Formation of an Offshore Company in Singapore
A unique characteristic of an offshore company is that it is incorporated in another jurisdiction than its primary location of operations or the location where its main investors are residing. In simple terms, offshore stands for another jurisdiction from where your company is currently operating.
The incorporation of an offshore company comes with several advantages including tax benefits, plain reporting standards, easy setting up of the company, and simpler administration norms among others. Choosing a specific jurisdiction for the incorporation of your offshore company is a critical decision because it is going to directly affect your business prospects. Considering a Singapore offshore company is an ideal decision because it can help you incorporate an entity with many tax benefits and which can be run in a very stable economic and political climate.
The following information lists the advantages of incorporating your offshore company in Singapore along with the incorporation requirements.
Reasons for Incorporating a Singapore Offshore Company
There are many reasons for incorporating your Singapore offshore company. The most important ones include the following:
Lower Tax Burden
Tax is one of the main factors that must be considered when incorporating an offshore company. The progressive tax environment in Singapore gives it a unique edge over other jurisdictions. Singapore’s tax system features relatively lower personal income and corporate tax rates compared to other countries in the region. Moreover, the government of Singapore offers lots of tax relief measure and tax incentives. Additional features include regional single-tier tax system and a robust tax treaty network, and non-existence of dividend tax and capital gains tax.
Singapore has a territorial form of a tax system, the taxes apply to any income made by the company within the city state or from a foreign source received in Singapore. According to certain conditions, any income received in Singapore from foreign sources is tax-free, and foreign-sourced income that is not remitted into the country is free from being taxed in Singapore.
Singapore has a one-tier tax system. After the income gets taxed under corporate law, it is possible to distribute the dividends tax-free to the shareholders. The country has a corporate income tax rate of about 8.5 percent for profits of not more than SGD 300,000 and 17 percent for profits beyond SGD 300,000. In addition, a newly incorporated company enjoys 0 percent tax rate against the initial taxable income of SGD 100,000 for each of the first 3 years of business. This exemption is provided to companies that have not more than 20 shareholders out of which a minimum of 1 must be an individual shareholder holding at least 10 percent of the shares.
Building an Image of Credibility
Despite all the above-mentioned tax benefits, Singapore is not a full-fledged tax-haven. Therefore, establishing an offshore company in Singapore helps present an image of credibility for your organization. Your offshore company in Singapore will be a serious business in the eyes of stakeholders including your bankers, employees, clients and other professionals.
Relaxed Foreign Ownership Laws
The foreign ownership laws are highly liberal in Singapore. A Singapore offshore company can engage in almost any kind of legitimate business activity. It is permissible to have a 100 percent foreign shareholding in any sector, and shareholders can be either corporate entities or individuals. Foreigners seeking to register an offshore company in Singapore are not required to obtain prior approval from the Singapore government.
Stable Political Environment
Singapore ranks No.1 in The Political and Economic Risk Consultancy’s list of Asian countries for being the most politically stable country and the least bureaucratic country in Asia. The government is known for its business-supportive policies and high level of integrity. Contrary to the environment in most Asian countries, the Singapore government is free from corruption and maintains a highly transparent business climate. All this is supported by an effective and sound legal system. Non-complicated and straightforward laws have been laid down with regard to the protection of Intellectual Property, commerce, labor and other aspects of business operations. As a result, the level of risk involved with the incorporation and operation of an offshore company in Singapore is very minimal.
Advanced Banking Services
Today, Singapore ranks as one of the top financial hubs in the Asia Pacific region. As a Singapore offshore company, it will be convenient for it to choose an excellent local or foreign bank to open your corporate account. Singapore banks provide an extensive range of useful features including online banking, multi-currency accounts, international credit cards, trade financing, and the facility to transfer funds across international borders among other benefits. Most Singapore banks will require you to be physically present for the opening of the account, but some are ready to exempt you on certain conditions. The duration taken for the opening of an account ranges from 2 to 15 days based on the internal processes of the bank.
Incorporation Checklist for Incorporating a Singapore Offshore Company
The process of incorporation and the requisites will involve the following factors.
Approval of Company Name:
- Before the incorporation of the Singapore offshore company, the proposed company name must be approved by the Company Registrar.
- We provide company name reservation as part of offshore company incorporation service.
- At least one director must be a local resident – a Singapore citizen, Singapore permanent resident, or a Singapore work pass holder.
- You can appoint any number of additional local or foreign directors.
- Each director should be an individual above 18 years of age.
- In case you cannot appoint a local director, we can provide our nominee director service.
- Must have at least 1 local or foreign shareholder.
- Not more than 50 shareholders are allowed.
- A director can also be a shareholder of the offshore company.
- A corporate entity is allowed to be a shareholder.
- Must have a qualified company secretary who is a local resident.
- A company secretary cannot be a corporate entity.
- A company director or shareholder may take on the position of company secretary.
- We provide corporate secretary service for all the Singapore offshore companies incorporated by us.
Official Registered Address:
- A Singapore offshore company needs to have a Singapore registered address, which can even be residential in nature.
- A P.O. Box address is not permitted.
- We offer registered office address service to all the offshore companies incorporated through us.
Appointing Incorporation Agent:
- Must appoint a professional service like our company for registering your Singapore offshore company.
- A foreign individual or entity cannot self-register a Singapore offshore company.
Required Documents for Incorporation:
The following are the required documents for those who are interested in incorporation a Singapore offshore company:
- Photocopies of passport of proposed directors and shareholders.
- Documentary proof of all the proposed directors and shareholders.
- If the shareholder is not an individual, complete information about the corporate entity.
Process of Incorporation:
- After Richmond gets all the required documents, we will register the company with the Company Registrar.
- Once your offshore company is incorporated, we will prepare all the incorporation kit comprising of items like company profile, rubber stamp, seal, certificate of incorporation and share certificates.
Opening Corporate Bank Account:
- We can provide assistance in opening your corporate bank account for your Singapore offshore company.
- It may be required for your Singapore offshore company to register for the Goods and Services Tax (GST). Check the guide on Singapore GST registration for more information.
- You can get our services for GST registration and complying with local law.
Getting Business Licences or Permits:
- Before you start your Singapore business operations, it may be required to get a business licence which is determined by your business activities.
- A licence is required only for specific types of business operations. Business licenses and permits can be obtained from the relevant government authorities after the incorporation of the company and before starting any business operations.
- If you require, we can provide support in applying for your business licence(s).
Comply with the Rules and Regulations:
- Once your Singapore offshore company is incorporated, you can get support from us with regard to regular compliance and filing such as tax filing and accounts.
Relocate to Singapore:
- It is not essential to relocate to Singapore for operating your offshore company. You can visit Singapore through a visitor visa as and when the need arises.
- Relocation is allowed for the operation of your offshore company by obtaining either an Entrepreneur Pass or Employment Pass.
- You can get help from us with regard to the application of your work pass.