The Jurisdiction Singapore
Singapore is a “First-Choice” jurisdiction for Holding Companies and International Business and is committed to further increase fiscal and business advantages in order to attract foreign companies to relocate to Singapore, or to restructure their business through Singapore.
A large number of double taxation agreements provide legal certainty and a number of tax advantages, for example the DTA between Singapore and Russia.
Singapore has emerged to the World’s third largest financial centre. It offers a superb business infrastructure, an excellent advantageous tax system, a large number of double taxation agreements, and a very good reach to Asian markets.
Singapore is located at the southernmost tip of the Asian continent and at the crossroads of major global trading routes. It has a multi-cultural population of 4,84 million (06/2008).
Its climate is characterised by uniformly high temperatures and humidity but pleasantly moderated by prevailing sea breezes. The average maximum is 31°C and average minimum is 24°C. Rain falls the whole year through.
Singapore’s multi-racial population is today approximately 5,2 million comprising of four major ethnic groups – Chinese (so-called Strait Chinese; 74%), Malay (13%), Indian (9%) and Others (3%).
Singapore recognizes the importance of foreign investments and welcomes foreign investors into Singapore with open arms. The Economic Development Board (EDB) is the lead government agency responsible for attracting foreign investors with solutions that create value for investors and companies in Singapore.
Singapore is an advanced, successful free-market economy, featuring an open and corruption-free environment. Globally connected, a pro-business environment with a strong and stable infrastructure to boost and sustain growth and success in a myriad of industries.
The GDP per capita was S$63.050 (in 2011; = EUR 39.966, = USD 51.375 as per 30.09.2012).
Singapore Taxes in Brief
In Singapore, taxes are levied on income of companies, individuals and property. In addition, taxes are levied on use of property and consumption which are known as property tax and goods and services tax respectively. However, there is no capital gains tax.
The tax year is 1st of January to 31st of December.
Taxation of Company Profits
Singapore’s taxation system is territorial. Companies in Singapore are subject to tax on income accruing in or derived from Singapore and foreign income received in Singapore from outside Singapore.
Foreign sourced dividends, foreign branch profits and foreign-sourced service income received in Singapore by a Singapore resident company is exempt from income tax if the following conditions are met:
the income is subject to some form of income tax in the foreign country,
the income is remitted from a country with a headline tax rate of not less than 15%; and
the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the Singapore resident company.
Under the group relief system, group companies are allowed to transfer current year’s tax losses and current year’s unutilised capital allowances (but cannot transfer investment allowances and foreign losses) to another company in the same group. A group consists of a Singapore incorporated parent company and all its Singapore incorporated subsidiaries. Two Singapore incorporated companies could be members of the same group if one is 75% owned by the other or both are 75% owned by another Singapore incorporated company. The group companies must have the same accounting period to qualify for the relief.
Singapore has a one-tier corporate tax system. Under the one-tier system, corporate profits will be taxed at the corporate level and the corporate tax paid is a final tax. Singapore dividends distributed from the corporate profits are tax exempt.
Corporate Income Tax Rates, Exemptions and Incentives
The corporate tax rate from the YA 2011 is 17%.
Companies (resident and non-resident) are subject to the corporate tax rate after partial tax exemption of up to $152,500 on their normal chargeable income up to $300,000 as follows:
Up to the first $10,000 of such income, 75% of the income or an amount to $7,500 will be exempt from tax,
Up to the next $290,000 of such income, 50% of the income or an amount up to $145,000 will be exempt from tax.
The exemption scheme does not apply to:
income that is subject to tax at concessionary tax rates; and
income earned by a non-resident company that is subject to a final withholding tax.
Incentive for New Companies
To encourage entrepreneurs to start up new companies to pursue their business ideas, qualifying new start-up companies are granted tax exemption of up to SGD 200.000 on the first SGD 300.000 of their normal chargeable income for each of their first three consecutive years of assessment as follows:
100% tax exemption for the first SGD 100.000 chargeable income
50% tax exemption for the next SGD 200.000 chargeable income.
Result: Unless a company’s profit do not exceed SGD 300.000, the effective tax rate will be NIL for the first SGD 100.000 profit, and 8,5 % for the profit SGD 100.001 to 300.000. This incentive is limited to the first three years of business.
The conditions to qualify for the start-up exemption are that the company must be a Singapore incorporated resident company with no more than 20 shareholders and of which at least one is an individual shareholder beneficially and directly holding at least 10% of the total number of issued ordinary shares.
Goods and Service Tax (VAT-equivalent)
The GST is 7 %.
Payments of the following nature are subject to withholding tax:
interest, commission or fee in connection with any loan or indebtedness,
royalty or other payments in one lump sum or otherwise for the use of, or the right to use, any movable property,
fee for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information,
fee for the management or assistance in the engagement of any trade, business or profession,
rent or the payment for the use of any movable property,
remuneration paid to a non-resident director,
fee paid to a non-resident professional (other than employee) for services rendered in Singapore,
proceeds from the sale of real property by a non-resident property trader,
fee paid to a non-resident public entertainer or athlete.
For rates of withholding tax please contact us. Subject to certain exceptions, withholding tax has to be accounted to the Comptroller of Income Tax by the 15th of the month following the date of payment of the income to the non-resident. For payments made on or after 1 July 2012, the due date of accounting for the withholding tax is the 15th of the second month following the date of the payment to the non-resident.
No withholding tax is required for royalty payments made to a non-resident for:
downloadable software for end user,
software bundled with computer hardware.
Please consult specific double taxation agreements for specific, country-related information.
Singapore Companies at a Glance
Alongside the traditional engines of growth in the manufacturing and financial/business services, the economic landscape has moved to one that promotes knowledge-based and research-intensive industries. At the same time there has been a significant growth and development in the biomedical sciences, clean technologies and interactive digital media industries.
The GDP per capita was S$63.050 in 2011.
Conversion rates (30.09.2012), one SGD is (reverse rate in brackets):
EUR: 0,81451 (1,57767)
USD: 0,63334 (1,22724)
RUB: 25,4044 (0,03932)
Singapore has four official languages. English (language of administration) Chinese (Mandarin), Malay (National language) and Tamil. Singapore has a high literacy rate of 96% of total population and more than half of the population is literate in 2 or more languages.
GMT + 8 hrs.
Information on Companies
Legal Forms of Companies
Private Company limited by shares: The majority of companies in Singapore are private companies limited by shares. The name suffix is “Pte Ltd” or “Private Limited”. A private company may have max. 50 shareholders.
Exempt Private Company (EPC):
An Exempt Private Company (EPC) is a company with less than 20 individual shareholders and with no corporate shareholder. An EPC does not need it accounts to be audited if revenue is less than S$5million for the financial year. Professional firms filing on behalf of EPC may require the hardcopy exempt certificate from directors as evidence of compliance and for record purposes. EPC still do benefit from tax incentives (see “Singapore Taxes in Brief”).
Public Company limited by guarantee:
A public company limited by guarantee is one which carries out non-profit making activities that have some basis of national or public interest, such as for promoting art, charity etc. There is no share capital.
Public Company limited by shares:
A public company limited by shares is one where the number of shareholders can be more than 50. The company may raise capital by offering shares and debentures to the public. A public company must register a prospectus with the Monetary Authority of Singapore before making any public offer of shares and debentures.
Company Act Chapter 50, as revised as per 31st October 2006.
Minimum capital requirement
Minimum paid capital is SGD 1,00. There is no concept of “Authorized Capital” for Singapore companies.
Singapore companies may not offer financial services, insurance services or other businesses that require a license, unless a respective permission is given.
The general corporate tax rate in Singapore is 17 %.
The first SGD 100.000 of profit is tax-exempted. The profit from SGD 100.001 to 300.000 is 50 % tax exempted.
Please refer to the submenu topic “Singapore Taxes in Brief”.
Double Taxation Agreements
Singapore has signed Double Taxation Agreements with more than 60 states.
Annual tax filing
Statutory. However, there is an exemption:
Companies meeting the below conditions automatically qualify as “Exempt Private Company”(EPC) and do only have to submit a declaration of solvency:
the total number of shareholders does not exceed 20, and
all shareholders are individuals, and
the annual turnover does not exceed SGD 5.000.000. or
the annual profit does not exceed GSD 2.500.00, or
the company is dormant.
EPCs still have to maintain bookkeeping records and have to file for tax.
Annual License Fees
Registered Company address and agent for incorporation
Registered company address must be in Singapore. This service will be ensured by Shanda Consult.
At least one natural person who is resident of Singapore and meets the legal requirements must be appointed as company secretary. In case that a director is also shareholder of a company, he cannot act as company secretary. Shanda Consult can provide with trustee company secretary if needed
A Singapore company must have at least one director. Corporate directors are not permitted. The directors do not need to be Singapore citizens.
At least one of the directors must reside in Singapore.
A shareholder may also be director of the same company. Shanda Consult will provide with trustee directors if needed.
Minimum one, natural or legal person possible. Max. 50.
Shareholders may also be director of a company.
The records of the Registrar are public. Confidentiality can be achieved through the appointment of trustees.
Disclosure of the ultimate beneficial owner
Confidentiality can be achieved through the appointment of trustees. However, ultimate beneficial owners must be proven the basis of documents for the opening of bank accounts.
Directors publicly known
Yes, the records of the Registrar are public. Anonymity can be achieved through the appointment of trustee director.
Shareholders publicly known
Yes, the records of the Registrar are public. Anonymity can be achieved through the appointment of trustee shareholder.
Control of foreign currency
Name of the company
Name can derive from any language with Latin characters, or Chinese characters.
Terms such as „Bank“, „Insurance“, „Trust“, “Society”, “University” as well as offensive and obscene names, names which suggest an involvement with the government, are not permitted. Company names must be unique.
Private Ltd.: Private Limited or Pte Ltd.
Public Ltd.: Public Limited Company or PLC.
Language of Company documents
Duration of incorporation
5 working days.
May be available.
Singapore Financial Companies
Singapore is one of the World’s most sophisticated financial centres. Service-friendly and business-focused legislation in line with international financial rules, combined with an excellent infrastructure and professional approach and effective services of the authorities provide an outstanding environment for financial companies.
The Sovereign Credit Rating of Singapore by Standard & Poor’s is “AAA/A-1+”, there are more than 600 local and international financial institutions located in Singapore.
In Singapore, the financial services industry is governed by Monetary Authority of Singapore (MAS), and the ruling legislation are, mainly, the Securities and Futures Act (SFA) and the Financial Advisers Act (FAA). As per the aforementioned acts, the following activities are regulated and appropriate licenses are issues by the MAS:
property fund management
dealing in and financing of securities
providing custodial services for securities
trading in futures contracts
leveraged foreign exchange trading (FOREX)
advising on corporate finance
investment advisory services
marketing collective investment schemes, i.e. trusts units
and many more…
The following types of financial institutions are regulated in Singapore (for types marked as bold, further information is provided below):
capital markets intermediaries
money changing and remittance businesses
Capital Markets Intermediaries
Capital markets intermediaries are licensed and regulated under the Securities and Futures Act. They may provide the whole range of capital markets services as specified in the 2nd schedule of the Securities and Futures Act with the appropriate Capital Markets Services licence. Currently, these services or regulated activities include dealing in securities; trading in futures contracts; leveraged foreign exchange trading; advising on corporate finance; fund management; real estate investment trust management; securities financing; providing custodial services for securities; and providing credit rating services.
Individuals who are employed by the capital markets intermediaries to carry out such regulated activities are required to be representatives under the Securities and Futures Act.
Financial advisers are licensed and regulated under the Financial Advisers Act. They may provide the whole range of financial advisory services as specified in the 2nd schedule of the Financial Advisers Act with the appropriate Financial Advisers licence. Currently, these services include advising others on investment products, issuance of research reports covering investment products, marketing of any collective investment schemes, as well as arranging life policies for others.
Individuals who are employed by the financial advisers to carry out such services are required to be representatives under the Financial Advisers Act.
Financial companies are licensed under and governed by the Finance Companies Act.
They focus on providing fixed and saving deposits as well as credit facilities to individuals and corporations. They may not offer deposit accounts which are repayable on demand by cheque, draft or order. Generally, financial companies shall not grant unsecured credit facilities to any person or body of persons, which in the aggregate and outstanding at any one time exceeds S$5,000. Financial companies are not allowed to deal in any foreign currency, gold or other precious metals or acquire foreign currency denominated stocks, shares or debt securities. They may expand their scope of activities subject to MAS’ approval.
Trust companies carrying out trust services are licensed under the Trust Companies Act. They may provide the whole range of trust services as specified in the 1st schedule of the Trust Companies Act with the appropriate trust business licence. Currently, these services include the provision of services for creation of an express trust, acting as trustee of an express trust, arranging for any person to act as a trustee of an express trust and the provision of trust administration services in relation to an express trust.
In certain cases, and under the condition of the approval of the related Authorities of Singapore, license exemptions are provided if financial services are delivered to not more than 30 qualifying investors. The definition of qualifying investors is based on their wealth (min. SGD 10.000.000 for corporate investors and min. SGD 2.000.000 for individual investors) and on their income (min. SGD 300.000 annually for individual investors).
This section has been prepared based on the information of MAS.
For further information on specific topics kindly contact us.