In this guide, we set out the key benefits of incorporating a Singapore offshore company, as well as setting out a checklist for offshore company incorporation.
What are the benefits of incorporating a Singapore offshore company?
There is a range of benefits to setting up a Singapore offshore company. We discuss these in turn.
International reputation
Singapore has an excellent international reputation as a place for investment and doing business: It is currently ranked first in the world for its business-friendly regulatory environment. When you incorporate in Singapore, business entities in other countries know that they are dealing with a credible business.
Tax benefits
The tax benefits of setting up an offshore company in Singapore are one of the principal reasons why businesses like to set up their business there: Singapore has low tax rates compared to other countries. This applies equally to personal income taxes, corporate income taxes (up to 17 percent), and goods and services tax (7 percent). In addition, Singapore does not have a capital gains tax or a dividend tax.
Singapore authorities tax income derived from business activity in Singapore, or any income sourced from overseas that is received in Singapore. Note, however, that certain foreign-sourced income is exempt from this.
The corporate income tax rate in Singapore is a flat rate of 17%, with a partial tax exemption for three years available for qualifying start-up companies.
A streamlined incorporation process
Given its business-friendly reputation, it is no surprise that the company incorporation process in Singapore is so straightforward. There are two key elements to the process: acquiring name approval and applying for Incorporation.
The streamlined process means that an offshore company can often be acquired in Singapore in as little as two days.
A sophisticated banking and finance industry
Singapore is one of the leading financial centers of the world. This means that Singapore offshore companies have a variety of banks, fintech, and payment platforms to provide them with services: It makes it easy to get multi-currency accounts, payment cards, and foreign exchange services. While many banks require that an individual be physically in Singapore to open the account, there are also business account options that do not require this.
A permissive environment for corporate governance
Singapore allows for foreign directors of companies. While at least one director must be based in Singapore, and meet citizenship, residency, and visa requirements, other directors may be based anywhere. To meet the local director requirement, it is common for international enterprises to appoint a professional director in Singapore for this purpose, known as a ‘nominee director’.
Note, a professional Singapore-based director is still a full legal director of the company and has all the powers and responsibilities of any other director.
Note also, that Singapore does not allow corporations to be directors (they must be natural persons).
A supportive environment for foreign ownership
In Singapore, foreign shareholders are permitted, and companies can have 100% foreign shareholding. In an exempt private company, the shareholders must be natural persons. In a private company limited by shares, shareholders may also be bodies corporate (for example, the corporate trustee of a foreign trust).
Checklist for setting up a Singapore offshore company
Action |
Description |
Acquire approval for the company name |
|
Establish initial share capital and shareholders |
|
Appoint directors |
|
Appoint the company secretary |
|
Nominate a registered address |
|
Gather incorporation documents |
|
Assess whether you need to register for GST |
|
Apply for Business Licenses |
|
Conclusion
Setting up an offshore company in Singapore has many benefits: It's a low-tax jurisdiction, with streamlined incorporation and compliance processes, and a relaxed approach to foreign ownership. However, in order to acquire the benefits of incorporating an offshore company in Singapore, it is essential that you follow the steps for incorporation and compliance, as set out above.