Factors to setup business in Singapore
There are many advantages of a private limited company for foreign investors. It protects the personal assets of individual investors, unlike proprietorship or partnership, and provides tax benefits under certain conditions. With private limited company, the dividends payable to shareholders are not taxable. Additionally, it allows shareholders and foreign directors to apply for an Employment Pass.
Singapore offers various incentives to corporates running their business in the country. Some of the incentives are as given below:-
- Personal tax rates start at 0% and max out at 20% above $320K
- Singapore is rated #1 in the world by World Bank for ease of doing business
- Singapore is ranked the third wealthiest nation in the world by Forbes magazine
- There are no dividend or capital gains taxes in Singapore
- There are no dividend or capital gains taxes in Singapore
- Singapore is situated in the heart of Southeast Asia, making it possible for your business to access a market of 2.8 billion people and Singapore’s extensive network of Free Trade Agreements, Avoidance of Double Taxation Agreements and Investment Guarantee Agreements, as well as its comprehensive air, sea and IT infrastructures, provides for seamless flow of goods and services to markets around the world.
- Zero tax rate on first $100000 for first three years of incorporation
- 50% exemption in the corporate tax rate on another $200000 for first three years of incorporation
- Certain other tax rebates to the corporates as and when changes are brought in the budget on an annual basis
- GST will be applicable only after crossing a turnover of $1 Million
- Government grants, up to 70 percent of costs, provided for companies in certain industries keen to adopting IT solutions and equipment to enhance business processes.
- No auditing is required for a company which qualifies as a small company.
- Singapore has no restrictions on foreign ownership of business. The repatriation of profits and the import of capital are freely allowed. Shareholders, including investors who receive dividends out of company profits, are exempted from Singapore tax. Singapore is one of the best places to set up company and run your business.
- IP protection – the country has ensured that IP and copyright laws are in synergy with the global laws on IP protection, as it grants increased public access to intellectual property.
Details of Singapore
Singapore Dollar (“SGD”)
No exchange control in Singapore.
Type of Law
The most commonly used official languages are English and to a lesser extent, Chinese, Malay and Tamil which are also official languages.
The different races live together with mutual respect and in racial harmony. The people is well educated and hardworking. Singapore has a population of approximately 4 million people. More than 75% are Chinese with the remaining 25%, mainly Malays, Indians and others.
The People’s Action Party, its single dominant ruling party since its independence in 1965, rules Singapore. Singapore is one of the world’s most politically stable and corruption-free countries.
Following three quarters of subdued performance, activity in the domestic economy picked up strongly by 12.3% q-o-q saar in Q4 2016. The turnaround largely reflected robust expansions in the traderelated sectors, particularly in electronics and biomedical manufacturing. In addition, the modern services cluster recorded an improvement in performance, led by the financial sector, which saw buoyant activity in the sentiment-sensitive segments. However, domestic-oriented activities were weak. For the year as a whole, GDP grew by 2.0% in 2016, a pace broadly similar to the 1.9% registered in 2015. Nonetheless, the composition of growth had shifted. Modern services, which anchored the Singapore economy in 2015, saw a sharp slowdown in momentum in 2016, weighed down in part by lacklustre demand for financial intermediation services. In comparison, activity in the trade-related sectors recovered in 2016, as headwinds such as the expiration of drug patents, which had impacted pharmaceutical production the year before, dissipated. Semiconductor output also rebounded, as domestic producers were able to leverage on resilient demand for Chinese mid-tier smartphones and inventory-building activity across the global IT supply chain in the latter half of the year.
The manufacturing sector expanded by 39.8% q-o-q saar in Q4 2016, in its best sequential performance since Q1 2011. Gains were underpinned by a 31.4% q-o-q sa surge in pharmaceutical output, as well as a strengthening in the electronics cluster. Notably, growth of the semiconductor segment accelerated to 19.9% q-o-q sa, from 7.5% the quarter before, amid the cyclical upturn in the global IT industry. Concomitantly, the precision engineering cluster grew by 6.0%, supported by firm demand for semiconductor equipment, particularly from China, as the latter sought to insource more intermediate products.
The financial services sector saw a 36.5% q-o-q saar rebound in activity in Q4 2016, compared with a mild 0.7% expansion in the preceding quarter. The step-up in outturns largely reflected the performance-based fees earned and recognised at year-end in the fund management industry. Sentiment-sensitive activities such as security dealings and forex trading benefited from the rally in global financial markets, with turnover values of the local bourse and the forex market growing by 12.2% q-o-q and 3.4% q-o-q, respectively. Among the financial intermediation segments, domestic non-bank lending grew by 2.3% q-o-q in Q4, supported by a recovery in business lending to corporates in the trade-related segments. While offshore non-bank loans continued to contract, the pace of decline moderated compared to the preceding quarter, amid tentative signs of a recovery in trade financing.
Business services grew marginally by 0.3% q-o-q saar in Q4, following a 1.0% contraction in Q3. A recovery in corporate demand for headquarter functions and accounting services helped to offset the sustained weakness in the architectural & engineering services segment, which was impacted by the still-contracting marine & offshore engineering (M&OE) industry. Meanwhile, following a 3.6% q-o-q saar pullback in the preceding quarter, the information & communications sector also registered modest growth of 0.9% in Q4. Notably, telecommunications activity saw improved outturns on the back of healthy demand for mobile and broadband data, as well as digital home services.
For more information refer to MAS.
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