Setting up a company in Singapore – How to navigate through
Singapore offers a lucrative opportunity for Indian businesses. It can be used as a launchpad for going global. However, setting up a Singapore entity sits at the intersection of FEMA laws in India, international taxation, corporate restricting and laws of Singapore. Let us discuss the nuances as:
- Why Singapore?
- Types of Singapore entities for Indian promoters
- Step-by-step Incorporation process
- One time set up and recurring costs
- FEMA and ODI
- Structuring Options for India promoters
Let us start:
1. Why Singapore? There are multitudes of options for investment in Mauritius, Dubai, Delaware and others. But Singapore has a unique combination of factors which make it particularly appealing for Indian business in 2026 and beyond.
- Ease of Doing Business in Singapore ranked at number 2 globally by the World Bank. You can get company registered in a day through BixFile+portal.
- Zero Capital Gains Tax on sale of shares, no withholding tax on dividends and no inheritance tax in Singapore.
- India-Singapore DTAA provides lower withholding tax rates of 10% on interest, dividends and royalties and fees for technical services. But LOB and PPT will apply.
- Singapore is the gateway for ASEAN. There are approximately 680 million consumer market, with Singapore having free trade agreements with 25 countries.
- Singapore offer IP Development Incentive that gives you a 5 to 10% concessionary tax rate on qualifying IP income. There is also a 250% R&D deduction.
- Singapore has English common law, an independent and highly respected judiciary, strong IP protection, and an AA-plus sovereign credit rating.
2. Types of Singapore entities for Indian promoters
Your choice of type of entity will have implications both under FEMA in India and Singapore.
- Private Limited Company, or Pte. Ltd: This is by far the most popular option for Indian businesses. 90% of Indian business prefer this. Minimum paid-up capital is just one Singapore dollar. Shareholders have limited liability — meaning your personal assets are protected. Under FEMA, when you invest equity into a Pte. Ltd., it’s classified as an ODI — Overseas Direct Investment — under the equity route.
- Variable Capital Company, or VCC: This is suitable for investor for pooling capital . It gives a tax-neutral, flexible structure. Under FEMA, it’s treated as ODI under the equity or fund route.
- Limited Liability Partnership, or LLP: Suitable for professional service firms — consultants, lawyers, architects. No minimum capital requirement. Partners have limited liability. Under FEMA, this is classified as ODI.
- Branch Office: The Indian parent is fully liable for all branch obligations. The branch can engage in commercial activity and earn revenue. Under FEMA, it’s treated as ODI under the branch route.
- Representative Office. This is purely for market research and liaison. A representative office cannot earn any revenue, cannot sign commercial contracts, and typically has a limited permitted life.
3. Step by Step Incorporation Process:
- Step 1 — Name Reservation. You apply on BizFile+ online portal. Name approval is usually instant or within a few hours. Once approved, the name is reserved for 120 days.
- Step 2 — Appoint a Local Director who is ordinarily resident in Singapore
- Step 3 — Appoint a Singapore resident Company Secretary within 6 months.
- Step 4 — Have physical Registered Address.
- Step 5 — Submit/File constitution and other documents with ACRA.
- Step 6 — Open a Bank Account. It will take 4-6 weeks
- Step 7 — FEMA Compliance —obtain a UIN — Unique Identification Number — from your Authorised Dealer Bank. Then, within 30 days of remittance and file Form ODI Part I through your AD Bank to the RBI.
- Step 8 — GST and Tax Registration. If your Singapore company’s annual taxable turnover is expected to exceed one million Singapore dollars, you need to register for GST — Singapore’s equivalent of our GST.
4. One time set up and recurring costs:
One time set up cost in Singapore will be around 3000 to 8000 Singapore dollars. Indian side cost will be around INR 75000/-
Recurring Annual Cost will be around 10000 Singapore dollars and Indian side will be approximately Rs. 1 lakhs.
5. FEMA and ODI framework: Practical Guidance :
- Point one — Get your UIN from the AD Bank before you remit the first dollar. No UIN, no remittance.
- Point two — File ODI Part I within 30 days. Every single remittance.
- Point three — Only invest in permissible sectors. Check the FEMA negative list. Financial Services investments have additional conditions.
- Point four — Keep your Singapore company in good standing. ACRA annual filings, annual returns, audits — all must be current.
- Point five — Repatriate dividends to India within 60 days of declaration.
- Point six — File your APR with the Singapore company’s audited accounts, by 31st December every year, no exceptions.
- Point seven — All loans and guarantees get reported via Form OG and ODI Part II.
- And point eight —most important — absolutely no round-tripping.
6. Structuring Options for Indian businesses:
- Holding Company Structure : It is most common. An Indian promoter holds shares in Singapore Pte. Ltd. This entity receives dividends from operating subsidiaries globally. The promoter may eventually exit through IPO or otherwise. But the compliance of POEM in India needs to be evaluated.
- Trading or Principal Structure: Singapore entity will hold inventory and Indian entity will act as contract manufacturer. This is very common in pharma, chemical and consumer goods space. Here, Indian transfer pricing regulations need to be evaluated.
- Develop or migrate IP from Singapore and licence back to India. Here BEPS need to be examined.
- VCC structure is suitable for venture capital, private equity and family office.
Singapore is a gold standard for Indian business going global. Low tax, ease of doing business and strong legal framework. However, one needs to comply with Indian FEMA/ODI, POEM, Transfer pricing and other regulations and laws in Singapore.
It will be better if one engages with right professionals from day one.
*******
In case you are planning to set up an entity in Singapore and have any query or need any support, you may like to connect with us.
Abhinarayan Mishra, FCA, FCS; Managing Partner, KPAM & Associates, Chartered Accountants, Dwarka, New Delhi; +9910744992, ca.abhimishra@gmail.com
Author Bio
