Singapore is well known for its pro-business policies and the favorable business environment. The modern generation of entrepreneurs has become a lot more cautious when it comes to setting up a business offshore.

1. Singapore: A Business Hub Attracting Foreign
Entrepreneurs and Corporations for
Singapore Company Incorporation

2. Singapore: A Business Hub Attracting Foreign Entrepreneurs
and Corporations for Singapore Company Incorporation
Irrespective of the world economic situation and crisis, Singapore is well known for
its pro-business policies and the favorable business environment. The modern
generation of entrepreneurs has become a lot more cautious when it comes to
setting up a business offshore. Not only they are looking for flexible tax regime, but
also, they are interested in incorporating a company at a location with favorable
business laws. Although, expanding core business is a major objective in setting up
of an offshore company, taking advantage of the lower taxation regime also
happens to be one of the main reasons behind offshore company incorporation.
Previously, Caribbean islands used to be the preferred location for offshore
company incorporation, as companies setting up businesses there would not have
to pay any taxes on their worldwide income. Recently, Singapore has emerged as
one of the most favored nations for company incorporation. Let us find out why…

3. Singapore at a Glance
Singapore is an island city-state and
smallest nation in the Southeast Asia.
Singapore is considered as a multi-ethnic
and multi-religious society; still then,
Singapore has been successful in
maintaining these cultures in a
harmoniously united manner.
Additionally, Singapore is a multilingual
society, as it comprises of four major
races, Malay, Indian, Chinese, and
Eurasian and each one has its own
mother tongue, and still English is its
main language. All these factors,
together, have contributed in promoting
Singapore as one of the best
destinations to incorporate a company.

4. Few of Singapore’s Trivialities
The Home Ownership rate in Singapore is 90.1%
The Literacy rate is 96.4%
The crime rate in Singapore is low with a crime rate of 581-per 100,000
population
The Mobile phone penetration rate in Singapore is about 151.8%
According to Global Competitiveness Report, Singapore is the most transparent
country in Asia
According to World Economic Forum’s Global Competitiveness Report, Singapore
has the topmost IP protection regime in Asia and second best in the World.
The ECA International Annual Survey declares Singapore as the ‘Most livable city
in the world’ for expatriates
As per World Banks Doing Business 2016 Report, Singapore is the world’s easiest
place to do business in
Singapore is the most ‘Network Ready’ city in Asia
Singapore as the city offers the best investment potential

5. Overview of Business Formations in Singapore
Singapore’s strategic location on the corridor between the East and West has been
the major reason investors and entrepreneurs are willing to incorporate Singapore
Company. By implementing policies that are pragmatic and relevant, Singapore
always adapted to the changing realities of the global economy. Despite having no
natural resources, Singapore has proactively embraced changing economic policies
for reinventing itself on a frequent basis and to nurture a vibrant ecosystem that is
conducive for enterprise growth.
The fact that more than 16,612 businesses were registered in Q4 of 2015 alone is
enough to establish the attractiveness of Singapore for the new company
incorporation. Of these, 48% were Private Limited Companies.

6. Overview of Business Formations in Singapore
The Q4 also saw the incorporation of 1,421 Non-Exempt Private Limited Companies
(EPCs). A Private limited company having not more than 20 shareholders wherein
not even a single shareholder is a corporate entity, and whose annual revenue does
not exceed S$ 5 Million is eligible as an EPC. An EPC is exempt from statutory
auditing and is merely required to submit a declaration of solvency.
A sole proprietorship is the second largest type of company incorporation entity
preferred by entrepreneurs. Less risky business entities often prefer sole
proprietorship company formation as it has fewer compliance issues and is easy to
set up.

7. The Commonest Operating Models in Singapore
Singapore is indeed an international business hub with its ideal enterprise
ecosystem, offering a myriad of benefits to the foreign enterprises and
entrepreneurs choosing to set up a company in Singapore. The common operating
modes of foreign companies in Singapore are:
Holding Companies
Singapore is a place where there is no capital gains tax. It also levies no tax on
foreign sourced dividends, branch profits and the service income received by a
Singapore-based company after satisfying certain prerequisite conditions.
Additionally, the dividend income distributed by a Singapore resident company is
tax-free. Foreign companies also gain from the DTA arrangements with the trading
partner countries and for pooling Foreign Tax Credits.

8. The Commonest Operating Models in Singapore
Finance and Treasury Centers
Apart from tax savings, efficient risk management and control can also be
achieved by choosing this model. Highly qualified workforce, a presence of
internationally recognized financial institutes, widely accepted DTA network,
excellent infrastructure and a competitive tax regime offering subsequent
incentives in the form of waivers and
reduced taxes are some of the key
attractions for such models. Usually, credit
management, corporate finance
management, derivatives management,
research & analysis, business planning and
budgeting are some of the business
activities in which these models are useful.

9. The Commonest Operating Models in Singapore
R&D and IP Management Centers
The Singapore government has implemented various programs for promoting
research and innovation and has some top-notch facilities and test bed platforms.
Singapore has ensured robustness in the IP (Intellectual Property) regime allowing
control and protection of rights. The recent development in IP related activities has
bestowed a Patent Prosecution Highway (PPH) enabling businesses to fast track
their patent application in partner countries. Using these requisites in a right way,
companies can calculate IP acquisition costs, claim tax deductions for R&D and IP
creation as well enjoy a reduced tax for qualifying projects by exiting without the
tax on capital gains.

10. The Commonest Operating Models in Singapore
Regional/International Headquarters
By taking advantage of the Singapore’s stable operating environment,
infrastructure, connectivity and quality workforce, foreign companies manage their
regional or global operations from Singapore. Often strategic business planning &
development, marketing and brand management, R&D, research and analysis,
sourcing and distribution, managing corporate finances, general administration as
well as IP management are some of the key activities managed from
Regional/International headquarters in Singapore.
Supply Chain Headquarters
The extensive connectivity, geographic location, superior warehousing, logistic and
port facilities offered by Singapore, enables easy connectivity and management of
procurement, manufacturing, and distribution. By ensuring freight savings, quick
customs clearance and the advantage of using Free Trade Agreements, foreign
companies ensure the growth of their business with minimum hassles.

11. Singapore Company Formation Options Foreign Companies
Subsidiary Company
This is a locally incorporated company having foreign company as its prime and
sometimes, sole shareholder as Singapore allows 100% foreign ownership. It is
considered as a local company and enjoys incentives and the privileges of tax
treaties upon satisfying set guidelines. A subsidiary company exists as a separate
legal identity in Singapore and is subjected to the local corporate tax rates. Its
liabilities, losses or debts are considered its own without affecting the foreign
parent company.
Branch Office
The Singapore corporate environment treats a branch office as a mere extension of
the parent company located offshore. Thus, liabilities, if any, incurred by the
branch office during its course of business are directly extended to the foreign
parent company. A branch office is liable to pay taxes on revenue generated locally
at the existing local tax rates; although, it is considered as non-resident for tax
purposes.

12. Singapore Company Formation Options Foreign Companies
Representative Office
Foreign corporations interested in carrying out
market research, administration or business
liaison activities usually prefer Singapore company
incorporation as a representative office. Such
companies are forbidden from indulging in
revenue generating business activities. As the
registration of such companies is valid for only
one year, a representative office is considered as
transitory agreement. Although the registration is
later renewable for three years maximum and
thereafter the representative office must be
converted into either a subsidiary or a branch
office to continue its business operations.

13. The Investment Opportunities in Singapore
Singapore has become an important destination for investment and incorporation
for foreign business corporations and entrepreneurs as it allows 100% foreign
ownership and no restrictions are levied on repatriation profits. The important
things an investor coming to Singapore considers are diplomatic ties, geographic
location, the FTA networks, the DTA arrangements with key trading partners and
ideal political, social, economical as well as business operating conditions.

14. The Investment Opportunities in Singapore
Ease of Doing Business
In early 2015, a US-based research institute Business Environment Risk Intelligence
ranked Singapore ahead of fifty developing economies. Singapore has to its credit
several of such accreditations, consistently topping several such reports
appreciating Singapore for its free trade, business policies, corporate environment
and Ease of Doing Business. The Singapore government having recognized the
importance of foreign investment serves indefinite investment opportunities as its
main course to foreign businesses and investors.
Economic Development Board
The Economic Development Board (EDB) of Singapore implements several schemes
and programs intended to help startups in the growth of their business. Few
schemes that can be named are Global Investor Program, International/Regional
Headquarter Award, and Pioneer Incentive programs.
Capital and Knowledge-driven Sectors

15. The Investment Opportunities in Singapore
Ease of Doing Business
In early 2015, a US-based research institute Business Environment Risk Intelligence
ranked Singapore ahead of fifty developing economies. Singapore has to its credit
several of such accreditations, consistently topping several such reports
appreciating Singapore for its free trade, business policies, corporate environment
and Ease of Doing Business. The Singapore government having recognized the
importance of foreign investment serves indefinite investment opportunities as its
main course to foreign businesses and investors.
Economic Development Board
The Economic Development Board (EDB) of Singapore implements several schemes
and programs intended to help startups in the growth of their business. Few
schemes that can be named are Global Investor Program, International/Regional
Headquarter Award, and Pioneer Incentive programs.

16. The Investment Opportunities in Singapore
Capital and Knowledge-driven Sectors
Singapore aims to foster knowledge and innovation-driven economy. Apart from
attracting investment in finance, insurance, manufacturing, and service sector, the
Singapore government is also implementing policies to attract a substantial
amount of investment in capital and knowledge-driven sectors like biotechnology,
clean energy, aerospace and consumer product business. Although these
investment niches are meant for high profile investors and MNCs, even the SMEs
have ample opportunities to incorporate a company in Singapore.
Manufacturing and trading have always been the core of economic development in
Singapore brought about by SMEs in the first phase. However, the recent trend
shows that SMEs are active in R&D, supply chain management, educational, Digital,
Media, Marketing, Consulting, Corporate Solutions and Information Technology.

17. Doing Business in Singapore
Before a company incorporation, entrepreneurs and investors think about the cost
of doing business in different locations. When it comes to labor and rental costs,
the chances are high that Singapore might appear less competitive compared to
few of its ASEAN neighbors. However, if analyzed deeply and in correct perspective,
Singapore indeed has many cost advantages of starting a new business.
Process of Company Incorporation in Singapore
First, the cost of company incorporation in Singapore is very much competitive
compared to its competitors and the entire incorporation procedure is completed
within 1-2 days. You can incorporate a company in Singapore with S$1 as the
minimum paid up capital and you can obtain various business licenses within a few
days. Thus, the pre-operative expenses of starting a business are very less and
within a matter of few days, you can start generating revenue.

18. Doing Business in Singapore
Tax Treaties and Exemptions
Singapore strongly advocates open
economy and levy zero duty on almost all
goods. Therefore, the businesses
incorporated in Singapore can import goods
in Singapore at a lesser price and in an
effective manner. The extensive FTA
network of Singapore assures tariff savings
and tax competitiveness for Singapore
exporters enabling preferential access to
select sectors and faster access to markets.
Newly incorporated companies are liable to
enjoy tax savings, as they are entitled to full
tax exemption on first S$100,000 of their
taxable income for each of the first three
tax filing years.

19. Doing Business in Singapore
Businesses Automation
Recently, Singapore changed its guidelines for issuing work passes and increased
levy to curtail foreign workforce. It may hurt industries engaged in labor-intensive
business operations. However, the Singapore government, through its Budget
2016, is aiming to increase businesses automation to achieve increase in the
productivity and reduce reliance on labor. It is expected to reduce the workforce,
operating and labor costs of the businesses.
In the same way, rental costs are also said to be higher in Singapore, compared to
its competitors. However, it should be noted that Singapore provides the best
infrastructure in the world in the form of good roads, world’s busiest airport,
International Maritime hub and high-speed internet, uninterrupted electricity and
water and online government services. All these facilities contribute in running the
businesses efficiently.

20. Contact Us
SBS Consulting Pte Ltd
35-B Hongkong Street,
Singapore
059674 – Singapore
Phone : +65 6536 0036
Email : info@sbsgroup.com.sg
Website : www.sbsgroup.com.sg