Setting up an Offshore Company in Singapore

Singapore ranks as one of the world’s most competitive and well-connected economies. It is strategically located along key trade, shipping, and aviation routes. Additionally, the country has established a wide array of global trade agreements, enhancing its position as a major international business hub.

Given these advantages, Singapore is considered one of the prime locations for offshore company incorporation.
This guide provides a step-by-step process for incorporating a Singapore offshore company, detailing the required documents for incorporation, post-incorporation requirements, and key tax considerations to be aware of.

An offshore company in Singapore is a business entity established in Singapore but conducts its operations from a location outside Singapore. This structure enables the company to benefit from Singapore's territorial tax system, where profits earned outside of Singapore are exempt from taxation in Singapore.

To qualify for this tax exemption, the company must meet specific conditions, primarily:

• It should not conduct any business activities in Singapore during the financial year
• Its management and contract-executing personnel must be based outside of Singapore
• Its income and profits must not be earned within or remitted to Singapore.

There are a range of benefits to setting up a Singapore offshore company. We discuss these in turn. 

Singapore has an excellent international reputation as a place for investment and doing business: It is currently ranked second in the world for its business-friendly regulatory environment. 

Additionally, when you incorporate in Singapore, business entities in other countries know that they are dealing with a credible business. 

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, notably low individual income taxes, corporate income taxes of 17%, a partial tax exemption for three years available for qualifying start-ups, and a 7% goods and services tax.

In addition, Singapore does not have a capital gains tax, and dividend tax is typically exempt. Singapore authorities tax income derived from business activity in Singapore or any income sourced from overseas that is received in Singapore. However, certain foreign-sourced income is exempt.

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 online.

The streamlined process means that an offshore company can often be acquired in Singapore in as little as two days. 

Singapore is one of the leading financial centres of the world. This means that Singapore has a variety of banks, fintech, and payment platforms that offer business bank accounts, corporate bank accounts, 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. 

However, should the company maintain a Singaporean bank account and receive any income, revenues, or profits into this account, it will be subject to a corporate tax.

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 known as a ‘nominee director.’ 
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.

Additionally, Singaporean regulations require that directors must be natural persons; corporations cannot serve as directors.

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 corporate bodies (for example, the corporate trustee of a foreign trust).

If you're living outside of Singapore and want to set up an offshore Singapore company, you can do it online. However, here's a quick overview of what you'll need:

• SingPass ID: To access Singapore's online business registration portal, you'll require a SingPass ID to log in. Singpass is a digital identity for Singapore residents and pass holders. If you're a foreigner without a Singpass, you may require a registered filing agent, such as a law firm, accounting firm, or company incorporation service provider, to facilitate the company incorporation process.
• A registered address in Singapore: An offshore company in Singapore must designate a physical office address as its registered address to receive legal and government correspondence. P.O. boxes are not acceptable. Companies can either rent an office space or use a service provider to fulfil this requirement.
• At least one local resident director: According to the Singapore Companies Act, a business in Singapore must have at least one director, authorised representative, general partner, or manager who is a local resident. In cases where a business does not have a local partner to fulfil this requirement, they often appoint a nominee director to the board. This nominee director represents another person or entity, ensuring compliance with legal and regulatory obligations.

Among the various types of business entities in Singapore, the private limited local company is the preferred choice for setting up an offshore company due to its ability to safeguard limited liability, enhance corporate image, and access tax benefits.

In this section, we will outline the detailed process of setting up a Singapore offshore company through the establishment of a private limited local company.

The first step is to verify the availability of your chosen business name through the Accounting and Corporate Regulatory Authority (ACRA) 's Business Filing Portal using this Search ACRA Register page.

Once you have confirmed a unique name, reserve it with the ACRA via BizFile. The application costs SGD 15. Approved names are then reserved for 120 days. Within this timeframe, the company must be established; otherwise, the reservation expires, and the name becomes open for registration by any party.

Business names are approved instantly unless there are complications requiring referral to Referral Authorities for approval. For instance, if your proposed business name includes the words "law," it may be referred to the Legal Service Regulatory Authority. In such cases, processing times may range from 14 days to 2 months.

The primary and secondary activities of your business should be specified by selecting the most appropriate Singapore Standard Industrial Classification (SSIC) code that aligns with your intended business activity. This information is also necessary as part of the name application process.

Depending on your stated business activities in this step, your company may need to obtain business licenses and permits from the Singapore government after registration and before commencing business operations.

The subsequent step involves establishing shareholders and share capital. Here are the requirements: 

• At least one shareholder, who may be local or foreign
• Minimum paid-up capital and share capital of SGD 1
• For exempt private companies: 1 to 20 shareholders
• For private companies limited by shares: up to 50 shareholders

Corporate shareholders are not permitted in exempt private companies, but they are allowed in private companies limited by shares.

Next, companies must appoint at least one director who is a Singapore citizen, permanent resident, EntrePass holder, or an employment pass holder.

There is no maximum limit to the number of directors.

All directors must be natural persons, over the age of 18 years, of full legal capacity, and not disqualified from being a director

Corporate bodies cannot serve as directors of Singapore companies. However, Singapore companies can appoint professional directors, commonly known as 'nominee directors'.

Singapore companies must appoint a company secretary within six months of incorporation. 

We recommend selecting a company secretary before incorporation, as the application will require specifics about the directors and/or company secretary. Having these details prepared in advance will help ensure a smoother process.

The company secretary 

• Must be a natural person based in Singapore
• Must be appropriately qualified under the Singapore Companies Act. 
• Cannot be the same person as the company's sole shareholder and director.

It's common for professional company secretary firms in Singapore to appoint one of their employees as a company secretary for an offshore company.

A Singapore offshore company must have a registered address in Singapore to receive correspondence and notifications. 

This address must be located in Singapore, although it doesn't necessarily have to be the company's operational base. Additionally, it must be accessible to the public for a minimum of three hours every weekday during regular business hours.

The registered address must be a physical address — PO boxes are not permitted.

Business owners and officers are required to submit their residential addresses, which become publicly available upon purchase of business entity information. To ensure privacy, an Alternate Address can be obtained for a fee of SGD 40, replacing the residential address on public records. However, it is imperative to still submit the residential address to ACRA and guarantee accessibility at the Alternate Address.

In order to incorporate an offshore company in Singapore, you will need the following: 

Once you've gathered all the information, you can submit documents and an application online via the Bizfile+ website. In this step, you will need Singpass credentials.

If approved, BizFile+ will email appointed officers (directors, shareholders, or company secretary) to endorse within 60 days. Otherwise, the application lapses. 

Foreigners without Singpass will have to find a registered filing agent, such as an accounting firm or corporate secretarial firm, to handle the submission of company name and incorporation applications on their behalf. 
Company incorporation services frequently provide comprehensive assistance, managing everything from document preparation to registration. You can verify the qualifications of a registered filing agent using the FA/QI Enquiry.

Incorporating a company outside of Singapore does not automatically grant tax exemption benefits typically associated with offshore status. To qualify for such benefits, it's imperative to maintain accurate accounting records and comply with relevant regulatory requirements.

Singapore companies are subject to various post-registration requirements, including the following:

• Appoint an Auditor - Companies must appoint an auditor within three months of incorporation. Your business may qualify for audit exemption if, in the last two financial years, your total annual revenue is below SGD 10 million, total assets do not exceed SGD 10 million, or you employ fewer than 50 people.
• Assess whether a GST is needed - Depending on your business activities, registering for the Goods and Services Tax (GST) may be required if your projected or actual annual revenue exceeds SGD 1 million. 

However, some businesses may qualify for exemption from GST registration if they solely provide specific international services and export goods. Verification of the client's belonging status may be necessary to confirm eligibility for these exemptions.

In addition to post-registration requirements, you must fulfil other ongoing compliance obligations each year, such as holding an annual general meeting (AGM) and submitting your annual return within seven months after the financial year ends. 

Setting up a Singapore offshore company using incorporation services costs between SGD 2,350 and SGD 3,500, depending on the scope of services offered. 

This includes a government registration fee of SGD 315 for local companies and SGD 115-175 for other entities, as well as the purchase of a certificate of incorporation at SGD 50.

Additionally, there are varying fees for a registered address, qualified company secretary, and nominee director (if applicable). For example, outsourcing a company secretary can range from SGD 300 for basic needs to SGD 1,500 for full compliance. The cost will depend on the complexity of your structure, so it’s advisable to discuss with the service provider to get an accurate quote. 

Nominee director fees in Singapore can also be costly, ranging from SGD 1,000 to SGD 5,000 per year, because a nominee director undertakes significant risk. If a company breaks a law, the nominee director may be held liable.

It takes 2-3 days for a company to be incorporated in Singapore.

However, the actual timeframe can vary depending on several factors, including the complexity of the company structure and the completeness of documentation. For example, certain words in the proposed company name, such as 'law' or 'school', may trigger referrals to relevant government agencies, extending processing times up to 2 months. 

Additionally, to enjoy tax benefits like the typical offshore entity, additional steps are needed. These include proving that the company's activities occur outside Singapore and maintaining proper accounting records. So, while setting up the company is quick, becoming offshore depends on meeting these conditions.

There are several crucial tax considerations that Singapore offshore company owners must understand to efficiently handle their tax responsibilities and optimise financial outcomes. 

The primary ones include foreign-source income, double tax avoidance agreements, and foreign tax credits. 

Foreign income earned outside Singapore is usually taxable when brought into the country. If the income is from a business in Singapore, it's taxed regardless of remittance. Often, foreign income faces double taxation unless exempted or reduced under Double Taxation Agreements.

However, Singapore tax-resident companies can get tax exemption on certain foreign-sourced income. This includes foreign-sourced dividends, foreign branch profits, and foreign-sourced service income not traded or carried on in  Singapore.

Please consult a tax professional to learn about your company's specific case. Qualifications for tax exemption may vary depending on individual circumstances.

A double tax avoidance agreement (DTAA) is a formal agreement between two countries meant to prevent or reduce double taxation when income crosses borders. Countries have these agreements in place to encourage international trade and business.

Understanding the double tax avoidance agreement between your home country and Singapore, including covered income types, tax rates, and exemptions, helps you leverage DTAA benefits to minimise your tax burden. Moreover, ensure compliance with tax regulations in both countries and stay updated on any changes.
Singapore has double tax avoidance agreements and similar agreements in place with approximately 100 jurisdictions. To learn more, check this list of DTAs, limited DTAs and EOI arrangements provided by the Inland Revenue Authority of Singapore (IRAS).

Foreign income earned by Singapore companies may face double taxation, first in the foreign jurisdiction and second when brought into Singapore. To mitigate this, companies can claim foreign tax credit for taxes paid abroad against Singaporean taxes on the same income. There are two types of foreign tax credits available:

1. Double Tax Relief (DTR): Provided under Avoidance of Double Taxation Agreements (DTAs) to reduce double taxation.
2. Unilateral Tax Credit (UTC): Granted on all foreign-sourced income received in Singapore by tax residents from jurisdictions without DTAs. 

You can find eligibility conditions in this foreign tax credit guide.

Preparing all your documents, sourcing a nominee, securing a registered address, and appointing a company secretary can be quite time-consuming. 

If you're seeking a streamlined company incorporation service, consider Statrys. With a single fixed price, we provide everything necessary to kickstart your Singapore company. 

Here's what our service includes:

Incorporation Service

• Filing for Incorporation with the Accounting and Corporate Regulatory Authority (ACRA)
• Issuance of Certificate of Incorporation
• Business Profile
• Company Chop
• Company's Constitution
• Preparation of pre-incorporation paperwork
• Preparation of post-incorporation paperwork
• Arrangement for a Local Nominee Director (1 year)

Nominee Director

A Singaporean Director appointed to meet regulatory obligations (1 year) 

Company Secretary Services

• Provision of Company Secretarial services (1 year)
• Annual Return Filing with ACRA for each calendar year
• Conducting AGM 6 months after the end of each Financial Year End (FYE) and filing the Annual Return 1 month after AGM
• Maintenance of statutory records
• Preparation of Annual General Meeting (AGM) documents
• Accessible online 24/7, all statutory records and compliance documents in one place

Registered Address in Singapore

• Registered address (1 year)
• Scanning and forwarding of mail