How to Setup Offshore Company in Singapore
Offshore company in Singapore is a process in which a company transfers its operations to another country. The idea of offshoring is to lower operating costs and increase efficiency. The question is, why Singapore? Singapore is one of the best places to incorporate an offshore business. It is the ideal regional hub for multinational corporations and entrepreneurs looking to enter the significant Southeast Asian market because of its strategic location, highly skilled workforce, and business-friendly environment.
When Should You Consider Set up an Offshore Company in Singapore?
While some believe that offshore company in Singapore's processes to a third party is a sign of struggle, that's certainly not the case. Offshoring is a sign of strength and a sound business strategy more than anything else. Below are some instances when offshoring is a sound strategy for your company.
Starting an offshore company in Singapore is a good option for a company that requires additional expertise. The global human resources available through this strategy is diverse, skilled, and knowledgeable. Offshoring helps you tap into this massive pool. An offshoring company can provide you with highly qualified and experienced human resources. In the post-pandemic era, several companies have turned offshore to ensure the continuity and stability of their core operations.
This is a good option for a company expanding internationally and trying to break into new markets. If your business engages in investment holding, the primary goal of keeping assets on hand is to generate income or invest in them, such as real estate. Singapore has a sizable respite from capital gains taxes and stamp duty.
Why Set up an Offshore Company in Singapore?
Here are the top four benefits of setting up an offshore company in Singapore:
Single-Tier Tax Policy
Its single-tier tax policy has become famous for investors who want to set up their businesses in Southeast Asia and take advantage of lower tax rates. The simplified tax system in Singapore is easy to understand and has low corporate and personal tax rates. It also has a comprehensive set of incentives to encourage entrepreneurship.
- Dividends paid by a Singapore corporation will not tax to the recipients.
- Foreign-sourced income that meets certain qualifying conditions will be exempted from Singapore tax.
- Capital gains will be exempted from taxation.
- The corporate tax rate is 8.5% for profits up to S$300,000 and a flat 17% above S$300,000.
- A newly incorporated company has a 0% tax rate on the first S$100,000 taxable income for the first three tax filing years.
- There is no need for annual statutory audits for offshore businesses with a turnover of S$5 million or less.
Incorporating an offshore company in Singapore takes just two days to a week. If you are unsure how to do it, you can always reach out to a third-party service provider like Sprout to help you with the whole process. Registration of a company requires only two straightforward steps:
- Approval of the company name
- Submission of incorporation documents (which includes business and personal information)
Furthermore, Singapore lets foreign companies own 100% of its businesses. The Singapore government believes this will allow for a more dynamic and innovative economy, ultimately benefiting Singapore's citizens and foreign investors.
The Policy of Liberal Foreign Ownership
Singapore has a broad and open foreign ownership policy. If you wish to establish an offshore company in Singapore, there are no restrictions on the types of business activity allowed. In all industries, foreign ownership will permit to reach 100%. Shareholders might be either natural persons or legal entities.
Robust Banking System
Offshore corporations have a superabundance of banking options in Singapore to choose from. The country's affluent banking system made Singapore one of the most hospitable countries in Asia. All major banks in the country offer a wide range of financial services, including offshore branches, compliance, and global support.
Singapore facilitates the growth and success of companies by reducing bureaucratic hurdles and fostering an environment of openness and trust. The government is working hard to ensure that the country remains attractive to investors and that they can access a range of services without worrying about red tape or bureaucracy.
Singapore also places a premium on protecting intellectual property, cultivating a skilled workforce, and supporting entrepreneurial endeavors. Singapore is one of the world's most competitive and innovative hubs for entrepreneurship. Its citizens enjoy a stable government, low taxes, and a developed infrastructure that supports business growth.
Guide to Setup an Offshore Company in Singapore
Setting up an offshore company in Singapore is more accessible than most other countries. Here is a brief walkthrough of the steps involved:
1. Finalise the Basic Documentations
When you set up an offshore company in Singapore, one of the first things you will need to do is register with the government. The process is not complicated, and you must research beforehand, so there are no surprises later.
- Determine your offshoring company's business entity: Is it a sole proprietorship, a limited liability partnership, or a private limited company? The most common choice is to form a private limited company, but you can choose another business entity if it better fits your needs.
- Register your company name: Make sure there isn't another entity in Singapore with the same name if you select your parent company's name. You can do that on Singapore's Accounting and Corporate Regulatory Authority (ACRA) website. Once you've chosen a name, you must visit the Company Registrar to have it officially approved. Once approved, they will issue a certificate of incorporation in your name.
2. Register Your Company With ACRA
Foreigners cannot register a company in Singapore by themselves. You'll need to hire an agent or firm for this step. Choose someone legitimate and experienced in company registration, such as Sprout. You will need to prepare copies of your ID, director and shareholder passport, and proof of address. Once ACRA approves this, the government will officially recognize your business and allow it to operate.
3. Register for GST, CPF, and SDL
There are a few steps to take after setting up the company with ACRA. In most cases, your business will need to register with various authorities, such as:
- Registering for the Goods and Services Tax (GST) in Singapore;
- Application for necessary business licenses based on the performing activity;
- Establishing a business bank account;
- Participation in the Central Provident Fund (CPF) registration;
- The Skills Development Levy (SDL).
In Singapore, you need to register for the CPF and SDL to pay taxes related to hiring workers. You can also register CPF online, while SDL payments have multiple channels. For GST registration, only if your company earned S$1 million in the previous year or planned to do so in the coming year. You can register for GST on a prospective basis even if you haven't started making money yet.
4. Adhere to ACRA Rules After Incorporation
ACRA (the Accounting and Corporate Regulatory Authority) regulates Singapore's businesses, accountants, and corporate service providers. All Singapore companies must file with ACRA annually, as stated by the Singapore Companies Act. To comply with ACRA regulations, an offshore company in Singapore must perform continuous administrative work annually. This administrative work includes, but is not limited to:
- The Annual General Meeting (AGM) is a must.
- The first AGM is due 18 months after incorporation.
- Listed companies (on or after 31 August) must have financial statements 4 months after your company’s financial year end and file annual return within 5 months after your company’s financial year end.
- Listed companies (before 31 August), the financial statement must be made up to a date not more than 4 months before the AGM.
- Non-listed companies (on or after 31 August) must file their financial statements not more than 6 months after your company’s financial year end and file the annual return within 7 months after your company’s financial year end.
- Non-listed companies (before 31 August) must be made up to a date not more than 6 months before the AGM
- A company's annual returns must be submitted to the ACRA within 30 days after its AGM, along with other documents for verification. These documents include the company's full name and registration number, information on directors, company secretaries, auditors, and shareholders, principal activities, and registered charges.
- These documents must submit to the IRAS and the ACRA every year.
Non-compliance with the above requirements will result in court prosecution. If a company fails to comply with ACRA, its directors are responsible, and the company typically faces high penalties.
Sprout With Us
With all these advantages that offshoring provides, why wait any longer? Time spent dallying is wasted that could have been earned, especially in Singapore, a lucrative nation. Set up your offshore company in Singapore now! Connect with Sprout Asia if you are still unsure whether to move forward or believe there are too many tasks to complete and require assistance.