In 2022, as reported by the Accounting and Corporate Regulatory Authority (ACRA), Singapore experienced a monthly influx of 3,000 to 4,000 newly established businesses, both domestic and international. Singapore stands out as one of the most accessible countries globally for launching a company. The setup procedure is uncomplicated, with minimal bureaucratic obstacles, rendering it an appealing choice for foreign entrepreneurs. Notably, the entire incorporation process can be executed online, adding to its convenience and attractiveness.
Foreign Ownership Rules in Singapore
Similar to a local in Singapore, an individual from another country can establish a company and hold 100% of its shares. The process of incorporation entails the submission of specific documents to the Accounting and Corporate Regulatory Authority (ACRA). These documents must adhere to stringent criteria for approval. Beyond precise paperwork, companies must also adhere to statutory regulations, including those concerning taxes, labor laws, and intellectual property.
Essential Criteria for Non-Citizens to Establish a New Business in Singapore
Commencing Your Journey
To establish a company in Singapore as a non-resident or foreigner, it is a requirement to designate a local director and contract a trustworthy filing agent for the registration process. Self-registration of your company is not permitted. Reach out to experts and consultants that are registered filing agent and can efficiently oversee this procedure on your behalf.
Essential Steps and Considerations
Choose the right business structure for your company
A foreign individual has the option to establish the following types of businesses in Singapore:
- A Private Limited Company
- A Sole Proprietorship
- A Limited Liability Partnership
Private Limited Company (Pte Ltd)
A private limited company is a popular choice among businesses.
- It can have anywhere from 1 to 50 shareholders
- It must have at least one local director who is a resident of Singapore.
- This type of company possesses a distinct legal identity, and it holds the rights of a legal entity.
- It has perpetual existence, ensuring its longevity.
- Pte Ltd also offers limited liability to its shareholders, restricting their financial exposure to the amount they’ve invested in its shares.
- The corporate tax rate for such companies ranges from 0% to 17%.
Banks and financial institutions typically view Private Limited Companies as more reliable than sole proprietorships or partnerships, making it easier for them to secure funding for business expansion.
- We suggest a sole proprietorship to our clients only when their business venture carries minimal risk. This business structure is suitable for low-risk scenarios, as it represents an unincorporated business entity. However, it’s important to note that a sole proprietorship lacks a distinct legal identity separate from its owner, which means the owner bears unlimited liability for the company’s debts and losses.
- In terms of taxation, the income of a sole proprietorship is treated as the owner’s income, subject to income tax rates ranging from 0% to 22%.
Limited Liability Partnership (LLP)
Within the framework of Singapore Company Law, a partnership can be officially established by two or more individuals and/or corporations.
- The distinctive feature of an LLP lies in its separate legal identity, setting it apart from its owners.
- The extent of liability for the owners is contingent upon their actions, oversights, or inactions that result in losses for the LLP.
- Partners are obligated to remit personal income tax on their earnings from the LLP, with rates ranging from 0% to 22%.
Why Choose a Private Limited Company?
Among these options, a Private Limited Company is considered the most reputable choice not only by financial institutions and other businesses but also by regulatory authorities, despite the additional filing requirements. This credibility makes it a popular selection among entrepreneurs and business entities.
Why you’ll need a corporate service specialist
We understand the compliance needs of your businesses.
With the proper help from experts they can facilitate a smooth and efficient business launch. Companies seeking to establish a presence in Singapore generally opt for one of the following structures:
A subsidiary company takes the form of a limited liability company. The parent company can fully own its shares. Importantly, the subsidiary operates as a distinct entity from its parent, limiting the parent company’s liability to its share capital. The parent company’s assets are safeguarded from covering the debts and losses of the subsidiary. Once a subsidiary company is formed, the parent company must assign one of its employees to oversee operations in Singapore, necessitating an Employment Pass for this individual.
Many foreign small and medium-sized enterprises (SMEs) prefer to register a branch office in Singapore. A branch office holds legal status post-registration, serving as an extension of its parent company. The parent company assumes responsibility for all debts and liabilities incurred by its branch office. Additionally, a branch office is required to employ at least one Singaporean resident.
Foreign companies can establish a representative office in Singapore, primarily for conducting market research and assessing the business potential of the Singaporean market. These offices carry out feasibility studies but lack a distinct legal identity separate from their foreign parent company. The appointment of up to five employees is permitted, but profit-generating activities are prohibited. The parent company must be an established entity with a track record of over three years and an annual turnover exceeding S$250,000. If the parent company dissolves, the representative office is deregistered.
Whether you intend to expand with a subsidiary office or establish a representative office as a testing ground, it is advisable to engage local corporate services to streamline the registration process. These services assist with matters such as office space, economic grants, manpower, and compliance requirements, allowing you to focus on your core business activities, minimizing the time and effort required for setup.
Incorporate with ease
The process of incorporating a company can often appear bewildering and complex. However, with the right guidance from experts, establishing a business in Singapore that aligns with your specific requirements becomes a manageable endeavour.
If you encounter any challenges and seek a reliable partner to oversee your incorporation process, Experts & Consultants is here to assist you.