These are some basic facts to consider before proceeding with a Singapore company registration.
Singapore is the world’s only island city-state, located in Southeast Asia, at the southernmost tip of the Malaysia peninsula. It was a British colony until 1963 and became an independent republic in 1965. Singapore has a population of 5.5 million, whose background is mainly Chinese and Malay.
Official languages are English, Malay, Mandarin and Tamil and the legal system uses English Common Law as its basis. The Singapore dollar is one of the most stable currencies in the world.
Singapore is a major global hub for commerce, finance and transport. It has received the “easiest place to do business” rating of the World Bank for 7 consecutive years and the country “best prepared for the new digital economy” designation from the World Economic Forum.
Other accolades awarded to Singapore include the most competitive economy in the world, 6th largest financial centre, 3rd largest foreign exchange centre, 3rd largest oil refining and trading centre and one of the two busiest container ports in the world since 1990. It also achieved 1st place in the 2023 Chandler Good Government Index, the least corrupt Asian country and 5th globally on the Transparency International index, as well as a consistent 1st place on the Economist Intelligence Unit’s business environment index for the past 15 years. It is the only country in Asia to have maintained a AAA sovereign credit rating for the past 10 years.
The Companies Act (Cap 50) is the governing legislation for Singapore company registration and regulation and the Accounting and Corporate Regulatory Authority (ACRA) is the government body responsible for enforcing it.
A private company has a maximum of 50 shareholders and its memorandum and articles contain restrictions in relation to the transfer of shares.
A small company is one which is private, has no more than 50 shareholders and also satisfies two of the following three conditions for the two preceding financial years:
A Singapore company may carry out any business activity, provided this is within the boundaries of the law. Certain activities may require licensing and regulation.
It is possible to complete a Singapore company registration in just a few minutes
A foreign company may register and continue as a Singapore company, provided the jurisdiction in which the foreign company is currently registered also allows this.
In order to qualify for redomiciliation, the foreign company must be able to satisfy two of the following three criteria at the end of the two preceding financial years:
The legislation does not allow a Singapore company to continue in another jurisdiction.
After completing the Singapore company registration, ACRA maintains details of the company’s shareholders, directors, secretary, registered office address and registered mortgages and charges. This information is available to the public.
Directors may elect to show an alternate address to the public instead of their home address, provided this is located in the same country as their home address. ACRA still records their home address but does not release it to the public.
Companies which do not qualify as solvent exempt private companies must also file copies of their financial statements, which will then become publicly available.
Singapore companies must file information about their beneficial owners (referred to as “registrable controllers”) with ACRA at the time of the Singapore company registration. This information is not available to the public.
A registrable controller is an individual or legal entity which meets any one of the following criteria:
The company’s name must be in English and expressed in Roman characters. It may not be identical to an existing company’s name, nor may it be “undesirable”.
The name must end in “Limited”, “Ltd”, “Sendirian” or “Sdn” to denote limited liability. A private company must also include one of the terms “Private”, “Pte”, “Berhad” or “Bhd” in its name.
It is usual practice to denominate the company’s share capital in Singapore dollars but this can also be any other currency. As a minimum, the company must issue one share at the time of the Singapore company registration.
The legislation does not allow bearer shares.
Shareholders may be natural persons or other companies, registered in Singapore or elsewhere. Individual shareholders may reside in any country. The minimum number of shareholders is one.
Nominee shareholders can be employed to hold the company’s shares if confidentiality is a matter of concern.
It is mandatory to appoint at least one director at the time of the Singapore company registration, who must be a resident or citizen of Singapore. Additional directors may reside in Singapore or abroad. Corporate directors are not allowed.
The same person may act as both sole shareholder and sole director.
Shareholders and directors may hold meetings anywhere in the world, either in person or as virtual meetings. It is also possible to adopt resolutions in writing instead of holding physical meetings.
The shareholders are required to hold an annual general meeting (AGM) within six months of the company’s financial year end.
A registered office must be maintained in Singapore. This is where the company keeps its statutory registers and records and the common seal. It is also the company’s official address, where the company may receive notices and official correspondence.
The company must appoint a secretary within six months from the Singapore company registration date. The secretary must be an individual, who is a resident or citizen of Singapore and who is suitably qualified.
If the company only has a sole director, it is not possible for the director also to act as the secretary.
The company is required to prepare financial statements each year, which must be in accordance with International Financial Reporting Standards.
The financial statements of every company which is not a small company must be audited.
The company will need to submit an annual return to ACRA within one month after holding its annual general meeting.
Unless the company qualifies as a solvent exempt private company, it must attach a copy of its financial statements when submitting its annual return.
The company must also file an annual tax return to the Inland Revenue Authority of Singapore (IRAS).
Singapore has adopted a territorial taxation system. This means that a company only pays tax on income which it generates in or remits to Singapore. Thus, if a Singapore company generates its income entirely outside Singapore and does not remit it into a local bank account, it will be exempt of tax.
The current rate of corporate tax is 17%. However, every newly incorporated company is entitled to a partial tax exemption during the first three fiscal years following the Singapore company registration. For each year, this exemption amounts to 75% of the first S$100,000 of taxable income plus 50% of the next S$100,000.
In order to qualify for this incentive, the company must have at least one natural person as a shareholder, holding a minimum of 10% of the issued shares. This benefit is not available to investment holding companies or to companies involved in property development, whether for sale or investment purposes.
The fiscal year runs from 1 January to 31 December.
No tax arises on dividends received from another Singapore company.
Overseas dividend income is not taxable unless the company receives it in a Singapore bank account. Even then, the dividend may qualify for tax exemption if the foreign company paying it has paid tax on its income and provided the highest corporate tax rate of that jurisdiction is at least 15%. It is irrelevant whether the foreign company actually incurred a lower rate of tax.
Singapore has concluded close to 100 double tax treaties with other jurisdictions. A company may gain access to the significant benefits provided by these treaties if it is able to demonstrate genuine tax residence in Singapore.
If the company’s turnover exceeds S$1 million, the company will normally be required to register for goods and services tax (GST). This does not apply if the company’s business falls outside the scope of GST, eg trading in commodities or in physical goods which do not enter Singapore.
The current rate of GST is 8%. This will increase to 9% on 1 January 2024.