In accordance with the Overseas Direct Investment data issued by the Reserve Bank of India, it can be presumed that Singapore is the top destination preferred by Indians for investment. All the Companies in Singapore are registered with Accounting & Corporate Regulatory Authority i.e. ACRA (similar to Ministry of Corporate Authority here in India) and has to diligently abide by the provisions of the Companies Act. Singapore is also ranked as one of the top destinations to do business. Out of many options available to choose for form of business entity, we have discussed herein the most relevant one from view of overseas direct investment:
TYPES OF SINGAPORE BUSINESS ENTITIES
Foreign corporate entities that are considering setting-up in Singapore can choose from the following three options:
- Representative Office
A representative office is the first route foreign companies can pursue when intending to set up in Singapore. Such setups are intended to be temporary and short-term, and cannot engage in any commercial activities that would otherwise generate revenue.
- Branch Office
Setting up a branch office in Singapore is the next possibility. Branch offices are extensions of the foreign company itself and thus allowed to conduct the relevant business activities that fall within its scope of business. Unlike a registered office, it is able to repatriate 100% of its earnings and revenue, and there are no limitations on the number of employees it can have. Setting up and registering a branch office in Singapore can be a better long-term option than that a representative office.
- Subsidiary Company/Private Limited Company
A subsidiary company is essentially a private limited company with a corporate entity as the major shareholder. It can be 100% completely owned by the foreign entity. Not only can it conduct its relevant business activities here in Singapore, but also repatriate and account for all of its earnings made.
For a big scale and long-term business perspective, a subsidiary Company or a private limited Company is always the most suitable option as similar to here in India, it also has separate legal entity status i.e. the shareholders shall not be liable for debts or losses beyond their share capital.
INFORMATION REQUIRED TO REGISTER A SINGAPORE COMPANY
1. Company name (English only);
2. All shareholders’ ID cards, passports, driving licenses (choose two out of three);
3. Sample of Chinese and English signatures of all shareholders (before and after the last name);
4. Business scope (the business scope has a corresponding number on the Singapore side).
PRE-REQUISITES FOR REGISTERING COMPANY IN SINGAPORE
1. At least one shareholder;
2. At least one local director in Singapore, one of whom must be a person with a Singapore status residing in Singapore;
3. The company must have a business registered address in Singapore;
4. Registered capital of at least 1 SGD;
5. The company name is all in English and ends with PTE. LTD., which means private limited company;
6. Each company must appoint a company legal secretary. The company legal secretary must be a local resident of Singapore;
7. The company’s industry scope can only choose two at most. If you need to deal with different businesses, it is always recommended to register different companies;
8. Legal registration documents as per the format provided.
NAME APPROVAL
You may choose two to three company names of your desire and check their availability on ACRA’s website. You can pick the company name that is available with authority. The name must be unique, unidentical (with existing company) and meaningful. It must not violate any copyrights, trademarks, or patent law. Once the company name gets approved, you can proceed to the next step, i.e., company registration. An approved company name remains reserved for 60 days.
REGISTRATION DETAILS:
- Time required 15-20 working days
- Common company registration fee: 9000 yuan and Annual review fee: 7000 yuan
- Bank account opening fee: 8000 yuan
TAXATION ASPECTS:
- GOODS AND SERVICE TAX (GST)
- Threshold limit for registering under Goods and Service Tax (GST) is when annual turnover is more than 1 million Singapore Dollar. Otherwise, it is optional to obtain Goods and Service tax number.
- The rate of GST is 7%.
- It is applicable on all domestic sells of goods and services, including importing.
- GST is not applicable on exports of goods and services.
CORPORATE INCOME TAX AND TREATIES
- The corporate income tax is 17%.
- Further, it is important to know that the Singapore government exempts taxes up to 75%, 50% and 25% in the first, second and third year of the incorporation of the Company respectively.
There are other kinds of taxes as well that are levied by the Singapore Government such as property tax, inheritance tax, betting tax, casino tax, etc. depending on the nature of business of a corporate entity. However, the nature of taxes aforementioned are the most relevant one keeping in view of taxes to be paid by the Corporates.
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{The author i.e. Kajal Goyal is a Company Secretary in Practice at Kajal Goyal and Associates and co-founder of Alliance Professionals and can be reached at (M) +91-9999952595 and (E) cskajalgoyal@gmail.com}
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