Setting up an Offshore Company in Singapore

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An offshore company is formed when an enterprise incorporates in a jurisdiction distinct from their main place of business, or where their main investors are based.

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 is 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, nor 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

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Description

Acquire approval for the company name

  • Company names require prior approval from the Accounting and Corporate Regulatory Authority (ACRA)
  • Note, approval for a company name does not create a trademark, or other intellectual property protection, in that name in Singapore.

Establish initial share capital and shareholders

  • There must be at least one shareholder, who may be either local or foreign
  • The minimum share capital is S$1 in value
  • In an exempt private company in Singapore, there may be between 1 and 20 shareholders. And in a private company limited by shares, there can be up to 50 shareholders. For companies with more than 50 shareholders, incorporation as a public limited company is required.
  • Corporate shareholders are not permitted in an exempt private company, but they are permitted in private companies limited by shares. 

Appoint directors

  • Companies require at least one director, one of whom must be locally resident in Singapore, as well as a Singapore citizen,  permanent resident, EntrePass holder, or an employment pass-holder
  • There is no maximum 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
  • Bodies corporate cannot themselves be directors of Singapore companies. However, Singapore companies can appoint professional directors in Singapore, commonly known as ‘nominee directors’. 

Appoint the company secretary

  • Singapore companies must appoint a company secretary within six months of incorporation 
  • The company secretary must be a natural person based in Singapore 
  • The company secretary must be appropriately qualified under the Singapore Companies Act, and may not be the same person as a company's sole shareholder and director
  • It is common for professional company secretary firms in Singapore to appoint one of their employees as a company secretary for an offshore company. 

Nominate a registered address

  • A Singapore offshore company must have a registered address in Singapore. Note, this must be a physical address — PO boxes are not permitted.

Gather incorporation documents

  • In order to incorporate an offshore company in Singapore you will need the following: 
    • A company constitution. This document sets out the basic rules of the company and the powers and responsibilities of shareholders and directors
    • Identification documents for proposed shareholders and directors
    • Proof of residential address of proposed shareholders and directors
    • Consent to act’ forms for directors and the company secretary 
    • For foreign corporate shareholders, incorporation documents, and a description of ownership structures.

Assess whether you need to register for GST

  • Your offshore Singapore company may need to register for goods and services tax (GST)
  • This is an indirect tax that must be remitted to the tax authorities at regular intervals
  • The current GST rate is 7%
  • Generally speaking, companies with projected revenue of 1 million or more must register for GST. 

Apply for Business Licenses 

  • Some businesses in Singapore are regulated and must apply for separate licenses. For example, a financial services license is required in order to engage in financial services.

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.

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