Singapore has established itself as one of the most sought-after business destinations in the World. The island nation has managed to retain its reputation for being ‘Best Place for Doing Business’ according to World Bank report for last ten consecutive years. Due to this reputation, Singapore has been witnessing a massive influx of global entrepreneurs to its soil every year. What drives the entrepreneurs to visit and work here is company incorporation Singapore.
It is evident that local, as well as foreigners, do research and study various aspects and prospects of Singapore business incorporation well in advance before taking the final plunge. Still this blog excerpt is trying to highlight a few advantages and challenges of Singapore company incorporation which will help them to run a viable business in the long-term.
Advantages of Singapore Company Incorporation:
Easy and Simple Singapore Registration Process
Low Corporate Income Tax
Availability of Series of Tax Benefits for Resident Business
Protective IP (Intellectual Property) Law
Skilled Manpower Resources
High Standard of Corporate Governance
Access to Government’s Funding and Assistance Schemes
Let us dive a little deeper into the main advantages of company incorporation Singapore.
Singapore Company Registration:
Entrepreneur wishing to set up a company must register online via BizFile+ portal of ACRA (Accounting & Corporate Regulatory Authority). Company registration is done after the proposed name gets approved by ACRA. Name search and application filing for incorporation; all these activities can be completed in BizFile+ portal itself. It takes 1 to 3 days to get the company registered if your application does not require review by the external authority. ACRA send the soft-copy of the incorporation certificate once all formalities of Singapore company registration is completed successfully.
Corporate Income Tax:
Corporate Income Tax of Singapore is territorial based. It means only income sourced from Singapore is taxable under tax laws of IRAS (Inland Revenue Authority of Singapore). The headline rate of corporate tax is 17%, but the effective tax paid by the companies is much lesser due to the implementation of various tax benefits and exemptions meant for resident companies.
Other Tax Benefits:
Absence of capital gain tax, no tax on dividend and full tax exemption schemes are some tax benefits that every local company can avail of. Under full tax exemption, a newly incorporated company, for the first three years, do not have to pay any tax on their initial chargeable income of up to s$100,000. Next, S$200,000 is taxed at the rate of 8.5%, and the rate of 17% is applicable for chargeable income above S$300,000. The existing companies can claim the partial benefits.
Protective IP Law:
Singapore government understands that Intellectual Property (IP) is a valuable asset in honing a knowledge-based economy, and thus, IP protection is taken severely in the city-state. The nation has very rigorous copyright laws. It is a criminal offense for an individual or entity to conduct intended copyright infringement. A company in Singapore can register copyrights, trademarks, patents, registered designs, and so on through IPOS website.
Singapore Government Funding and Assistance:
The role of government cannot be exaggerated in contributing to the creation of a pro-business environment in Singapore. Their continual support towards nascent business is worth to mention. In a bid to transform nation’s economy, the government has rolled out several financial initiative to support start-up businesses (as SMEs contribute around 50% GDP of Singapore economy).
A few of these schemes are as follows:
SPRING Startup Enterprise Development Scheme (SPRING SEEDS)
ACE Start-ups Scheme
Technology Enterprise Commercialization Scheme (TECS)
iSTART ACE Scheme
ComCare Enterprise Fund (CEF)
It is wrong to assume that Singapore is free of any challenges when it comes to business incorporation. Tight labor market and increasing rental costs are the key headwinds every business struggle with. On top of it, ever growing demand from companies is making the competition tougher. However, these challenges could barely affect the entrepreneurs determination to incorporate a company in Singapore. Because alternatives are there to overcome these constraints. As a result, entrepreneurs and investors from far-flung places come to Singapore to make their presence known.