Singapore’s tax system is based on the principals of source and remittance. Only profits that are derived from or arise in Singapore, or any foreign-sourced profits remitted back to Singapore are subject to tax in Singapore. The current rate of Singapore Income Tax (SIT) is 17% – one of the lowest rates in the region. All companies in Singapore must be registered with the Accounting & Corporate Regulatory Authority (ACRA) and abide by the Companies Act, Chapter 50. While there are five different entities to choose from – sole proprietorship, partnership, company, limited liability partnership and limited partnership – the most common and flexible option is to set up a Singapore company. If the number of shareholders exceeds 50, it is deemed to be a public company. If the company has more than 20 but fewer than 50 shareholders, it is deemed to be a private company. Finally, if the number of shareholders is 20 or less – with no corporation holding any beneficial interest in the company’s shares – and the company has a turnover of less than S$5 million, it is deemed to be an Exempt Private Company (EPC). An EPC is exempt from tax from the first three years after incorporation for the first $100,000 of chargeable profits. The next $200,000 profit is 50% exempt from SIT, while any profits exceeding $300,000 are taxed at 17%. Dividend income from other Singapore companies is not subject to tax. Foreign-sourced dividends remitted back to Singapore are generally taxable but they can be completely exempted from tax if the following conditions are satisfied:

  • The country from which the dividend was paid has a headline tax rate of 15% or higher;
  • The dividend has suffered taxation, either because it is paid out of taxed profits or has suffered withholding tax.

Capital gains are not subject to tax. Singapore has entered into over 80 comprehensive agreements for the avoidance of double taxation (DTAs). It has one of the most comprehensive networks in the world and the list is still growing.

A Singapore company requires a local registered office where all official documents, notices and court papers can be sent and where all statutory records are kept for the company. The address must be a physical location, not just a post office box. This is because people have the right to visit the office to inspect certain registers and documents, and to deliver documents by hand. It must be open to public for at least 5 hours during business hours.

A Singapore company is required to appoint a qualified company secretary who is able to deal with Singapore company laws. A company secretary typically would normally provide you with the following services:

  • Help you understand and comply with Singapore Companies Act
  • Maintain the statutory registers
  • Remind you of statutory deadlines and assist you with statutory compliance
  • Provide members and directors with notice of meetings
  • Ensure that your company files statutory information is accurate and submitted punctually
  • Draft and file any corporate resolutions
  • Custody and use of the company seal
  • Ensure that any parties entitled to inspect your company records are able to do so
A requirement in Singapore is that each company must appoint one Singapore resident director.
If you are based overseas and do not have a local director, you can appoint a Resident Local Director service to satisfy this statutory requirement. The service can be provided on a short-term or annual basis as below:
  • If you do not intend to relocate to Singapore, you would need a resident director service on an annual basis.
  • If you are relocating and intend to apply for an employment pass, you may only require a resident director on a temporary basis. When you eventually receive your employment pass, the director can resign and you are able to take over as the local resident director.
There are several Corporate Secretarial firms that can help you to prepare and file the annual return with Company Registrar and annual tax return with Inland Revenue Authority.
Not quite. Singapore operates a territorial and remittance-based tax system, which means that only those profits that are sourced within Singapore or foreign-sourced profits remitted back to Singapore are subject to Singapore tax. Profits derived offshore are not taxed in Singapore if these are kept outside Singapore.
Most Singapore companies are not subject to an audit of their financial statements. Companies with an annual turnover of less than S$5million and less than 20 shareholders (who are all individuals) are not subject to audit. If audit is required, the fees are competitive and normally quite reasonable, depending of course upon your choice of auditor.
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