How To Open An Offshore Company In Singapore?
Table of Contents
The financial and political stability of the state, intensive economic development, and preferential taxation policy attract companies to Singapore, for which it is essential to optimize taxes without losing their business reputation. The lack of foreign exchange controls also attracts business people.
Officially, Singapore is not included in the list of offshore states; the principle of territorial taxation is used here. The corporate tax rate in Singapore is uniform; for both residents and non-residents, it is 17%. Residents and non-residents of the state pay taxes in the following cases:
- income received in Singapore
- the income was received outside of Singapore but transferred to any of the local banks.
For many countries, Singapore is not an offshore zone. To ease the tax burden, you need to do business outside the country and not transfer money to banks in Singapore. The total number of states with which Singapore has agreements on the avoidance of double taxation is more than 50.
Offshore companies in Singapore with a bank account are issued in the shortest possible time (1 day); this is a respectable solution. The country is favorably located in the southeastern part of Asia, is not included in the Black Lists, and has a stable economic system. The state attracts with its high economic development, GNP indicator, a consistently vast financial services market, and a huge concentration of many high-tech enterprises. Business owners can look forward to the following benefits:
- Price from 2700€
- A company with an already opened account from 20,000 euros (if there is such a company)
- Stable jurisdiction
- Registration of a Singapore offshore company in 1 day.
Basic requirements for a Singapore offshore company incorporation
- One of the directors of the company must be a resident of the country. The number of directors is not limited. The company secretary must also be a resident of Singapore
- Shareholders are required (at least one shareholder). The issue of bearer shares is prohibited. All shares must be registered.
- You need a registered legal address. Without it, the offshore company will not be registered. Mailing address for registration is not suitable
- Mandatory accounting. Mandatory preparation of an annual report
- When choosing a name, it must necessarily include words indicating the organizational and legal form of the company (“Private Limited” or “Pte. Ltd”, etc.).
Registration of a limited liability partnership LLP
For such companies, there are no requirements for the size of the minimum authorized capital. There must be at least two partners; both individuals and legal entities can act without residency requirements. Instead of a director, there must be a manager, at least one individual, a resident of Singapore. Information about partners is publicly available. Annual reports are submitted, and the solvency is confirmed annually (a special declaration is submitted). LLP as a legal entity is exempt from taxes; taxes are paid only by partners as individuals. There are also certain tax breaks for resident firms in the first three years of operation.
Should I buy a ready-made Singapore offshore company or register a new one?
You can register a turnkey offshore, that is, a completely new company. Some registrars offer ready-made companies. They can also be purchased; this will make it possible to get started faster. You need to pay attention to the date of registration of a ready-made company, the fresher it is, the better.
The main feature of ready-made offshore companies in Singapore is immediately starting work, for example, when the deadline is needed for yesterday.
To register a Singapore offshore company, you must provide:
- for individuals, a passport and proof of address of residence, this can be, for example, utility bills
- for legal entities registration documents and passports of individual participants.
Documents for Singapore offshore company incorporation:
- Company’s stamp
- Certificate of incorporation with Apostille
- Registered office (legal address)
- Memorandum and Articles of Association with Apostille
- Share Certificate
- Appointment of the first direction by the subscriber with Apostille
- Declaration of Trust
- First director minutes of meeting
- A letter of resignation, director.
These documents must be handed over after the purchase or registration of offshore companies in Singapore.
Reasons for registering Singapore offshore company incorporation
- No restrictions on the choice of the type of activity. The main thing is that it is not prohibited by law. Several activities involve compulsory licensing (insurance, banking, trust activities).
- A positive image of Singapore offshore company. Offshore zones are often perceived as a way of tax evasion, so offshore companies do not always manage to maintain a good image in the eyes of partners and investors. Since Singapore does not belong to an offshore zone, companies registered in its territory are perceived as reliable and are respected by international partners.
- No bureaucratic obstacles. There is no corruption in Singapore; the registration procedure is computerized. The personal presence of its founder in the country is not required to open a company. The time required for registration is up to 2 weeks.
- Confidentiality. Information about the beneficial owners of the company is closed. You can get it only by a court decision.
- Convenient geographical location and well-developed infrastructure. The country is ideal for companies doing business in the Asian market. A large international airport operates in Singapore, and the country also has one of the largest ports in the world.
Are you interested in offshore companies in a politically stable country with a high market economy? The best solution would be Singapore, a state with a favorable investment climate and clear, understandable legislation.
Benefits of offshore companies in Singapore
Thousands of new firms are opened in the country every year, and there are several reasons for this popularity:
- The political and economic stability of the jurisdiction as a whole
- The minimum set of documents required to register an offshore company
- Low cost of registration and purchase of ready-made offshore companies
- Legislation based on British common law
- English as a state language
- High speed of registration due to the well-thought-out work of government organizations (for example, there is an electronic queue, some of the services can be ordered via the internet)
- High status of the local banking system.
Respectability is confirmed by the fact that the country is not included in the Black Lists and, as a rule, does not cause problems for residents of other states. Due to its geographical location, the jurisdiction is an excellent choice for an Asian-oriented business.
Alternatively, you can consider Hong Kong. These two countries are fighting for the right to be called leaders in the field of economic freedom for business, occupying the first and second positions since 2014.
Singapore offshore company tax
Two characteristics characterize the Singapore tax system:
- Tax residency
- Territorial taxation.
A firm will be considered a tax resident if the income is generated and managed from the territory of Singapore. Typically, in this case, the tax rate is 17%, but if the income is higher than 300 thousand Singapore dollars, it is reduced in stages, depending on the amount.
Singapore offshore company tax on a territorial basis is typical for Southeast Asia. In this case, income is only taxed if it was received domestically; otherwise, the tax rate will be zero.
New legal entities have several privileges, ranging from the proliferation of agreements on the elimination of double taxation and ending with tax holidays.
For the first three years of activity, legal entities are exempt from paying the Singapore offshore company tax to the treasury. A dynamic rate is applied, depending on the amount of profit received. Income received from abroad is not taxable. However, there are several important nuances:
- When paying interest on a loan, a tax of 15% is withheld; for royalties, the interest rate is 10%.
- Income earned from the sale of shares in subsidiaries by a local company is not taxed. A subsidiary is a company, more than half of the shares of which are in the holding’s possession for at least one and a half years.
- There is no withholding tax on dividend payments to Singaporean companies.
The financial sector is stable. At the same time, foreign firms are not the primary source of income for Singapore, making the budget more stable and independent in economic matters.
Features of registration of an offshore company
There is practically no foreign exchange regulation. The state currency is the Singapore dollar, although a foreign bank account can always be opened in foreign currency in US dollars, for example.
There are two common forms of registration:
- With limited liability
- Public company or partnership.
Exempt Private Company (EPC) is especially popular among foreigners.
Any foreign firm must have at least one local director in its management, so it cannot exist without a nominee service. Dozens of advantages of jurisdiction easily offset this small minus.
When hiring such a director, it is imperative to leave a deposit equal to the payment amount for their services. A deposit is necessary for the correct liquidation of a legal entity if the beneficiary simply abandons it.
In other matters, the jurisdiction does not differ significantly in terms of registration processes. The owner will need to:
- Pick a unique name
- Rent an office or buy a virtual address
- Appoint a director and a secretary.
Self-registration can take several months. With professional help, the procedure takes less, only up to 10 days. Another 4-7 days are allotted for the delivery of documents to the place of the beneficiary if it is assumed that they are on the territory of other states.