FINANCIAL HUBS

Singapore

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Singapore

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Singapore is one of the leading hubs for international business and trade. Singapore, with its mature economy and established financial market, is also a fantastic place for overseas businesses to establish subsidiaries and holding companies.

Singapore is a top logistics hub and is also home to one of the busiest ports in the world. Singapore also has the world’s highest percentage of millionaire households. One of the predominant economic sectors is refining and exporting imported goods, based on industries such as electronic, chemicals, petroleum refining, biomedical sciences and mechanical engineering. Singapore will continue to be the one of the best global locations for setting up businesses.

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Types of Singapore entity

There are several options available to overseas companies seeking to create a presence in Singapore. The type of entity that is ultimately chosen will depend upon a number of factors including, for example:

the expected nature and scale of the business activities;
the levels of risk anticipated in the initial stages;
the intended duration of the business activities;
accounting and taxation considerations;
Singapore statutory compliance and reporting obligations; and
commercial considerations

The most commonly encountered corporate structure for overseas companies looking to enter the Singapore market is a Company.

For some types of business, an alternative corporate structure, such as a Limited Liability Partnership (LLP) or a Partnership, may be more appropriate.

Company: A private limited company is a separate legal entity. The main benefit of this is that the members of a company will not be held personally liable for the debts or losses of a company.

Limited Liability Partnership (LLP): The key differences between an LLP and the other forms of partnership lie in its legal status – it is considered to be a separate legal entity from its partners; and can own property in the LLP’s name, which is not possible for the other forms of partnership..

Partnership: Largely similar to a sole proprietorship in terms of structure, liability, and taxes, the most significant difference is that a partnership can comprise of two or more partners, subject to a maximum cap of twenty individual partners. Once a partnership exceeds this cap, it is required to incorporate as a company under the Companies Act.

Singapore taxation

Which taxes should you be aware of, what rates should you pay and what are your obligations?

Corporate Income Tax: Singapore’s headline corporate income tax rate is a flat 17% on chargeable income. Since 2003, Singapore has operated a single‑tier corporate income tax system, meaning there is no double taxation of corporate profits when they are distributed. Tax paid by a company on its chargeable income is the final tax, and dividends paid by a Singapore‑resident company to its shareholders are exempt from further taxation in their hands. There is no tax on capital gains in Singapore.

Personal Income Tax: In order to determine an individual’s Singapore income tax liability, you must first determine the person’s tax residency status and chargeable income, and then apply the progressive resident tax rates where applicable. Singapore taxes resident individuals at progressive rates starting at 0%, with marginal rates rising through the bands and reaching 23% for chargeable income between SGD 500,000 and SGD 1,000,000 and 24% for chargeable income above SGD 1,000,000. There is no capital gains tax or inheritance/estate tax in Singapore, but tax rules differ depending on whether an individual is tax resident or non‑resident.

Social Security: Singapore does not have a traditional social security tax; instead, employers and employees contribute to the Central Provident Fund (CPF). For employees aged 55 years and below, the standard CPF contribution rates are 17% of ordinary monthly wages from the employer and 20% from the employee, giving a total of 37%, applied up to the prevailing CPF monthly salary ceiling. Different contribution rates apply for employees above age 55 and for lower‑wage employees.

Goods & Services Tax (GST)

It’s a consumption tax on goods and services in Singapore.

What is the GST rate in Singapore: The Goods & Services Tax (GST) rate is currently 9%. The GST Act is modelled off the UK VAT legislation and New Zealand GST legislation.

Who needs to pay GST: GST is a self-assessed tax and businesses are required to continually assess the need to be registered for GST. GST registration falls into two categories: compulsory and voluntary. Compulsory registration applies when your business turnover exceeds or is expected to exceed SGD 1 million over the past or next 12 months, respectively (unchanged); voluntary registration is available below this threshold for businesses making supplies subject to GST.

Further information: You should seek expert advice to make sure that you are paying the correct rate of GST and if your supplies will be treated as taxable supplies of goods or services. Furthermore, penalties can be levied for not registering at the correct time, for claiming GST incorrectly or not accounting for GST correctly on sales.

Setting up the office

The “perfect” office is different for everyone. A start-up might benefit from being in a collaborative co-working environment, whereas a well-established brand may feel more at home in their own space. The good news is, with plenty of flexible workspace in Singapore and counting, there’s a match out there for every business.

Which office type should I choose?

All flexible workspaces have one thing in common: licence agreements. Unlike a lease, a licence agreement allows you to rent an office for shorter periods of time and there’s room for negotiation. Also, monthly all-inclusive billing makes it easier to keep track of cash flow.

Co-working: If you’re a solopreneur or manage a small team, you might decide to rent desks in a co-working space. Many run events for members, enabling you to network and grow.

Private office: If you want your own space, you can rent a private office in a flexible workspace. Shared amenities mean you’ll still pay a competitive price and get to meet other businesses.

Managed office: Designed with medium to large businesses in mind, a managed solution provides a self-contained, customisable workspace solution on flexible contractual terms.

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