies, shareholders and
  companies controlled by their shareholders. Examples: Credit Suisse
  Singapore Ltd, Barclays Merchant Bank Singapore Ltd,
  ANZ Singapore Ltd, Axis Bank Ltd etc.

Major Banks in Singapore

• ABN-AMRO Singapore (UK, Spain, NL)
• BNP Paribas (F)
• Citibank (US)
• DBS Development Bank Singapore (SG)
• HSBC Hong Kong Shanghai Banking Corporation (UK)
• OCBC Overseas Chinese Banking Corporation (CN)
• Maybank Malayan Banking Berhad (MY)
• SCB Standard Chartered Bank (UK)
• UOB United Overseas Bank (SG)

MCI Counselors Law & Tax is working in Singapore with the following Bank Institutes: DBS, HSBC, OCBC, UOB.
In particular cases, the opening of bank accounts remote (via Dubai, Zurich and Hong Kong) is possible.

 

| Further Information

MCI Counselors Law & Tax is constantly present in Singapore with its own subsidiary, ITI Innovative Technologies Invest Pvt. Ltd. (contact details see our imprint). We published a Whitepaper Singapore which can be requested by you via our Order Form in the Download Section.

Please don’t hesitate to contact us in case of any open questions. Kindly understand that within offered Standard Packages no kind of tax relevant advice can be given. There are various options and further models available on demand. Kindly ask in that case for your individual quotation, based on a phone / Skype Consultation free of charge.

You need further information?
Just drop us an E-Mail or use our Contact Form.

Document Release: 25.02.2012, variable

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